Economy
Nigeria Hit with the Worst Fuel Scarcity Yet
Nigeria is the main oil producer in Africa and is currently the continent’s largest crude oil exporter. This status however holds no value for Nigerians who have now been accustomed to fuel scarcity in varying degrees being a constant challenge.
In 2024 alone, the country has been hit with two fuel scarcity crises. The first occurred from April to May when the fuel cost increased by 68.01% on a year-on-year basis from N842. 25 per litre in April 2023 to N1415. 06 per litre in April 2024. The second crisis is ongoing. It has seen the petrol price rise to N1,050 per liter in a matter of days from the average of N770.54 recorded in July 2024. This fuel scarcity is another addition to the ongoing cost of living crisis Africa’s largest economy is experiencing.
Nigeria’s Cost of Living Crisis Continues to Soar
During his inaugural speech on May 29, 2023, President Tinubu announced an end to fuel subsidies in the country, citing that continuing subsidies were unsustainable and a drain on public finances. The president acknowledged in another address on June 12, 2023, that although halting the subsidies added a burden on the people of Nigeria it was crucial to the country’s economic survival. Over a year after this bold move by the government, most Nigerians are struggling to make ends meet sparking protests across the country.
NOIPolls, an independent pollster in West Africa disclosed in 2023 that 63% of adult Nigerians surveyed across the country desire to relocate to other countries. The lack of economic opportunities is the primary motivator for leaving Nigeria. As the “Japa”— a colloquial term for emigration— itch among Nigerians intensifies, the youth who can’t leave have sought to earn an income remotely working for foreign companies, gambling on international online casinos, and working multiple low-level jobs.
The prices of food, cooking gas, medication, and public transport have risen since President Tinubu assumed office in May 2023. This rising cost of living has been a result of the naira’s poor performance against the dollar and the instability of the country’s economy. Nigerians have had to survive through high levels of inflation not experienced before in the country for three decades.
According to the World Food Programme, 26.5 million people across the country are projected to face acute hunger between June and August 2024. This is an almost 40% increase from the 18.6 million Nigerians recorded to have faced food insecurity at the end of 2023. This new fuel scarcity crisis has seen Nigerians make long queues at filling stations to access petrol, led to significant increases in transport fares, and resulted in losses for businesses that rely on fuel to power them.
NNPC Explains Cause of Current Fuel Scarcity
In response to rising concerns about fuel scarcity in the country, the Nigerian National Petroleum Corporation Limited (NNPCL) through Dapo Segun, the Vice President, attributed the ongoing fuel scarcity to the impact of the recent heavy rains, lightning, and thunderstorms across the country. Mr Segun explained that the rains had caused saltation in the Estragos channel making navigation difficult and thus hindering the transportation of petroleum products across the country. Additionally, Seun reported that fuel discharge from both onshore and tankers had been suspended occasionally due to lightning and thunderstorms. These three natural extreme weather conditions have made distributing petroleum products across the country challenging.
As the NNPCL vows to resolve the fuel scarcity crisis soon, Nigerians are looking to two other refineries that were set to begin operations to ease the cost of fuel burden. The Dangote Refinery is expected to begin selling petrol in Nigeria by the end of this August. The chairman of the Dangote Group, Aliko Danknote, who had committed to this milestone is positive that his company will meet the target. Additionally, the Port Harcourt refinery is expected to be operational and supplying petroleum products across the country by September 2024 as assured by the group chief executive officer of the NNPCL, Mele Kyari. This will be the third time the refinery’s operational month has been moved this year following its mechanical completion in December 2023.
The Independent Petroleum Marketers Association of Nigeria (IPMAN), on the other hand, has accused the NNPCL of actively contributing to fuel scarcity by failing to provide petroleum products to its members even after payment. IPMAN disclosed that even though payment to the state oil company was made three months ago members have been forced to purchase petroleum products from private depots whose prices are significantly higher. IPMAN is now calling on the government and other key stakeholders in the oil industry to intervene in the situation to lessen these hardships.
Citizens of Africa’s largest crude oil producer and exporter are now no longer surprised by fuel scarcity in their cities. While many try to find ways to survive under the new economic hardships, others opt to leave the country in search of greener pastures. It is evident that Africa’s largest economy is on the brink of collapsing should the government not turn around the economic situation soon.
By Dipo Olowookere
A 0.38 per cent loss was suffered by Nigerian stocks on Tuesday on the back of continued selling pressure from investors embarking on profit-taking.
Data from the Nigerian Exchange (NGX) Limited showed that the contraction was influenced by the 1.78 per cent decline recorded by the insurance sector, the 0.24 per cent slip printed by the consumer goods index, and the 0.09 per cent drop posted by the energy space, offsetting the 0.75 per cent growth achieved by the banking sector and the 0.21 per cent growth recorded by the industrial goods segment.
Investor sentiment was weak during the trading day, as the bourse ended with 13 price gainers and 40 price losers, representing a negative market breadth index.
LivingTrust Mortgage depreciated by 10.00 per cent to N3.42, Multiverse also shed 10.00 per cent to N22.95, McNichols dropped 9.92 per cent to N5.45, Thomas Wyatt dipped by 9.87 per cent to N3.56, and Eterna lost 8.57 per cent to trade at N33.00.
On the flip side, AVA Capital improved by 9.94 per cent to N9.95, Livestock Feeds expanded by 9.71 per cent to N8.65, Neimeth increased by 8.43 per cent to N9.00, AIICO gained 3.47 per cent to settle at N4.18, and Oando grew by 3.30 per cent to N36.00.
A total of 1.6 billion equities valued at N28.7 billion exchanged hands in 54,160 deals yesterday versus the 923.0 million equities worth N37.9 billion traded in 72,544 deals on Monday, indicating a 73.35 per cent surge in the trading volume, a 24.27 per cent decline in the trading value, and a 25.34 per cent slip in the number of deals.
The busiest stock was Japaul, which transacted 904.4 million units for N2.7 billion. Sterling Holdings sold 54.0 million units valued at N431.9 million, FCMB exchanged 49.5 million units worth N545.9 million, Chams traded 44.9 million units for N199.2 million, and Neimeth sold 42.4 million units worth N327.8 million.
Business Post reports that the All-Share Index (ASI) gave up 927.70 points to 244,802.83 points from 245,730.53 points, and the market capitalisation receded by N599 billion to N158.016 trillion from N158.615 trillion.
By Adedapo Adesanya
The Naira put up a better performance against the United States Dollar in the various segments of the foreign exchange (FX) market on Tuesday, August 4.
In the parallel market, it improved its value by N5 to settle at N1,400/$1 compared with the previous day’s value of N1,405/$1, and at the GTBank forex desk, it appreciated by N1 to close at N1,373/$1, in contrast to the preceding session’s N1,374/$1.
In the Nigerian Autonomous Foreign Exchange Market (NAFEX) segment, the Nigerian currency gained N2.28 or 0.17 per cent against the greenback to quote at N1,362.55/$1 compared with the N1,364.83/$1 it was exchanged a day earlier.
Also in the official market, the local currency appreciated against the Pound Sterling during the session by N6.48 to finish at N1,831.41/£1 versus N1,837.89/£1, and chalked up N5.22 on the Euro to sell at N1,568.71/€1 versus N1,573.93/€1.
Interbank FX transactions increased 14 per cent day-on-day as market makers’ activities raised total Dollar volume exchanged to $156.23 million, more than 132 per cent above $137.05 million in turnover at the previous close.
The interbank FX turnover rose despite a marginal rise in deals at the NFEM window as data from the central bank put Tuesday’s quote at 139 from 138.
As for the cryptocurrency market, major tokens were mixed as global stock indexes hit fresh records on renewed enthusiasm for artificial-intelligence-related shares.
With cheaper oil, easing rate expectations and a strong risk-on rally in equities supporting digital assets, analysts say crypto appears to be driven by internal market dynamics rather than macroeconomic factors, even as traders watch for a potential Strait of Hormuz deal.
It was reported overnight that Iran and Oman were close to an agreement to reopen the Strait of Hormuz, with an announcement targeted for Wednesday.
Binance Coin (BNB) grew by 1.8 per cent to $600.54, Bitcoin (BTC) rose by 0.9 per cent to $64,199.86, Solana (SOL) jumped by 0.8 per cent to $73.95, and Ethereum (ETH) advanced by 0.7 per cent to $1,867.21.
But Cardano (ADA) depreciated by 1.9 per cent to $0.1908, TRON (TRX) dipped by 0.6 per cent to $0.3268, Dogecoin (DOGE) slumped by 0.5 per cent to $0.0698, and Ripple (XRP) crashed by 0.4 per cent to $1.06, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.
By Adedapo Adesanya
Brent crude dropped below $80 per barrel, precisely losing $4.41 or 5.3 per cent to settle at $79.36 a barrel on Tuesday, after comments by officials from the United States and Qatar raised hopes for a diplomatic resolution to the Iran war, which could improve oil flows through the Strait of Hormuz.
Also, the US West Texas Intermediate (WTI) futures depreciated by $4.57 or 5.7 per cent to trade at $75.77 a barrel.
US Secretary of State Marco Rubio said on Tuesday there was progress in talks with Iran and Oman about moving more ships through the strait, but a final agreement was yet to be reached.
Also, Treasury Secretary Scott Bessent had said earlier on Tuesday that a deal with Iran to reopen the strait could come as soon as Tuesday or Wednesday.
Qatar’s Foreign Ministry spokesperson Majed al-Ansari said efforts to secure a diplomatic resolution to the war were continuing.
Qatar said it has discussed with US President Donald Trump ways to reduce escalation and converge viewpoints between the US and Iran.
Meanwhile, the latest round of US-facilitated talks between Israel and Lebanon began on Tuesday and will continue through Thursday.
Amid this, Iran still wants control over inbound shipping and visibility over outbound traffic through the Strait of Hormuz, with the ability to intervene if necessary, as part of a plan being discussed with Oman to reopen the strategic waterway.
Market analysts noted that the prospect of a diplomatic solution to the conflict has helped remove some of the geopolitical risk premium in oil prices. If negotiations between the US and Iran make meaningful progress, the market could continue pricing in a lower probability of supply disruptions.
Disruptions to shipping through the strait, through which a fifth of global oil and gas flowed before the war, have forced Middle Eastern nations to cut oil output sharply. The world has lost more than 2.6 billion barrels of oil since the Iran war began in February.
Shipping traffic at the key Gulf waterways of Bab el-Mandeb and the Strait of Hormuz remained unchanged at the start of the week.
The American Petroleum Institute (API) estimated that crude oil inventories in the US rose by 2.69 million barrels in the week ending July 30. Commercial crude oil inventories excluding the SPR have lost just over 58 million barrels over the last sixteen weeks, with US crude inventories down just 7.2 million for the year, according to API data.
Official data from the US Energy Information Administration (EIA) will be released later on Wednesday.
