Russia-Ukraine tension worsens Nigeria’s energy crisis

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caeebe lcci on cbn

By Adewale Sanyaolu

The ongoing crisis between Russia and Ukraine has continued to take a negative toll on Nigeria, by compounding its already troubled energy crisis.

Findings by Daily Sun at the weekend showed that more and more vessels have failed to call  on Russia and Ukraine shores over continued hostilities and sanctions slammed on it by most European countries and the United States.

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The development has continued to push up both the landing cost of Premium Motor Spirit (PMS), popularly called petrol, Jet A1 and diesel to all time high.

Joining the call against further energy crisis, the Lagos Chamber of Commerce and Industry (LCCI) in a statement released at the weekend, warned that the rising cost of diesel could further aggravate the country’s hunger crisis.

Daily had last week exclusively reported the surge in price of diesel which hit N625 per litre, representing an increase of 150 per cent from its initial price of N250 per litre over one month ago.

Operators in the hospitality industry under the aegis of  Lagos State Hoteliers Association warned that the escalating price of diesel could spell doom for the sector if not arrested.

Some industry observers who spoke to Daily Sun on condition of anonymity at the weekend, said the country’s energy crisis may take a turn for the worse in the weeks ahead over the escalating crisis between the two countries.

They explained that the country’s N3 trillion budget for subsidy in 2022 may double if oil prices continue to soar. Already, they said the both the landing cost of  oil has risen to unprecedented levels.

Curiously, the hostilities are equally having negative effect on the US energy market as prices of several grades of gasoline have risen by over 40 per cent in the last one month.

For Nigeria, the situation is more troubling as all its three refineries with a name plate capacity of 455,000 barrels per day located in Port-Harcourt, Warri and Kaduna are all comatose.

Currently, Nigeria is battling with acute shortage of Premium Motor Spirit (PMS), as the supplies remain epileptic over the past two months.

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Regrettably, despite assurances from the Nigerian National Petroleum Company (NNPC) that it has enough in its strategic reserves, the situation in most parts of the country suggests otherwise as long vehicular queue continue to dot the various filling stations.

On the other hand, oil prices have continued its steady rise, signaling increased cost for fuel import dependent economies like Nigeria. The continuous rise in oil price is not unconnected with the Russia-Ukraine crisis.

At the weekend, Brent, the international oil price benchmark against which Nigeria oil is priced hit $112.7.

This comes as much of the gains ought to have been recorded by higher oil prices is filtered away through payment of subsidies.

Sounding a note of warning on the country’s energy crisis, President of the LCCI, Dr. Micheal Olawale-Cole, warned that the war between Ukraine and Russia will likely worsen the world’s hunger crisis

He warned that the world economy is already feeling the impact of the disruptions caused by the war on global supply chains, as reflected in rising local prices of petrol and diesel, as in the case of Nigeria which depends on oil imports.

‘‘Today, it is not just about the skyrocketing price of diesel which has risen above N700.00/litre, but that the product is now scarce and difficult to get’’.

Looking at the economics of these crises, he said Nigeria should have been a major harvester of opportunities from the war between Russia and Ukraine in areas like gas supplies to Europe where Russian oil and gas have been rejected as part of sanctions on Russian for invading Ukraine.

He lamented however that Nigeria does not have the infrastructure in place to produce enough gas for supply to Europe.

In preparing for the reality of our near future, the chamber urged the Federal Government to take seriously the completion of projects like the Trans-Saharan Gas Pipeline, a planned natural gas pipeline from Nigeria to Algeria.

‘‘With this, we can explore the opportunity of exporting gas to Europe. We should also target Trans-Saharan and European markets with the ongoing construction of the Ajaokuta, Kaduna, Kano Gas Pipeline, popularly known as AKK Gas Pipeline.

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