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Nigerian fuel shortages disrupt economy

26 May 2015

Nigeria, Africa’s biggest economy and one of its most oil-rich, is suffering from its worst ever energy shortage, according to reports in the country’s media. The fuel crisis has grounded airlines, shut banks and hospitals, disrupted telecommunications, and led to the closure of a number of manufacturing companies.

Nigeria depends on fuel imports to meet more than 70% of its domestic requirements and pays importers to guarantee cheaper local prices. Major fuel distribution companies allege they are owed $1 billion in outstanding payments by the outgoing government of President Goodluck Jonathan, and have gone on strike in protest.

According to Bloomberg, MTN, Africa’s biggest mobile phone company with 61 million customers in Nigeria, said in a statement it was running low on fuel reserves. Both MTN and Airtel were said to have shut down a number of base stations.

Guaranty Trust Bank Plc, Nigeria’s biggest lender, closed its offices on May 25 because of the shortages, while Arik Air, the country’s biggest carrier, has cut two-thirds of its 120 daily flights.

Hospitals and medical facilities have also been critically affected due to their over-reliance on diesel for temporary power generation as grid-fed electricity is not dependable across most of the country.

Aliko Dangote, who runs the country’s biggest network of cement production plants, told Thisday his cement plants at Ibese and Gboko had been closed down while the 10-million metric-ton plant at Obajana in Kogi State was operating at minimal capacity.

The disruption of fuel supplies has also led to the idling of 10 thermal power plants across the country, according to Thisday.

The country’s four state-owned refineries were built to refine 445,000 barrels per day (bpd) of crude, enough to meet national demand of about 300,000 bpd, but they are poorly maintained and run at a fraction of their capacity.

President-elect Muhammadu Buhari will take over from Jonathan on May 29, causing anxiety among creditors that the new government may take longer to pay the claims, the head of the oil marketers body said in a May 12 interview.

The strike by oil marketers and distributors has been further exacerbated by disputes and strikes at the state-owned Nigerian National Petroleum Corporation (NNPC), normally the fuel supplier of last resort in the country.

Dangote told Thisday he had flown to Abuja on May 23 to meet President Jonathan and exhort him to take measures to address the situation.

Dangote said: “I met with the president on Saturday afternoon and spoke to him that night also. I impressed on him the need to address the situation urgently and to refrain from handing over the country to Buhari in such a mess.”

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