The Nigerian National Petroleum Corporation (NNPC) has designed an 18-month programme to delist Nigeria from the league of fuel importers and join the club of countries exporting refined products. In this report, JOHN OFIKHENUA examines the oil sector industry operation and how fuel scarcity became a familiar spirit to Nigerians.
NIGERIA will be saving a whopping N1 trillion by not appropriating funds for fuel subsidy payments in the N6.08 trillion budget proposed for this year.
The preliminary reorganisation of the Nigerian National Petroleum Corporation (NNPC) by its Group Managing Director (GMD), Dr. Emmanuel Ibe Kachikwu, who doubles as Minister of State for Petroleum Resources, has made further payment of subsidies on fuel importation unnecessary.
Besides, the padding of the daily fuel consumption capacity, the falling prices of oil at the international market and the reactivation of the local refineries in Port Harcourt, Rivers State, Warri, Delta State and Kaduna, Kaduna State, made it imperative for the NNPC to readjust the volume of import.
The development has however unsettled those who have been rendered redundant in fuel distribution chain. Already, the minister and the NNPC management are perfecting strategies to pull Nigeria out of fuel importation in the next 18 months
Some marketers, acting as middlemen, who had in the past, dominated the fuel importation business, have taken the non-budgetary allocation for subsidy payment and the planned local production of refined petroleum product as a quite notice served on them.
The resumption of production at the refineries after years of redundancy despite the huge resources sunk into their Turn Around Maintenance (TAM) is giving fuel importers nightmares.
As a member of the Organisation of Petroleum Exporting Countries (OPEC), Nigeria has been described as a mere oil bearer and not a developer. The country imports more than have of the refined products to meet local demands.
Its proposal to join the league of refined products’ exporters is causing some excitements in the circle of local and international stakeholders in the sector.
But, as expected, those who had befitted from subsidy payments are not giving up the battle to remain in the fuel distribution chain. They are trying their best to thwart government’s efforts.
In a bid to tame the perennial monster called fuel scarcity and its attendant challenges, Kachikwu has done a study of the entire downstream sub-sector of the industry.
The study was triggered by the desire to cut the amount being spent on fuel subsidy, which climbed to over N1 trillion under the immediate past administration.
Since the NNPC took over as the sole fuel importer, private marketers have been fighting back under various guises, including pipeline vandalism, fuel diversion, products’ hoarding, selling above approved pump price and under-dispensing.
The filling stations involved in the distribution and retailing of products to the end-users are owned by members of the Major Oil Markers Association of Nigeria (MOMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN).
In a statement by Children and Women’s Rights Network, a coalition of civil society groups, drew the attention of President Muhammadu Buhari and the minister to the activities of some faceless forces, who they said bent on sustaining the scarcity being experienced.
The statement, signed by its Executive Director, Mr. Moses Adedeji, said: “Faceless but determined forces, unnerved by ceaseless monitoring and the involvement of security agents in tackling pipeline vandalism and fuel distribution are now mounting strategic challenges towards ensuring that fuel scarcity is prolonged.”
According to the group, a high-level cabal within the oil sector mounted a subtle but disingenuous campaign against the retention of the Managing Director of Petroleum Products Marketing Company (PPMC), Mrs. Esther Nnamdi-Ogbue, after she announced the involvement of the Department of State Services (DSS), Economic and Financial Crimes Commission (EFCC) and other security agencies to guard against product
The collation’s statement reads in part: “Less than 24 hours after her appointment as Managing Director of NNPC’s retail arm, powerful cartels operating in the illegal diversion of fuel have stepped up their revenge mission against Mrs. Nnamdi-Ogbue, whose new ideas are truncating their illegal business, by using faceless platforms to call for her removal by Dr. Ibe Kachikwu.
“On December 28, last year, various newspapers, reported Mrs. Nnamdi-Ogbue’s disclosure that the Police, the Economic and Financial Crimes Commission (EFCC) and the Department of State Services (DSS) would soon be involved in the prosecution of pipeline vandals.
“During her December 27, 2015 official visit to Mosinmi Depot and Ajebo pipeline in Obafemi Owode Local Government Area of Ogun State, she explicitly stated that ‘we are looking at all ramifications on how to bring these criminals to book; they have to be treated as criminals and pipeline products thieves‘.
“She also stated that trackers would soon be mounted on trucks carrying fuel from depots to filling stations across the country, as part of measures to check diversion.
“In the past few weeks, these unscrupulous elements and their collaborators also feel gravely hurt that under the supervision of the Minister of State, Dr. Ibe kachikwu, she had deployed hundreds of personnel, under the overall supervision of the minister, to ceaselessly monitor defaulting filling stations and fuel distribution across the country.
“The growing discomfort of these unscrupulous vested interests amply demonstrate that, as President Mohammadu Buhari and Minister Kachikwu expect, corruption fights back, using many guises.
“We call on Minister Kachikwu to carry on in his meritorious service to Nigeria and ignore the faceless group that is demanding that he removes forthright officials like the newly appointed MD of NNPC Retail, Mrs. Nnamdi-Ogbue.”
The minister has been introducing different reforms to block financial leakages. Some of such reforms are oil swap stoppage, which becomes effective this month and the introduction of monthly publication of NNPC’s financial report.
Those who hitherto hid under old order to feed fat on the system are uncomfortable with the measures that will make operations in the oil sector transparent.
On January 5, the NNPC announced the attainment of a combined daily production of over 6.76 million litres of petrol daily.
In its breakdown, the NNPC said: “The production yield from the plants indicates that while Port Harcourt Refinery, which was re-streamed a week earlier, is producing some 4.09 million litres; the Kaduna Refinery is contributing some 1.29 million litres and Warri which was re-streamed on Sunday is posting a yield of some 1.38 million litres.”
The nation’s four refineries were projected to increase to over 10 million litres per day in January. But, oil thieves masquerading as aggrieved militants, attacked some oil and gas pipeline installations in Gbaramatu, Delta State. The attack forced the closure of the Kaduna and Warri refineries, thus frustrating the 10 million-litre expectation.
Also in the same Januray, another explosion rocked the Nigeria Agip Oil Company pipeline in Brass, Bayelsa State.
NNPC’s former spokesman, Ohi Alegbe, confirmed that the company shut down crude oil flows to the two pipelines due to the attacks on the facilities.
“We have shut down flows for now.” Alegbe said.
Although the total output of the refineries is a far cry from the daily consumption requirement of over 38 million litres, it will substantially reduce the importation of refined products.
The NNPC has increased its daily distribution by one cargo, sending 400 trucks to the Federal Capital Territory (FCT).
The suspension of fuel subsidy payment discouraged MOMAN and IPMAN members from importing the product they would be compelled to sell at N77 per litre to retail outlets.
The MOMAN that partook in the subsidy payment regime are: Conoil, Forte Oil, Mobil, Oando and Total.
They had in December last year, cited difficulty in accessing Foreign Exchange (forex) as alibi for not importing petrol.
Prior to the forex debacle, NNPC was responsible for the importation of over 75 per cent of products. But Kachikwu recently announced that the corporation is now responsible for 100 per cent importation, using the facilities of the marketers for storage and distribution.
As a way out of the lingering fuel scarcity and end the resurgence of fuel queues, the NNPC said that it has stepped up collaboration with the MOMAN members and other players in the downstream industry.
The NNPC explanation drew an allegation from Petroleum Tankers Drivers (PTD), branch of National Union of Petroleum and Natural Gas Workers (NUPENG) that the corporation was behind fuel scarcity.
PTD’s National Chairman Salimon Akanni Oladiti, told reporters in Ibadan, the Oyo State capital, that marketers were not hoarding fuel, but that the queues resurfaced owing to insufficient fuel supply.
He was quoted as saying: “We are not conniving with anybody to make Nigerians suffer for fuel. For sometimes now, we have not been able to load at NNPC depot in Apata in Ibadan and there is no hope of loading in some other NNPC depot in the Southwest.
“Government is responsible for this problem, because if they bring enough petrol into the country, we as distributors are ready to sell it out. It’s so sad that we are one of the largest producers of oil but we are still suffering.”
Pointing out that 75 per cent of the fuel consumed in the country now is imported by NNPC and the remaining 25 per cent is imported by major marketers, Oladiti disclosed that “corruption is still in the oil industry. There is corruption, bribery at all the oil depot before you can load your truck”.
Prior to the PTD claim, IPMAN’S Vice President, Alhaji Abubakar Dankingari alerted that private depot owners were selling petrol for N98 per litre to distributors.
A few days later, he noted that that the price had risen to N107 per litre.
But when the bubble burst, Dankigari lamented that over 8,000 tickets of his members were pending because there was no fuel to load even at the NNPC depots.
Controversy over NNPC’s ‘unbundling’
A MISCONCEPTION that the reorganisation of the Nigerian National Petroleum Corporation (NNPC) would erase oil workers’ jobs worsened the nationwide fuel shortage.
The situation worsened last week when the corporation’s Group Managing Director (GMD), Dr. Emmanuel Ibe Kachikwu announced NNPC restructuring.
But, Kachikwu, who doubled as the Minister of State for Petroleum Resources, has cleared the air that the restructuring, will, rather than throw people into the job market, make them productive.
The minister said: “And why are we doing this is because that all the analysis done in terms of the number of staffing that we have, shows that we are quite over-staffed.
“So, the only way you can do that is to create work so that anybody who is in the system (we don’t what anybody coming to read newspapers) has something to do to justify the earning.
“And as we are doing that, we remembered suddenly that we have adequate staff to man and we are not really as over-staffed as we thought initially. This took some months of work to bring this out. Some of these ideas were the ideas that I created but consultants took them and worked out the process.
“So, the principle of restructuring which is approved by Mr. President is that nobody loses work for now. The environment is just too thirsty for you to throw people out of the place.
“Nobody is losing work. But people are going to get busy in respective business anywhere and it is point for those that want to prove a career to get skills and rise up and go and drive those companies. NNPC is still a whole. It is not a different company. It is a simply divisional break up.”
Despite the minister’s clarifications that the reorganisation will not in any way lead to job loss, the NNPC arm of National Union of Petroleum and Natural Gas Workers (NUPENG), and the Petroleum and Natural Gas Senior Staff Association (PENGASSAN) shutdown facilities that affected production and further aggravated fuel crisis.
Speaking on the action, PENGASSAN’s Acting General Secretary, Lumumba Okugbawa, said that unbundling the NNPC will amount to policy summersault on the part of the government.
In a statement available to The Nation, he said that the unions had at the annual Oloibiri lecture on March 3 opposed NNPC’s unbundling when the minister spoke of a plan to break up NNPC into five Regional Corporation and 30 companies in the following week as part of the ongoing restructuring at the national oil company.
The oil workers described the plan as an arbitrariness of the executive power by the minister, adding that the he (Kachikwu) unilaterally declared the unbundling of the NNPC without consultation with other critical stakeholders, including PENGASSAN and NUPENG.
They also alleged that all attempts to ensure that the minister attend to their concerns on labour issues proved abortive as he refused to meet with the workers.
Okugbawa said the unbundling plan will scare away investors from the oil and gas industry at a time when the nation needs foreign investment to grow the industry – Nigeria’s economy’s life wire.
According to him, the government did not take into consideration the existing law that established the NNPC before planning to unbundle the corporation.
He said: “There is an existing NNPC Act of 1977 that set up the NNPC. This Act has many provisions that deal with structure and operations of the corporation.
“There are many issues such as pensions and transfer of the employees, which are provided for in the NNPC Act of 1977. What will happen to all these provisions of the law?
“For the government to do anything with the current NNPC, the Act must either be repealed or amended to accommodate the planned restructuring. If not done, it will equal to lack of respect for the rule of law on the part of the government.
“The Petroleum Industry Bill (PIB) that is expected to be the legal instrument for the ongoing reforms of the oil and gas industry will be meaningless if the government should introduce plans outside the reforms, The PIB is germane to the development of the nation’s Oil and Gas Industry.
“Above all, the various stakeholders, especially the unions should be involved before any major change is carried out in the organisation and before any unilateral statement capable of heating up the industrial climate is made.”
Although workers suspended their industrial action following the intervention of the Petroleum Resources Ministry, the break in the flow of products for two days the job boycott lasted aggravated fuel shortage.
Banking on the cooperation of workers and other stakeholders, Kachikwu has assured Nigerians that “on the whole in terms of local production, we must target a time-frame of between 12 to 18 months to get out of importation.
“It’s (importation) not good for the country. It’s not a good image. It does not create job and it’s a loss in tax, income to government.
“We are working feverishly trying to see with the Joint Venture partners (JV) on how we can come up with refineries. We have advertised recently for the collocated refineries.”
The NNPC has spoken of a plan to expand the market share of its retail business to an appreciable level from the 12 per cent by building a mega station in every Senatorial district across the country.
In a deft move designed to ensure efficient distribution and country-wide penetration of petroleum products, the corporation has launched a nationwide consultation with stakeholders aimed at drumming up support for the planned expansion of its retail outlets.
But in the interim, the minister spoke of ongoing talks between the government and the Central Bank of Nigeria (CBN) on how marketers can access forex for fuel importation.
His words: “We are working in collaboration with the Central Bank now to try and look at long term solutions for the majors so that they themselves can go back and bring their products.”
In terms of building greenfield refineries, building additional NNPC affiliate refineries, importation of fuel and distribution, the ministry is poised to give Nigerians the best but the major snag on Kachikwu’s path seems to be contrasting with stakeholders’ interest.