Trouble by the Tankful

It’s a Sunday, and Lekan Busari and Alhaji Adigun are chatting near the entrance of their local service station. The two friends know that the queue to fill their gas tanks will be shorter on the day of rest. “People are in church,” says Busari, a mechanical engineer in the southern Nigerian city of Ibadan. “The wait is only about an hour.” Just then a car cuts in front of them in the queue, sparking a cacophony of angry shouts and earsplitting horns. “What’s he doing there?” demands Busari. “Does he have no patience?”

Buying gas in Nigeria can test even the most indefatigable soul. In the world’s most distorted fuel market, drivers regularly wait two or three days at filling stations just for a few liters, sleeping in their cars to ensure their place in the queue. Others risk filling their gas tanks with expensive black market fuel, which is sold in dirty plastic containers or soft drink bottles by the side of the road; the petrol is often diluted by low-grade gas or even water.

The world’s sixth-biggest oil producer is gripped by a seemingly permanent fuel crisis. Nigeria produces more than 2 million barrels of crude a day but its four state-owned refineries are run-down and functioning below full capacity. The govern- ment monopoly on the importation and sale of refined fuel has led to industry-wide corruption, while a generous state fuel subsidy encourages smugglers to sell cheap gas for inflated prices outside the country. “I agree it is distorted,” says Vice President Atiku Abubakar, the driving force behind deregulation and privatization in Nigeria’s first democratic administration in more than 15 years. “Once you have a monopoly you have all kinds of distortions in the system because it is bound to be manipulated by vested groups.”

Now the government says it will fix the problem. It wants to deregulate the industry, introduce competition and end subsidies. Nigerians pay just 18 cents a liter for gasoline, close to the cheapest in the world. But the bargain price discourages oil companies from refining crude domestically, forcing the government to spend more than $1 billion a year on imported refined petroleum products. Profiteers, including corrupt public servants, promptly smuggle out as much as 25% of that to neighboring countries like Benin, Cameroon and Niger, where gasoline costs up to four times as much.

Under the new government plan, fuel subsidies would be phased out over the next two years. President Olusegun Obasanjo has also ordered any ships found illegally carrying fuel to be sunk. The changes should make it much harder for the state-owned oil company to control the fuel trade, encourage private distributors to set up in Nigeria and finally end the paradox of Africa’s greatest oil producer having to import enough fuel for its domestic needs. “Deregulation is not aimed at causing more hardships for Nigerians,” says Abubakar. “It is intended to free the sector from bottlenecks and to guarantee enhanced performance.”

But while the plan makes good economic sense it has run into political problems. Nigerians have grown used to cheap fuel; like Texans, they see it as their birthright. Many oppose even the smallest price rise, let alone the near doubling that will likely occur with deregulation. “It’s going to cause trouble,” says Ismailaa Alli, a manager at a Mobil Service Station in Ibadan. “Food is already very costly. If they raise fuel prices everything will again double. The inflationary effects will be massive. Who will be able to eat?”

The Nigeria Labour Council, which represents most of the country’s unions, held protests against deregulation last month and promises strikes if the government makes good on its word. “We are not just barking but are ready to bite if they insist on provoking us to this extent,” says a defiant Adams Oshiomhole, the nlc’s president. “If they deregulate, we will deregulate the struggle.” The government says it will do a better job selling its fuel policy. But it had better be quick. The next presidential election is not due until early 2003 but campaigning is already heating up. In car-crazy Nigeria, the price and availability of fuel may turn out to be crucial in driving the votes.