Addressing supply challenges facing Nigeria’s downstream sector

Oil marketers in Nigeria have attributed the reoccurrence of petrol scarcity to supply chain bottlenecks. Meanwhile, Angola has increased the price of diesel as it phases out subsidies on the petroleum product. Rhode Luemba, Head of Flow Sales, Global Markets at Standard Bank Group, joined CNBC Africa to discuss these stories and more. Luemba highlighted the impact of subsidy removal on inflation and the need for businesses to adjust. In Angola, the gradual removal plan is well-communicated, allowing for proper adjustments in various economic sectors. The government's savings from subsidy removal are expected to be channeled into social projects to mitigate the impact on the population. However, in Nigeria, the removal of fuel subsidies has led to significant price discrepancies between approved rates and actual pump prices, causing challenges for commuters, motorists, and businesses. The Dangote Refinery in Nigeria brings reassurances in production volumes, but logistics constraints remain a hurdle in ensuring efficient distribution of fuel to the end consumers. The comparison between international market prices and local pricing strategies adds another layer of complexity to the situation. As oil prices remain high, the downstream sector in both countries faces challenging times. While Angola's phased approach to subsidy removal shows promise in managing the transition, Nigeria grapples with immediate price adjustments and supply chain issues. The focus in both nations is on finding a balance between market forces, government interventions, and consumer welfare. The coming months will be crucial in observing how these countries navigate the changing dynamics of the downstream sector and address the pressing supply challenges.