Oil price drops as fuel scarcity bites hard in Nigeria

Oil price dropped on Friday as fuel scarcity continues to bite harder in West Africa’s largest economy, Nigeria.
Brent crude future fell by 1.52 percent or $1.41 to $91.46 at 10:30 AM Nigerian Time after climbing to $92.94 on Thursday.

OPEC daily basket price stood at $95.32 a barrel Wednesday, the last update by the Secretariat, while U.S. West Texas Intermediate (WTI) crude futures shed 71 cents, or 0.7 per cent, to $91.05 a barrel, after sliding 2% in the previous session.

Nigeria’s state oil company, Nigeria NNational Petroleum Company (NNPC), has had to ramp up import of petrol to cushion the effect of the scarcity caused by product withdrawal due to excess methanol two weeks ago.

The country consumed 80 million litres of petrol before the scarcity; however, no statistics available since the scarcity hit major cities, including Lagos and Abuja, causing long queues at few filling stations with products.

While most filling stations are under lock and keys for lack of products, the situation has forced motorists and residents into the hands of profiteering black marketers, who now sell product as high as N500 per litre as against N165/litre official price.

Mele Kyari, NNPC boss, was on Thursday, summoned by the House of Representatives downstream committee, where he assured of a methanol-free product order of up to 2.1 billion litres, expected to arrive in the country soon.

He promised an end to the scarcity in a few days’ time.

“We are a law-abiding company. There is no way we could have known about the methanol presence. The only way we could have known about it is if our suppliers, in good faith, disclosed it to us,” he said.

“In this particular instance, the discovery was made by our inspection agents who noticed the emulsification at the filling stations and brought it to our attention.

“Subsequent investigation revealed that the four cargoes which are all from the same source also contained methanol-blended PMS,” Kyari told Reps.

Nigeria, an oil producing country, depends on importation to meet its petrol consumption needs.

Experts, including the International Monetary Fund, IMF, have over the years, called for revamping of the country’s four refineries to cut importation costs, exorbitant subsidies, which according to them, would in-turn boost the country’s economic indices.

While the scarcity has yet to be resolved, civil society groups have called on the government to take responsibility for damages caused by the excessive methanol petrol.

The NNPC has also said it will seek damages from foreign suppliers of the contaminated products.

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