Monday, December 26, 2011

Fuel Shortages in Malawi, The World

As 2011 draws to a close, indications are that the long-winding fuel queues will remain part of the warm-heartedness that is Malawi come 2012. The fuel shortages have created consternation among government, consumers and civil society organizations, but this barrage of anger has not been pulley enough to bail Malawi out of a crisis that has spread to the country’s foreign currency reserves.
Finance and Development Planning Minister, Ken Lipenga, told Parliament two weeks ago that Malawi’s current economic challenges would not end until 2012. On the other hand, Consumers Association of Malawi’s executive director, John Kapito, regards the current situation as the mark of a “failed state”.
However, research carried out by The Sunday Times Business reveals that Malawi was not the only country affected in 2011. Others included China, Egypt, Nepal, Nigeria, Pakistan, Russia, Tanzania, Uganda and Yemen. The only difference could be that, as Malawi’s fuel crisis continues, other affected countries have successfully brushed it off.
Here is a round up of the affected countries, and the reasons for their fuel shortages:
According to Crude Oil Peak- an organisation that monitors global production and sales of crude oil- China experienced a round of diesel shortages in October, with many private gas stations run out of stocks.
While diesel shortages are common in October, which form part of China’s traditional peak season, this year’s diesel pinch was unprecedented in magnitude.
The shortages came after the country’s top economic planner, the National Development and Reform Commission, cut the retail price for gasoline by 47 US$ (approx. K78) per ton.
Refiners’ reluctance to produce further made the situation worse, with China’s two largest oil refiners and suppliers facing the brunt of consumers’ anger for stockpiling diesel in a bid to pressure the government into raising fuel prices.
Before that, Shanghai truck drivers had on April 20 gone on strike requesting the authorities to abolish fuel surcharge, and manufacturers to pay higher shipping fees.
Egypt faced diesel shortages in May this year, a problem that affected its governorates, creating the sorry sight of long queues of trucks, minibuses, agricultural tractors and lorries.
In Daqahliya, Qalioubiya, and Kafr Al-Sheihk governorates, vehicles lined up along streets, causing heavy congestion on major roads and blocked traffic for long hours. Drivers in other provinces clashed, resulting into several injuries, according to Crude Oil Peak.
Diesel is regarded as the basic fuel for heavy transport vehicles, bakeries, electricity generators, and tourism players in remote areas.
The country’s Ministry of Petroleum statistics indicate that local diesel production generates only 75 percent of the country’s consumption, with the remaining 25 percent gap being filled through imports.
Fuel shortages in Egypt, which has been suffering from heavy fuel shortages for the past three years, is a recurring problem and is mainly caused by an increase in local diesel consumption due to the agricultural harvest season.
Nepal had its turn in April, following an announcement by the state-owned Nepal Oil Corporation (NOC) that it could no longer afford to import fuel from India.
NOC- which controls the importation and distribution of all petroleum products in the country- complained that, in the wake of the Libyan political crisis, fuel price rises were translating into losses on petrol, diesel and kerosene sales.
Land-rocked Nepal, which depends on India for all its oil imports, faced another blow when India refused to supply it with the much-needed fuel due to outstanding debt with its sole supplier, Indian Oil Corporation, prompting the Indian supplier to cut off shipments.
It was not the first time Nepal faced a fuel shortage problem. In February 2008, the country was also hit by a crisis following a strike by ethnic minorities who were demanding more rights.
Nigeria experienced a kerosene supply shortage in August, prompting consumers to question the Kerosene Direct Programme jointly launched by the Nigerian National Petroleum Corporation and Capital Oil to alleviate kerosene distribution problems nationwide.
In some states, delivery dropped from 200 trucks to 10 trucks per depot. Observers blame recurrent kerosene shortages on the monopoly being enjoyed by the Nigerian National Petroleum Company in the importation of the product.
The world’s sixth-largest exporter of crude oil, Nigeria imports refined petroleum products like kerosene, gasoline and diesel because refineries work at low capacity ostensibly due to decades of corruption that have left most public utilities in a state of disrepair.
According to the Organisation of Petroleum Exporting Countries’ Annual Statistical Bulletin 2010/2011 published in July, Nigeria shipped 2.464 million barrels a day in 2010. Latest figures released by the country’s Central Bank Monetary Policy Committee show that Nigeria spent 1.34 billion dollars importing petroleum between January and March 2011.
Nigeria’s Minister of Petroleum told parliament on Jul. 7 that the country needs eight million litres of kerosene daily.
Pakistan faced a petrol shortage in June, affecting traffic in such cities as Multan, Sargodha, Jhang, Faisalabad, and Muzzaffabad in Azad Kashmir.
At least 90 percent of all petrol pumps closed down in cities like Faisalabad, when they were receiving 250,000 litres against its total daily consumption of 600, 000. In other cities, pump stations raised petrol prices.
The petrol shortages were blamed on the closure of PARCO and Attock Refinery, some of the biggest oil refinery companies in the country. Petrol station owners blamed PARCO, but PARCO owners hit back, saying pump owners were not booking orders due to oil price decreases.
Russia found itself in a gas crisis in April, forcing the country to cut petrol exports.
Russia often faced natural gas crises due to disagreements with other states. In January 2009, instance, the country was embroiled in a dispute with Ukraine over natural gas, which contributed to Russian energy giant, Gazprom, decision to shut down all supllies to Europe through Ukrainian pipelines.
Russia supplies about two-fifths of the European Union’s (EU) total imports. In fact, 10 of the 12 states that have recently joined the EU depend on Russia for at least 60 percent of their natural gas.
August saw Tanzania struggle to keep its fuel pumps wet.
The shortage arose after fuel suppliers refused to comply with Tanzania’s Energy and Water Utilities Regulatory Authority policy directive that they lower fuel prices.
Economists accused Ewura of contradicting Alfred Marshall’s economics of demand and supply by imposing ‘artificial’ fuel prices below the prevailing market price.
Another country that joined the fuel fray was Uganda.
Uganda faced the crisis in July, forcing the Uganda Electricity Generation Company to shut down one of its thermo generators.
The country was also hit by another crisis in March, creating a wave of price rises.
The shortages were sparked by supply inefficiencies in neighbouring Kenya.
The country faced a petrol crisis in July following a tribesmen attack on a major oil pipeline in March. Another standby oil pipeline was blown up in the same month, plunging Yemen into a fuel crisis.
This forced the country to rely on Saudi oil imports. Its first batch arrived in Yemen in mid-June.
On May 4, Energy Minister Amir Salim Al-Aydarus warned that Yemen could face an economic collapse if attacks on oil pipelines continued.

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