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Dr Timothy Okon, Managing Partner at Teno Energy, has urged the Nigerian government to implement strategic petroleum product reserves to shield the country from global supply disruptions and stabilise domestic fuel availability.
Speaking on ARISE News on Thursday, Okon said Nigeria’s current energy pressures are driven mainly by external factors. “The crisis we now find in our hands is not instigated by Nigeria, and therefore the consequences necessarily come from what economists would call negative externalities,” he explained.
He highlighted disruptions in global supply routes, particularly the Straits of Hormuz, which have restricted around 20 percent of crude supply worldwide.
“The biggest issue, of course, is the Straits of Hormuz and that has meant that 20% of its supply has now been constrained or restricted,” Okon said.
Nigeria’s crude supply challenges are compounded by prior financial arrangements tied to oil, limiting domestic refining volumes. “Nigeria has always had an issue with the fact that we also use the crude to borrow money, et cetera,”
Okon stressed that strategic reserves covering 60 to 90 days of supply would allow the country to absorb shocks during periods of disruption. “Usually, that can vary between 60 to 90 days sufficiency. So you can tide yourself over when these events take place,”
He warned against returning to fuel subsidies, describing them as financially unsustainable, and advocated targeted measures to cushion citizens. “What we do not want is to have a general policy on subsidy. That would be very retrogressive… the public sector should increase people’s take-home pay to cushion that effect,”
Okon concluded that high oil revenue should be used to reduce debt, freeing crude for domestic use. “Once you can pay down your debt, then you wouldn’t need to devote those barrels… the strategic product reserve, really, is what we need to implement in both the near and the long term. That has to be done,” he said.
