(Ecofin Agency) - The fuel scarcity situation in Nigeria has been termed as the country’s most severe crisis as it is putting pressure on a fast deteriorating economy that has been hit by the slump in global oil prices thereby creating a foreign exchange disaster.

Efforts to ease the situation in the country has proved abortive. A decline in investment, diversion of fuel to neighboring countries, vandalism, N150 billion outstanding debt owed to marketers by the Federal Government and the inability of the country’s refineries to work efficiently are current issues being faced by the country.

While some industry experts have said that the scarcity will not end at once even if there are some progress, especially as far as gasoline (petrol) production from the refineries of Port Harcourt and Warri is concerned, some have said that the cost of importing petroleum products for a month is enough to construct about 15 modular refineries in the country. And some have urged the federal government to tap from the technology of illegal refineries instead of destroying modular refineries.

According to Francis Perrin, the Chairman of Strategy and Energy Policy and the Editor of Arab Oil & Gas, the reason why modular refineries are being destroyed by the Federal government and the Nigerian National Petroleum Corporation (NNPC) is because they also want to construct modular refineries in the vicinity of the existing state refineries, renovate and upgrade existing plants.

“These two projects are interesting. Of course it takes time, money, security and profitability but it is not Mission Impossible. There is also a private project from the Dangote Group. You also have in the country numerous illegal refineries and it would be difficult for the government to say: well, it is OK and let us legalize all this business built on the theft of oil. It would not really send a good message. The fact that there is a shortage of oil is not a sufficient reason to consolidate criminal activities. And these small refineries are of course not state-of-the-art units. They can be dangerous and cause damage to the environment. The refining business is a difficult and complex business and it must be awarded to professional and skilled entities,” he told Agence Ecofin.

Nigeria’s economy has been affected by the fluctuating prices of crude oil in the global market and the failure to arrive at a decision to freeze or cut production by Oil producers in Doha.

The country has twice lost its position as Africa’s top oil producer with oil production dropping by 67,000 bpd in March at 1,677 million bpd from the 1.744 million bpd in February.

Nigeria saw the highest decline in production in March followed by Venezuela. Exports and production of Nigeria’s Forcados crude remain closed due to an explosion on the subsea Forcados pipeline by militant attacks, causing a leak that warranted it to stop loadings.

The president of Nigeria LNG, Babs Omotowa has said that the country needs new investment otherwise Nigeria will lose her current 4th position as world’s largest exporter of LNG to 10th position by 2020.

Anita Fatunji