Janice R. Andrews
The Nigerian oil sector faces an unprecedented crisis as fuel consumption plummets and prices soar, putting approximately 10,000 oil dealers at risk of shutting down their operations. Following President Bola Tinubu’s removal of the fuel subsidy in May 2023, the nation has witnessed a dramatic 92% reduction in daily petrol consumption, falling from 60 million liters to just 4.5 million liters by August 2024.
Impact on Fuel Distribution and Pricing
The crisis has severely disrupted fuel distribution across Nigeria, with only 16 of the country’s 36 states receiving petrol supplies from the Nigerian National Petroleum Company (NNPC) Limited as of August 2024. The removal of the fuel subsidy has triggered a massive price surge, with petrol costs escalating from ₦185 per liter to over ₦1,000 per liter by October 2024, contributing to the highest inflation rate in three decades.
Industry-Wide Distress
The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) reports that operating costs have become unsustainable for many dealers. The cost to load a single fuel truck has increased dramatically from ₦7 million to ₦47 million within 16 months. This financial strain has led PETROAN to seek a ₦100 billion government grant to prevent the collapse of thousands of petrol stations.
Employment Crisis
The potential closure of these 10,000 oil marketing businesses threatens over one million jobs across the sector. The Independent Petroleum Marketers Association of Nigeria (IPMAN) confirms that its members have been forced to reduce fuel purchases significantly due to prohibitive costs. IPMAN President Abubakar Maigandi notes that dealers now purchase considerably less inventory than before the crisis.
Labor Union Concerns
The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) reports significant job losses among truck drivers and petrol station workers. Secretary-General Afolabi Olawale emphasizes that downstream sector workers, including truck drivers, station employees, and depot representatives, have been particularly affected by the crisis.
Economic Implications
The fuel crisis has broader economic ramifications:
- Many Nigerians have abandoned private vehicles in favor of public transportation
- Food and transportation costs have risen sharply
- Business operations across various sectors face increased overhead costs
- The dramatic decrease in fuel consumption indicates significant changes in consumer behavior
Call for Government Action
Industry stakeholders are urgently calling for government intervention to prevent further deterioration of the sector. PETROAN’s request for a ₦100 billion grant aims to:
- Prevent the closure of thousands of petrol stations
- Protect over one million jobs
- Stabilize the fuel distribution network
- Support businesses struggling with increased operational costs
The situation requires immediate attention to prevent further economic hardship and protect Nigeria’s vital oil marketing sector. Without intervention, the industry faces the risk of widespread business closures and significant job losses, potentially deepening the nation’s economic challenges.
