Nigeria's Department of State Services gives 48-hour ultimatum to end petrol queues

The Nigerian Department of State Services (DSS) recently issued a 48-hour ultimatum to the Nigerian National Petroleum Company Limited and oil marketers to resolve the ongoing petrol scarcity in the country. This move comes amidst the Central Bank of Nigeria's (CBN) decision to review the new cash withdrawal policy, with Governor Godwin Emefiele stating that there are no plans to reverse or change the timing of the policy. Femi Oladehin, a Partner at Argentil Capital Partners, provided insights on these developments during a recent CNBC Africa interview. Oladehin highlighted the complexity of the petrol scarcity issue, attributing it to structural imbalances in the market. He emphasized that the DSS, as a non-regulatory entity in the downstream industry, cannot solve the problem through executive fiat. With significant debts owed to marketers and pricing disparities across geographical regions, the market faces challenges that require comprehensive solutions. Discussing the issues between marketers and the Nigerian National Petroleum Corporation (NNPC), Oladehin noted the logistical hurdles in distributing products across the vast country. He pointed out the collapse of the equalization fund meant to support transportation costs and the strain on marketers operating under capped margins amidst high inflation. Regarding the cash withdrawal limit policy, Oladehin supported the CBN's initiative to reduce physical currency in circulation, citing the substantial amount of unbanked cash outside the banking system. While acknowledging logistical concerns, such as limited banking infrastructure in parts of the country, he underscored the long-term benefits of formalizing the informal economy. In response to the legislative scrutiny faced by the CBN over the policy, Oladehin urged understanding of the central bank's autonomy in policy-making. He emphasized the importance of backing the CBN's efforts to enhance transparency and tax compliance in the economy. Despite the legislative challenges and questions raised by lawmakers, Oladehin expressed confidence in the CBN's ability to navigate the scrutiny and uphold its policy objectives. He cautioned against excessive interference in the central bank's operations, advocating for a balance between oversight and independence to promote economic stability and regulatory effectiveness.