Consumers of the Premium Motors Spirit (PMS), best known as petrol, in Ondo State are groaning following a scarcity of the product, with one of them telling Saharareporters: “Honestly, I am tired of this country.”
Findings by SaharaReporters on Saturday showed that the scarcity has made many of the consumer to engage in panic buying of petrol in the few gas stations in the state capital, Akure, where the product is available.
A SaharaReporters correspondent who moved round the state capital reported that the scarcity became noticeable late on Friday.
The scarcity was visible in some of the gas stations visited, as their gates were shut while consumers of the product, mostly motorists, were stranded.
However, the few gas stations that sold — at Alagbaka, Oyemekun, Oke Ijebu, Ijapo, Ondo Road and Oda Road — experienced long queues in a stretch of about 200 to 300 metres, thereby causing traffic on the roads.
Long queues were seen at NNPC Mega stations on the highway in Akure, as other gas stations on same route up to Shasha market were closes, aside the popular Showboy Petrol Station.
The Bovas gas station, which is the most preferred choice of motorists on the Oke Ijebi route, shut its gate as workers said there was no fuel to dispense to consumers.
Our reporter observed that these gas stations, which are mostly retailers, have started selling the product at N150 and N180 per litre, which is against Federal Government-approved pump price of N145.
Investigations showed that the major marketers in the state that have the product are now rationing it on high price among Independent marketers willing to cooperate.
It was also noticed that many of the motorists rushing to queue up for the product had no idea of the cause of the sudden scarcity, and the station’s owners were unwilling to talk.
A motorist, Tijani Olakunle, said the situation might worsen from Monday if the government refuses to intervane. He also accused the government of insincerity on the scarcity of the product.
“They are telling us that there is fuel everywhere, thank God you said you are a journalist; can you see the product here now? At least you saw us in the queue sweating inside our vehicle to get the product.
“I don’t think the Federal Government is being sincere with this scarcity of fuel. How can they say there is fuel everywhere while we are suffering to get it here? So, I am calling on them to better act immediately before this scarcity will get worse by Monday becuase people will want to travel back and go to their places of work.”
Another petrol consumer, Babalola Orimolade, whose wife sells cold food inside the Oja Oba Market, said the scarcity is now bitting hard and will have a knock-on effect on their business.
“We need petrol to power the generator to freeze the food inside our refrigerators, and I cannot even stand the queue at the gas station. You can see everyone sweating here to get the product.
“Honestly, I am tired of this country — because it seems it is only we the common man that bears this brunt and those at the top don’t feel what we are feeling. And is this the next level that they came to promise us.
“Here, there is queue and they are selling for us at N150 per litre. If you cannot stand the queue, then you will get black market for N200 per litre. Is this not a big shame on us as country that has oil and still we refine outside the country?”
Niyi Adesida, a commercial driver popularly known as ‘taxi diver’, said the long queues at the gas stations forced him to resort to getting the product from the black market.
“The scarcity is already bitting hard on us as taxi drivers, and the N50 per drop is no longer comfortable for us becuase we now get the fuel at the rate of N180 and N200 per litre from the black market.
“The filling stations are not openining for sale and I learnt they don’t have the product, but where are the black market guys getting it from?”
Shina Amoo, Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN) in Ore depot, told SaharaReporters on the phone that the “slight” petrol scarcity was that the product was not readily available in the depots.
Amoo explained that many of the independent marketers were now buying from private depots at an expensive rate to serve the state.
He added that the Nigerian National Petroleum Corporation (NNPC) was aware of the situation and had been working to proffer solutions.
“My brother, the truth of the matter is that the product is not available for consumption and we are getting the ones we have from the private depot,” he said.
“Just imagine, when we are buying the product to serve the people at the rate of N139 per litre, excluding other expenses of landing cost at the petrol station. But, like i told some persons not too long ago, everything boils down to the Federal Government to make petrol available. I hope this will be resolve before the end of next week.”
Speaking, the Operations Controller of the Department of Petroleum Resource (DPR) in Ondo state, Oseni Adewale, accused the marketers of hoarding the product against the consumers in the state.
Adewale said there was enough petrol to last the state beyond the Easter season, noting that any of the markters caught hoarding the product will be dealt with it.
Similarly, the Ondo State government has promised to arrest the owners of any gas station caught hoarding the product from consumers.
A statement signed and issued by Doyin Odebowale read: “The Ondo State Government views, with grave concern, the latest attempt by some unscrupulous persons to create panic through the hoarding of PMS, fuel.
“This assault on decency is coming at a time when the NNPC continues to reiterate facts on the availability of the product. Nigerians have been assured of regular supply of the product and this Government has no reason to disbelieve the organisation.
“It is against this backdrop that the Government warns, sternly, all petrol dealers in the State, to desist from any unpatriotic acts which may inflict pains on the people. We, on our part, will resist and sanction any untoward practice, conceived and/or executed, to engender hardship in the Ondo State. Any dealer caught hoarding fuel will be arrested and prosecuted.”
Coronation Research’s Nigeria weekly update: CBN goes for growth
This year US$18.79bn has flowed into the NAFEX market with Foreign Portfolio Investment (FPI) accounting for 65.40% of inflows (US$12.29bn). The CBN’s supply of US dollars to the NAFEX market has been 3.02% of inflows (US$0.57bn). In effect, FPI is supplying sufficient US dollars to take the pressure off the CBN, hence our confidence that the exchange rate will hold this year. And the CBN has new-found confidence to target growth.
Bonds & T-bills
The yield on a Federal Government of Nigeria (FGN) Naira bond with 10 years to maturity fell by 24bps to 13.95%, and at 3 years declined by 25bps to 13.20% last week. The yield on a 364-day T-bill fell by 51bps to 12.50%. The yield on a T-bill with 3 months to maturity declined by 27bps to 10.30%.
Investors are reacting to the CBN’s revised Standing Deposit Facility (SDF) placement by banks which is now capped at N2.0 billion (US$5.7 million) from N7.5 billion previously. The T-bill market is currently characterised by high demand and strong market liquidity which depressed yields this past week. In the absence of frequent Naira fixed income auctions by the CBN, we expect yields to be stable and not derail significantly from current levels. With this amount of liquidity in the market the initiative lies with the CBN to set rates.
The price of Brent rose by 3.99% last week to US$66.72/bbl. The average price, year-to-date, is US$66.10/bbl, 7.80% lower than the average of US$71.69/bbl in 2018, but 20.75% higher than the US$54.75/bbl average seen in 2017.
The 2019 oil market is themed by supply cuts, for the most part. The latest report from the International Energy Agency (IEA) shows that oil supply exceeded demand by 0.9 million barrels per day for the first half of the year. This comes on top of pre-existing stockpiles and rising shale production. With oil price protection in view, OPEC’s tightening measures are understandable, especially with the US/China trade war still unresolved.
The Nigerian Stock Exchange (NSE) All-Share Index lost 2.41% last week, resulting in a year-to-date return of negative 9.11%. Last week Cadbury Nigeria (+8.64%), Flour Mills of Nigeria (+8.00%) and Unilever Nigeria (+3.13%) closed positive while Forte Oil (-23.33%), PZ Cussons (-10.14%) and Nestle Nigeria (-8.92%) fell.
Last week saw the listing of Airtel Africa which closed the week at N323.50/share, down 18.98% from its listing price of N363.00/share. Such a reception continues to show weak investor sentiment in the market. While investors maintain a cautious stance on investing in equities, some stocks are trading close to multi-year lows and present a good entry point for investors, in our view.
The CBN pushes the growth pedal
The last few weeks have seen a flurry of activity from the CBN; a circular on mobile money & financial inclusion; hints of banking sector re-capitalisation 2.0; another circular prohibiting banks from a loan to deposit ratio less than 60%; and finally a ‘no thank you’ note to banks which may wish to park excess cash in the CBN vault, for excess cash balances above two billion Naira (US$5.6m).
What is the overall signal?
The CBN’s recent focus for the past two years has been on monetary stability. Following a 7.50 percentage point decline in inflation, a rise in foreign exchange reserves and hard-earned currency stability, one could argue that it has won the battle. And it has been helped by the downward prospects for US dollar interest rates, which take the pressure off emerging market currencies to some extent. Now the CBN can return to its other agenda. It wants economic growth.
Nigeria’s GDP growth rate mimics the growth rates of developed countries even though it isn’t one. One sign of sluggish growth has been slow growth in commercial bank loans, which suggests, among other things that the supply side of the economy is weak. The CBN’s approach to galvanising growth had been skewed towards the supply side, and it has deliberately held down loan rates in several areas, such as agriculture, in order to implement its policy. The problem with this initiative is that commercial bank loans have not grown as a result, leading the CBN to come up with more radical measures than before.
Typically banks keep cash balances when the CBN Open Market Operation (OMO) auctions are imminent, driving up overnight lending rates around auction dates. But there is a clear downward trend this year in the rate at which very short-term unsecured loans are traded between banks around OMO auction dates.
In fact, on 4 July the cost of overnight loans between banks fell to its lowest this year (4.86%) suggesting that for a given level of liquidity mop-up by the CBN, banks are willing to lend to themselves at cheaper rates than before. During H2 2018, this relationship was upward trending (when adjusted for outliers).
The CBN is attempting, through its circulars, to unlock excess liquidity trapped within the banking system in the hope that it will be channeled towards the real economy. Banks now have an extra incentive to target firms, and the affluent with (soft) loans when other forms of risk-free income become pressured.
All of this reads well for consumer spending, which is the dominant component of aggregate demand, but it may mean thinner margins for banks. The argument that banks may still expect to improve or maintain their margins without a corresponding expansion in loan books must be nuanced with the guidance that the CBN may restrict banks’ participation in the OMO and T-bill market for their own account. By and large, the CBN’s actions are likely to drag down interest rates until the point is reached where it finds Naira liquidity is negative for the currency.
Indeed, in our view the CBN may be wary of a steep reduction in market interest rates and what they could mean for the Naira exchange rate, on two counts. One, some of the excess liquidity in the banking system could find its way into the FX market. If stability remains a priority, the CBN will have to part with more of its dollar reserves. Two, moderating market interest rates could erode the appeal of the naira carry trade prompting foreign portfolio investors to unwind their positions.
But these are still early days, and we await the CBN’s upcoming auctions to learn more of its rate policy.
What Dana Airline did to its passengers at Abuja international airport
A cross section of the passengers who spoke with the News Agency of Nigeria (NAN) on Friday at the airport described their experience as unfortunate.
One of the passengers, Mr Waribo Kuku, said he was supposed to board Dana flight from Abuja to Port-Harcourt since Wednesday (July 10), but no flight was available.
Kuku called on the management of Dana airline to compensate him for the delay and inconvenience.
He also appealed to relevant authorities, such as the Federal Airport Authority of Nigeria (FAAN), Consumers Protection Council and SERVICOM, to address such grievances and ensure that customers were adequately compensated to serve as deterrent.
Another passenger, Mr Jerry Wanodi, told NAN that he booked a Dana flight from Abuja to Port-harcourt since Thursday but couldn’t board the flight due to rescheduling and cancellation of the flight.
Wanodi said that he had been at the airport since 2 p.m on July 11, up till the 6.30 p.m and there was no sign of any Dana Air flight on ground.
Another passenger of the same airline who pleaded for anonymity said he was disappointed with Dana and threatened to sue them for damages.
“I have to go back to my family, you know how women think. It’s like I have been giving excuses on why I haven’t come home yet.
“I am so disappointed with Dana Air and I want relevant authorities to ban Dana from flying in Nigeria
“I also want them to pay compensation to me for keeping me at the airport since Thursday,” he said.
Similarly, Mr Berepelebo George told NAN that he has lost an opportunity to be gainfully employed because of the cancelled flight.
“I have an interview appointment with an organisation in Port-Harcourt which I have missed due to flight cancellations.
“I want the relevant authorities to have regulations on airlines to tackle this impunity,” he urged.
Mrs Amaka Ojeka, another sad passenger, described the development as a national embarrassment.
Ojeka narrated how she flew in from Germany, noting that there was no stroller at the international wing and had to wait for 45 minutes before she was able to secure one.
She also expressed regret that she has been waiting to board Dana to Port-Harcourt but found out that there was no aircraft on ground.
“I am disappointed by what is going on at the airport because you can’t find this in a developed society.
“They are not organised and why is Dana not returning my money but they sent a message via email for me to come to the airport and there was no plane on ground.
“I went back and paid a hotel bill of N10,000 as well as airport taxi.
“Government should look into the matter and take appropriate measures to address it,” she said.
The FAAN authorities and Dana Air management were yet to react to the development in spite of media inquiries.
NAN reports that the passengers waiting to board Dana Airline flight to Portharcourt and Lagos have been kept in suspense amid mounting anxiety.
Ethiopian Airlines In Talks With Buhari Government To Establish National Carrier After Nigeria Air Flopped
Ethiopian Airlines has announced that it is in talks with Nigerian government to establish a national carrier for the so-called ‘Giant of Africa’.
Nigeria had announced the plans to establish an airline in 2018 but shortly after its proposal, the government of President Muhammadu Buhari in September 2018 changed its mind and announced the suspension of the airline prompting public outrage.
But Tewolde Gebremariam, the Group Chief Executive Officer, Ethiopian Airlines, told journalists in Abuja on Friday, “We have been discussing and exploring possibilities to establish or support a strong airline in Nigeria. I don’t mean that there is no strong airline in Nigeria, but we want an airline that can satisfy the demand of the domestic market, the regional market, and international market.
“We are also in talks with Ghana government to establish Ghana Airways but the biggest market which is Nigeria has been a challenge, to be honest with you. We make sure that when we start something, we start professionally and make sure that it succeeds.
“Nigeria is a very large country but unfortunately, since the demise of Nigeria Airways, we are unfortunate that we don’t have a strong carrier. So, this concern is part of continental concern because in Africa, non-African carriers have the biggest shares. It is around 80-20 per cent ratio. 80 per cent of the traffic between Africa and the rest of the world is carried by non-African carriers.
“The homegrown carriers have only 20 per cent of the market. This is not fair and it used to be 60 per cent some years ago but now it is coming down. We are also threatened because all of us in Africa are only 20 per cent of the market.
“So, in a declining trend, there is a possibility that the market share can be zero. So, they will wipe us out. We have to make sure that we work together with all African countries to ensure that there are strong homegrown indigenous carriers. We have done this with Asky in Togo and we want to do it in Nigeria.”
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