Fuel scarcity sparks alarm, experts warn of looming economic crisis

Nigeria is on the brink of an economic crisis as the Nigerian National Petroleum Corporation Limited (NNPCL) faces a $6 billion debt to oil marketers, coupled with a persistent fuel scarcity that is wreaking havoc across the country.

Economic experts are raising alarms, warning that the situation could have severe repercussions for the nation’s economy if not addressed promptly.

The $6 billion debt owed by NNPCL has accumulated over several years due to delayed payments to oil marketers, inefficiencies in the subsidy regime, and volatile global oil prices.

This debt has now reached a critical point, severely impacting the ability of oil marketers to sustain fuel supply. Consequently, Nigeria has been experiencing widespread fuel shortages, with long queues at petrol stations becoming a common sight.

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Economic experts have voiced their concerns about the escalating crisis, emphasizing the need for urgent intervention. Dr. Olumide Olarewaju, an economist and energy analyst, noted that the NNPCL’s debt situation is unsustainable.

He warned that “the inability to service this debt will continue to disrupt fuel supply chains, leading to prolonged fuel scarcity, which will have ripple effects across the entire economy.”

Dr. Amina Yusuf, a macroeconomist, stated, “The inflationary pressure is likely to worsen as businesses pass on the increased costs to consumers. This will erode the purchasing power of Nigerians and deepen economic hardship.”odun

The fuel crisis is particularly devastating for small and medium-sized enterprises (SMEs), which are the backbone of Nigeria’s economy.

Many of these businesses rely on fuel-powered generators due to the unreliable power supply.

READ ALSO: Falana demands probe into NNPC’s $6bn fuel import ‘scam,’

As a result, they are facing higher operational costs and reduced productivity. Professor Chinedu Eze, an expert in business economics, warned, “The longer this crisis persists, the more we will see businesses shutting down, leading to job losses and a potential recession.”

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The broader implications of the NNPCL’s debt and fuel scarcity could jeopardize Nigeria’s economic growth.

The country, already grappling with sluggish growth and high unemployment, could see its economy contract if the crisis is not resolved.

According to Professor Eze, “The current trajectory suggests that we could be heading towards a full-blown economic crisis if there is no immediate and decisive action from the government.”

Economic experts are calling on the Nigerian government and NNPCL to take urgent steps to address the crisis

Dr. Olarewaju emphasized the need for NNPCL to restructure its debt with oil marketers. “Restructuring the debt could provide the necessary breathing space for the NNPCL to stabilize fuel supply and prevent further escalation of the crisis.”

Experts also suggest that the government reconsider its fuel subsidy regime, which has been a significant contributor to the NNPCL’s financial woes.

Dr. Yusuf pointed out, “Subsidy reform is crucial. While it may be politically sensitive, a more targeted approach could help reduce the fiscal burden and improve the efficiency of fuel distribution.”