NNPC in the Dock as Petrol Scarcity Persists in Yuletide

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Chaoitic scenes at a filling station in Lagos as motorists struggle to buy petrol

The nationwide scarcity of petrol, which was caused largely by a shortfall in supply, has persisted, with only a few of the 28 functional depots in Lagos having the product, despite interventions by the Nigerian National Petroleum Corporation. Ejiofor Alike reports

Since the Independent Petroleum Markers Association of Nigeria threatened to shut down over 900 filling stations in Lagos and Ogun states by December 11, the country has not recovered from the attendant fuel scarcity that followed the threat. IPMAN had promised to carry out the threat if the Nigerian National Petroleum Corporation continued to undersupply petrol to its members. The association accused the NNPC of supplying petrol to private depot owners and undersupplying the corporation’s Ejigbo Depot, which serves more than 900 filling stations in Lagos.

The Lagos State Chapter of IPMAN alleged in a statement that NNPC was undersupplying its members and also frustrating them by reneging on the bulk purchase agreement it signed with its members to supply the product to them at ex-depot price of N133.28k per litre. IPMAN argued that with the undersupply from the NNPC, its members sourced for products from the Depot and Petroleum Marketers Association (DAPMA), which allegedly bought at N117 per litre from the NNPC and resold to IPMAN members at N141 per litre. The marketers said at that price it would be unrealistic for them to continue to sell to the end users at the regulated price of N145 and break even in business.

The NNPC had debunked IPMAN’s claims, insisting that the Ejigbo Satellite Depot consistently dispensed petrol at the approved price of N133.28 per litre, contrary to allegations that it sold at a higher price.

Though IPMAN did not carry out the threat to shut down its filling stations, the country was hit by petrol scarcity, which has defied NNPC’s interventions.

Despite NNPC’s claims that the country has enough petrol, only a handful of the 28 active depots in Lagos have regular stock of petrol since the crisis started.

PENGASSAN Strike Threat

A planned strike by oil workers under the aegis of Petroleum and Natural Gas Senior Staff Association, which was scheduled to commence at midnight last Monday, before it was suspended, also exacerbated the fuel supply situation, as the tension occasioned by the workers’ threat worsened panic buying by motorists.

PENGASSAN had on December 7 announced its intention to embark on strike due to what it described as “unfair labour practices” and the “seemingly untameable posture” of some indigenous oil and gas companies, including Neconde Energy and marginal field operators.

However, the strike was suspended following the intervention of Director-General of the Department of State Services, Mr. Lawal Daura; Minister of Labour and Productivity, Dr. Chris Ngige; and Minister of State for Petroleum Resources, Dr. Ibe Kachikwu. A statement signed by PENGASSAN’s National Public Relations Officer, Fortune Obi, said the suspension was due to the intervention of government officials.

The PENGASSAN statement also noted that Neconde Energy, represented by the company’s managing director and lawyers, in a meeting with the association, had agreed to recall its sacked employees and promised to allow PENGASSAN to exist within its corporate structure. According to Obi, the Minister of Labour and PENGASSAN “therefore agreed to endeavour to resolve the anti-union posture by other indigenous companies and marginal field operators” while a meeting was fixed for the second week of January 2018 to look at the issues.

Dry Depots

Despite the suspension of the planned strike, nationwide scarcity of petrol has persisted, as only few of the 28 functional depots operated by independent marketers in Lagos have fuel in their depots. Investigation reveals that most of the depots are dry, despite claims by NNPC that the country has sufficient petrol. A market survey earlier carried out by THISDAY showed that only a handful of depots – Aiteo, D-Jones, Fatgbems, Folawiyo, NIPCO, and MRS – had petrol at their depots, out of the 28 functional depots in the state.

THISDAY’s market survey showed that the ex-depot price of petrol at one of the depots was N146 per litre, while others sold at N143, as opposed to the official ex-depot price of N133.28.

The sale of petrol between N143 and N146 per litre at the depots has made it impossible for filling stations to sell at N145 per litre. Based on the high ex-depot price, some retail outlets have been forced to sell a litre of petrol above the N145 pump price, while some stations adjusted their pumps to short-change customers.

However, major marketers, such as Conoil, Oando, Mobil, MRS, Total, and Forte Oil, are still selling at the official price but to only their dealers.

Intervention

NNPC has consistently claimed that the scarcity was caused by marketers who hoarded the product in anticipation of a pump price increase by the federal government. The corporation has restated that the federal government has no plan to increase the pump price of petrol.

Group Managing Director, NNPC, Mr Maikanti Baru, restated at the weekend that NNPC was increasing the volume of products distribution to the market and would not relent until the problem was over, adding that NNPC would import at least 1billion litres of petrol by the end of December.

Also at the weekend, the National Association of Road Transport Owners and Petroleum Tanker Drivers expressed their commitment to throw their weight behind NNPC in the efforts to remove the hiccups being experienced in the supply and distribution of petrol in the country. NARTO National President, Alhaji Kassim Ibrahim Bataiya, and the PTD National Chairman, Comrade Salimon Oladiti, met other stakeholders to deliberate on the challenge of products supply and distribution with the chairman, House of Representatives Committee on Petroleum Resources Downstream, Hon. Joseph Akinlaja.

Bataiya declared, “We are transporters and we know how many litres we have been moving across the country. If anybody is found guilty of moving products out of this country or to any unauthorised locations within, even if they are our members, we would not only disown them, but also exposed them.”

However, in a subtle acknowledgement of the fact that the scarcity was caused by shortfall in supply, contrary to the claims of product sufficiency, the NARTO national president frowned on a situation where only the NNPC was importing petroleum products. He called on federal government to encourage marketers to complement the corporation’s efforts.

On his part, Oladiti condemned the activities of some unpatriotic citizens involved in the smuggling of the products out of the country, thus, subjecting Nigerians to the current hardship being experienced nationwide.

However, THISDAY’s investigation has revealed that since May 11, 2016, when the federal government increased the pump price of petrol to N145 per litre, the issue of smuggling to neighbouring countries has become a thing of the past, as the price of petrol in the country is no longer lower than in the neighbouring countries, as it was when the price was N86.50. Smuggling of petrol to other countries had thrived in the past because of the relatively low price of petrol in Nigeria. THISDAY gathered that since the federal government implemented the new price regime, there was glut in the market until the current crisis started.

The scarcity hit the country following the failure of some oil trading companies to abide by the terms of the Direct Sale-Direct Purchase contracts between them and the NNPC. Under the DSDP scheme, some oil traders take NNPC’s crude to refiners abroad and bring back equivalent value of petrol.

But due to lack of capacity to import petrol, some of the oil trading companies, it was learnt, opted to import diesel for November/December 2017 contracts instead of petrol as stipulated in the DSDP contracts.

NNPC had in April this year signed about $6 billion worth of deals with local and international traders to exchange about 330,000 barrels per day of crude oil for imported petrol. The deals, which were previously referred to as offshore crude oil processing agreements and crude-for-products exchange arrangements, are now known as DSDP agreements.

THISDAY gathered that these oil traders engaged by the NNPC were supposed to bring back petrol into the country after taking crude oil to the international refiners. It was, however, learnt that in the months of November/December, some of these companies converted their DSDP contracts to diesel as they could not bring back petrol as a result of the high cost of the product in the international market.

The implication, it was learnt, was that the market was flooded with diesel, which is also imported by the other private marketers as a deregulated product. However, petrol, which other marketers lack capacity to import and have been relying on NNPC for supply, became a scarce product, leading to the current crisis.


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