11/25/2014

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Business

Fuel shortages dog Africa's biggest oil producer

LAGOS, Nigeria (AP) - The man in the large SUV forces his way to the front of the line at the gas station, ignoring the blaring horns and threats of fisticuffs from drivers who have slept in their cars and waited for more than 12 hours for the scarce fuel.

Raw anger and frayed tempers give way to resignation as the big man wins, waved in by fuel attendants, no doubt expecting a bribe.

Nigeria, despite being Africa's biggest petroleum producer, has been dogged by a fuel shortage for weeks.

In this West African nation that does not only mean scarce gas to keep cars on the road. It means no diesel to run generators that are the lifeblood of industry in a country where frequent power cuts last hours. It means no kerosene for stoves used to cook meals by tens of millions of poor people.

And drivers in Lagos use more gas than most, burning it up in chaotic traffic jams that can turn a half-hour ride into a four-hour ordeal. Some commute for hours daily from out of state because they cannot afford wildly expensive rents payable a year in advance in the commercial capital that is home to an estimated 18 million people.

"We have no lights (electricity), no decent hospitals, no decent roads. I can't pay school fees or put enough food on the table. And now I can't work," said an exhausted taxi driver and father of five, Bola Ogunlesi, in a line for gas on Lagos' Ikoyi Island.

There, gas was being sold for up to 300 naira ($1.81) a liter instead of the government-subsidized 95 naira (58 cents).

Nigerians don't refer to fuel shortages, only fuel "scarcity," an indicator they are aware that there is no real shortage.

"It's embarrassing in a country that produces petroleum," said political analyst Femi Adebayo. "The problem will continue as long as those in the corridors of power continue to give out contracts to their cronies to import fuel at highly subsidized rates."

Nigeria does have oil refineries - four of them- to turn the crude oil into fuel. But hundreds of millions of dollars allocated over the years to revamp them has disappeared or been ill-spent. The state-owned Nigerian National Petroleum Corp. reported last month that three refineries performed at just 19 percent of their capacity in the first nine months of 2013.

So the country that produces 2.2 million barrels of oil daily imports fuel in often opaque deals.

The International Monetary Fund for years has pressed Nigeria to abandon fuel subsidies that it says encourage corruption and smuggling while doing little to help the poor.

But Nigerians say the subsidy is about the only benefit they get from petroleum resources. Some of the biggest protests ever seen in the country of 170 million erupted in 2012 when President Goodluck Jonathan's government attempted to scrap the subsidy, doubling prices of fuel overnight. The government was forced to back down, partially restoring the subsidies.

A couple of months later it was revealed that businessmen allied to the government had stolen some $6.8 billion in a fuel subsidy scam where they were paid to import fuel that never arrived. An investigation by a government-appointed commission said fuel subsidies are costing the nation $17 billion a year, not the $8 billion the government claimed. While the government is paying subsidies for 59 million liters of fuel a day, the country consumes only about 35 million liters, the report said.

Two years later, no one has been prosecuted.

In the latest scandal, the Central Bank governor Lamido Sanusi alleged that some $20 billion in oil revenues is missing from state funds. President Jonathan promptly fired Sanusi, though he says he has ordered a forensic audit into the allegedly missing billions.

Just as the shortages appeared to be easing this week, workers at the Independent Petroleum Marketers Association of Nigeria threatened to strike and workers said the 125,000-barrel a day Warri oil refinery has been shut down all week, in part because of rampant oil thefts.

That seemed to presage more misery in Nigeria, where, according to U.N. statistics, 70 percent of people survive on $1 a day.
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