The Slice Weekly #43: Fuel Scarcity in 2024: How Are Nigerians Managing?

In this issue of the Slice Weekly, we’re looking at a topic that affects us all –fuel scarcity. While the term doesn’t need much explanation, given how familiar we are with the long queues and rising prices, it’s essential to understand what’s happening behind the scenes.

In 2024, Nigeria has faced several challenges that have brought fuel scarcity back into the spotlight, impacting our daily lives and the entire economy.??

What’s Driving Fuel Scarcity in 2024???

This year has seen a surge in fuel scarcity, and here are the key reasons why:??

1. Supply Chain Issues: Nigeria took on an oil-backed loan last year to ease economic tension. Combined with a rising exchange rate, this has strained the country’s fuel supply even further.
2. NNPC Debt: The NNPC currently owes $6 billion to fuel suppliers, making it challenging to maintain a steady gasoline supply across the country.
3. Subsidy Removal: While the government has started removing fuel subsidies, the shift hasn’t been complete. The prices are now largely determined by market forces, but subsidies continue in some areas. Read more here.

The Role of the Dangote Refinery??

The Dangote Refinery, which became operational in 2024, was expected to reduce Nigeria’s dependence on imported fuel and help stabilize prices. However, several challenges remain:??

1. Crude Oil Supply: The refinery needs 15 cargoes of crude oil annually, but the NNPC has committed to supplying only 4, leading to a shortfall.
2. Currency Agreement: The NNPC will sell crude oil to Dangote Refinery in naira, which is part of the federal government’s strategy.
3. Production Targets: The refinery plans to supply 20 million liters of petrol in September and ramp up to 30 million liters daily by October.
4. Pricing Impact: Even though we’re refining fuel locally, the Petroleum Industry Act mandates that products be sold at international market prices. So, while the refinery’s impact on fuel supply may improve, price reductions might not be immediate.??

Where Do Things Stand Now???

Fuel prices have surged by about 45%, with prices from the NNPC rising from ?568 to ?855 per liter. In some areas, prices have gone above ?1,000 per liter.??

This spike is affecting various aspects of daily life:??

• Transportation costs have skyrocketed, both for public transport and private vehicles.
• Food prices are rising due to higher transport and production costs.
• Inflation is cutting into everyone’s purchasing power.??

The NNPC is expected to start lifting fuel from Dangote Refinery by September 15th, which could ease the long queues temporarily. But pricing uncertainty remains.??

Let’s Talk: How Are You Managing Rising Costs???

Now that we’ve covered the current situation, we’d love to hear from you. How are you managing your finances amidst these rising fuel costs? What strategies are helping you cope, and do you have any tips to share with others???

Let us know in the comments??