SMEs bleed as scarcity of PMS hurts productivity, profits
Joshua Kabiye had waited for four hours at a boisterous filling station at Ikotu, a suburb of Nigeria’s commercial city, Lagos.
Kabiye had left home at 5 am in search of fuel with which to power his generator, but could not get any at 9 am. An owner of a barber’s shop, he did not bother to open his place of business as that would be a waste of time. The power distribution company in the area hardly provided electricity for more than an hour, so he needed fuel with which to serve his customers.
There was a long queue of vehicles stretching to Ejigbo, another noisy community in an over-populated Lagos.
Two hours later, it was Kabiye’s turn to buy fuel, otherwise called premium motor spirit (PMS).
“Oga, we cannot sell fuel to you,” the fuel attendant told Kabiye.
“Why?” he asked.
“Government told us not to sell in jerry cans.”
“You are not serious. You want me to go empty handed after spending hours here.”
Angry that he was in a country where nobody cared about another, he decided to cause a stir. He held the fuel attendant, a lady, on the neck, and threatened to break it, if she ever insisted on not dispensing the PMS to him, even at N150, against the official pump price of N86.
There was a pandemonium, which drew the attention of two gun-wielding security operatives manning the station.
The two men pushed Kabiye out of the filling station and threatened to deal with him if he ever came to the place.
Frustrated, Kabiye had to buy from a black market racketeer, who sold at N300 per litre right in front of the station.
He had to buy five litres, rather than ten he had earlier wanted to.
This captures the situation faced by operators of the micro, small and medium enterprises (MSMEs) in Nigeria, who are hard hit by fuel scarcity ravaging the country.
Most filling stations hoard fuel for night buyers, who are mostly black marketers, findings show.
The directive of the Department for Petroleum Resources (DPR) stopping filling stations from selling in jerry cans is also not helping matters, as it has been established that most people buying in gallons are SMEs.
The whole situation pushes operators of small businesses into buying from black marketers who sell between N250 and N350 per litre.
This raises the cost of running businesses and cuts profits, thereby threatening to close down a large chunk of 37 million MSMEs operating in the country.
“Jerry can holders are mostly SMEs,” said Jon Tudy Kachikwu, chairman, SME Group of the Lagos Chamber of Commerce and Industry (LCCI).
“You can imagine tailors, artisans, food processors not getting fuel from filling stations, owing to scarcity. You can also imagine what happens when this is worsened by an order from government not to sell to them in jerry cans,” Kachikwu said.
“The report we got from our members shows that most of them in processing business have not been doing so, because they cannot find fuel. Some have had to buy from black markets at N250-N300 in order to operate for just two to three hours,” he said.
“Some SMEs now do not open for more than two to three times week for the past one month. You can imagine a litre of fuel going from N86 to N250. The situation in the market is that you cannot increase your price because money is not circulating and nobody will buy if you do so,” he stated.
Kachikwu recommended that government review the directive and allow filling stations to designate special pumps for those buying in jerry cans.
Okunde Okunmu, as SME operator, who plays in the technology sector, told Start-Up Digest that if this situation continues, many small businesses will die by September.
“Our cost has risen by over 20 percent. We need to pay some staff members and meet other obligations. But we are in a fix and are struggling,” Okunmu said.
ODINAKA ANUDU