Running on Empty: What Nigeria's Fuel Crisis Reveals

This country finds itself in quite the predicament. Can the new president find a solution?

Though the peaceful transfer of power from Goodluck Jonathan to President-elect Buhari slated for May 29 should be cause for celebration throughout Nigeria, the crowds that assembled on the streets of Lagos and Abuja last week were more incensed than jubilant. While a deal was finally reached between the government of Nigeria and the wholesale fuel distributors to end the fuel scarcity that had hamstrung Africa’s giant, the terms of the agreement are unclear, and the negotiation process is opaque. Although the oil-tanker drivers and other oil workers who had gone on strike and those who waited in long queues at the few petrol stations that still had fuel during the shortage may be momentarily placated, the crisis sheds a critical light on the petro-corruption undermining the country’s success.

A shortage of fuel in Nigeria, Africa’s largest oil producer, ground the country to a halt. Schools, radio stations, mobile-phone companies, airlines and hospitals, all discontinued or reduced their services throughout the country during the shortage. A sharp devaluation of the Nigerian naira and the collapse of the global price of oil have significantly strained the Nigerian economy. The country produces over 2 million barrels of oil a day and roughly 70 percent of the government’s revenues come from oil; the near halving of the price of oil has crippled the “giant of Africa.” The problem has been compounded by the state of the domestic refineries: Nigerian oil refineries are out-of-date and neglected, which leaves the country dependent on exporting crude oil and importing a refined product. The fuel shortage was compounded by the reduced electrical capacity in the country; the Ministry of Power reported last week that the already-erratic and insufficient power supply in the country dropped from 4,800 MW to just 1,327 MW. Nigerian businesses include the cost of diesel electrical generators in their cost of doing business. However, the fuel shortage rendered these generators largely useless and shut down businesses throughout the country.

The irony of a country that collected over $50 billion in oil revenue in 2011 being short on gas has been widely noted; Nigerians themselves have satirized the situation on twitter, using #aintnobodygotfuelforthat to point out the ways that the fuel shortage has changed day-to-day life in the country. The fuel shortage came amid accusations from wholesale fuel vendors that the Nigerian government owes them some $1 billion for fuel and subsidies, charges that have supposedly been accruing since October 2014. A spokesman from the APC, President-elect Buhari’s party, accused the incumbent party, the PDP, of deliberately “sabotaging” the economy as Buhari is scheduled to take office. The Nigerian Finance Minister lays the blame at the feet of the wholesale vendors and has asked the Nigerian Central bank to verify their claims because “there has been so much fraud allegations and scams in the business of oil marketing.”