Follow Us on Google
By Adewale Sanyaolu
If feelers from the downstream sector of the petroleum industry are anything to go by, Nigerians should brace up for tougher times ahead of the Christmas and New year celebrations.
Indeed, the shortage of Premium Motor Spirit (PMS) popularly called petrol is already taking a negative toll on all spheres of life, especially economic activities.
The Southwest Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr Tajudeen Adigun, warned that if the situation is not quickly addressed, the fuel scarcity may extend to the Yuletide.
He said that history has shown over the years that the demand for PMS popularly called petrol is usually on the rise during the Yuletide.
Adigun said that people engage in a lot of intra and inter-state travels during this period, saying that any slight hicupp in supply will lead to fuel scarcity.
The situation, which has been malignant in the last two months appears to have fully blown into a major fuel crisis across the country; a development industry observers say requires urgent government intervention.
Further findings by Sunday Sun across the major petroleum product depots in Apapa confirmed the fears of industry stakeholders as loading of petroleum product was not in tandem with the claims of the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) that it has 33.17- day product sufficiency.
The NMDPRA in its report on product sufficiency claimed that there was 33.17-day sufficiency of petrol in the country as of November 24, 2022.
It also stated that about 2.1 billion litres of petrol was in stock despite the widespread queues nationwide.
But some marketers who spoke to Sunday Sun at Apapa claimed that the position of NMDPRA on adequate product availability does not correspond with the reality on ground.
They maintained that their turnaround around time in the last one month has been seriously impacted due to shortage in product availability.
National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr Debo Ahmed, in a telephone interview blamed the development on the non-challant response of the NNPC and NMDPRA to the national emergency.
Ahmed said that the failure of the NNPC and NMDPRA to collaborate and ensure that private depot owners do not exploit marketers by selling above the regulated price of N148.17 per litre through effective monitoring was part of the problem.
The collapse of monitoring and enforcement has led to the product being sold at different price bands across the country.
In Lagos, prices range between N170 per litre to N310 per litre, depending on the location while in neigbouring Ogun State, prices range between N250 per litre to N280 per litre.
He said that NNPC as the importer of last resort gives product to private depot owners at N148.17 per litre, saying the depot owners in their bid to profiteer and makes excess profit, sell to marketers at N205 and N210 per litre respectively.
‘‘When we buy at N210 per litre, how do we break even? We have to add cost of transportation and other logistics. The more distance you cover to deliver, the more expensive it becomes. Imagine loading at N210 per litre in Lagos and you are taking the product to Ilorin. Calculate the cost of diesel alone before it lands at your filling station.”
Besides, he said the shortage of foreign exchange was crippling the operations of the NNPC to enable it import at the level it should, adding that the level of imports have reduced drastically in recent months.
The IPMAN boss added that the transition of NNPC from a public entity to a limited liability company was also response.
He explained that the acquisition of about 500 Oando filling stations by NNPC was also responsible as there are some internal restructuring in its downstream arm to cope with the demand of its new transition.
‘‘This restructuring has affected the internal workings as some movements within the company was currently impacting on the operations of the downstream arm. Some officials who don’t have experience in downstream operations were moved in while some with experience were moved out.So that will definitely disrupt the distribution chain,’’.
Another constraint identified by Ahmed was the collapse of the 21 NNPC depots across the country due to incessant pipeline vandalisation and massive theft of refined petroleum products.
He disclosed that if the 21 NNPC depots were functional, the current scarcity wouldn’t be biting harder as the product would be available in every nook and cranny of the country thus not necessitating the massive influx of trucks to Lagos depots.
Efforts to reach the Group General Manager, Public Affairs, NNPC, Mr Garba Deen Muhammed and his counterpart in NMDPRA, Mr Kimchi Apollo, proved abortive.
A Whattsapp message sent to Apollo as at 8:43a.m on Wednesday was not responded to ditto for the one sent to Garba Deen at 9:48a.m.
A source in one of the petroleum marketing companies told Saturday Sun in confidence that the failure of the country to meet its Direct Sale Direct Purchase(DSDP) volume of 320,000 barrels per day to accredited importers occasioned by massive oil theft was responsible for the current fuel crisis.
The DSDP arrangement programme is a model introduced in 2016 and is carried out through direct sales of crude oil to refiners or consultants, who in turn supply NNPC with equivalent worth of products.
NNPC imports about 1.3 million tons of petrol per month, against which it commits about 320,000 barrels a day of crude to the swaps, Bloomberg quoted the company data.
In March and April 2022, the report added that Nigeria’s fuel imports were more than 50 per cent.
Dwindling crude production recently forced the NNPC to set up a new contract deal with local oil importers.
The deal will also see NNPC holding up payment for crude supplied by at least three months.
This is coming as the country’s crude volume can no longer cater for the direct sale direct purchase deal between NNPC and local oil importers as well as meet local demands.
NNPC imports all its petrol, swapping most for crude with international traders, including Vitol Group and TotalEnergies as well as domestic groups such as Sahara Group Limited and Oando Plc.
Oil production decreased to an average of 937,766 bpd in September as the government blamed the steady decline on massive theft and pipeline vandalism.
Confirming the new arrangement, Group Chief Executive Officer (GCEO) of NNPC, Mr Mele Kyari, had recently told Bloomberg that the state-owned oil firm asked local importers to permit payment delays of at least 90 days.
Kyari said the new deals would involve “a longer credit period”.
He expressed confidence that a rebound in Nigeria’s crude production will allow the company to cover its deferred payment obligations.
The NNPC GMD said that he expects the country to add 500,000 barrels a day to its output by the end of November, mainly by restarting activities on the Shell Plc-operated Forcados export terminal and Trans Niger pipeline.
“We will meet all the deliveries and still have surplus crude production for cash,” Kyari told Bloomberg.
“They know we can pay. Otherwise, they wouldn’t supply.”
The new contracts operate alongside the original “direct sale, direct purchase” deals, under which NNPC is expected to provide crude before traders deliver the fuel, according to the report.
On his part, the Deputy National President, IPMAN, Zarma Mustapha, stated that the queues would likely continue till December, but noted that efforts were on to address the hitches.
He said: “The on and off queues are due to issues of logistics in terms of supply of the commodity to the retail outlets from either the mother vessel to the private depot owners, and from there to independent and major marketers’ stations.
“There are a series of logistics issues as regards the supply chain. But the government and stakeholders are engaging in order to get a solution to these issues. However, we believe that this will be addressed, though it may drag beyond December.”
Also speaking, the Secretary, Abuja-Suleja IPMAN, Mohammed Shuaibu, stated that the current challenges of poor distribution and supply shortage of petrol might lead to widespread queues for PMS during the festive period in December.
“Our worry as marketers is that the festive month is at hand and if nothing is done quickly to address the current concerns around supply, I am afraid that it will escalate during the festivities, because it has started,” he stated.
Shuaibu described the situation as very precarious, stressing that it was the government that had the capacity to address it through the NNPC.
“We are in a very precarious situation and we pray it does not escalate beyond this. But then, the government has to wake up to its duties, because as you know, none of the four refineries is productive. They are more or less obsolete,” he stated.
Shuaibu called on the government to act fast in getting the refineries functional, describing this as the “most sensible solution at this moment.”
