Fuel Scarcity Set Linger

20 Nov 2012

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Vehicles queuing for fuel

With NNPC and oil marketers trading blames over the lingering fuel shortages and the product still largely unavailable to buyers, respite appears not in sight for Nigerians, this forthcoming yuletide, write Chika Amanze-Nwachuku, Ejiofor Alike and Chineme Okafor
For the better part of this year, premium motor spirit, also known as petrol has remained largely unavailable to users across the country.
Where the product is available, the price could range from N100 to N120 per litre, depending on the place of purchase.

Long queues of vehicles started resurfacing at filling stations at the Federal Capital Territory, Abuja and other parts of the country in February and the situation has brought untold hardship to users in parts of the country, especially the Northern part of the country.

There are strong indications that the scarcity may not be over soon since there are still disruptions in supply and distribution, raising fears that except urgent steps are taking to improve product supply and distribution, the fuel shortages may hamper activities during Christmas season, which is barely 40 days away.

NNPC’s Sufficiency Claims
Despite claims by the Nigerian National Petroleum Corporation (NNPC) that it has sufficient stock of product that could meet consumers’ needs, the lingering fuel shortages have continued to unleash more hardship on already impoverished Nigerians, just as it has taken its toll on the economy of the country as most business establishments largely depend on fuel to function.

Responding to THISDAY’s enquiry on the lingering problem, Acting Group General Manager at the NNPC’s Group Public Affairs Department, Mr. Fidel Pepple, blamed the build -up of queues, which first manifested in Abuja metropolis and satellite towns on sharp practices by oil marketers.

Pepple maintained that the NNPC, through its subsidiary, the Pipelines and Products Marketing Company (PPMC) had been releasing enough petrol to sufficiently meet the demand in Abuja and its environs, and insisted that the continued existence of long fuel queues at filling stations across the city shows that some marketers have been hoarding and diverting the product thereby causing unnecessary hardship to Nigerians.

“Going by the quantity of PMS that has been released by PPMC from the Kaduna Refinery for distribution to Abuja, we are not supposed to have queues at all in any filling station. On Monday, 71 trucks of PMS were loaded from the Refinery in Kaduna designated for Abuja, but the report we have showed that only 18 trucks arrived Abuja. On Tuesday, 45 trucks of PMS were loaded from Kaduna to Abuja, only 25 arrived. This clearly shows that some marketers are diverting the product thereby causing Nigerians unnecessary hardship, ” Pepple said.
The NNPC however acknowledged that it had been facing serious challenges in products distribution, but vehemently denied that the scarcity was in any way associated with deficits in products availability.

Pepple again explained that the corporation was not lacking petroleum products to supply across the country, contending that sharp practices, such as hoarding and diversion of petrol away from designated delivery points by private petroleum marketers were the major causes of the lingering fuel crisis.

Another major problem, according to Pepple, was the vandalism of the System 2B pipeline network at Arepo in Ogun state, which is a major distribution channel.

He explained that the attack on the pipeline resulted in the serious shortage of petrol in some cities.
“Nothing has changed from the situation; it is still the same distribution challenges that we have had to work out ways of overcoming it. The system 2B at Arepo is yet to be fixed, at the moment we are still conducting an assessment on the pipeline network and as soon as that is concluded and we are ready to begin repairs, we will definitely put out that information to the public,” Pepple told THISDAY in Abuja.

THISDAY also learnt from the Manager, Public Affairs and External Relations of PPMC, Mr. Nasir Imodagbe, that as part of measures to checkmate hoarding and product diversion, the PPMC was planning to monitor product distribution in the affected parts of the country.
Oil Marketers’ Counter-claims

But oil marketers have dismissed NNPC’s claims of sufficient product, as well as the allegation of hoarding and diversion of product, noting that the root cause of the petrol scarcity was government’s failure to pay marketers’ outstanding subsidy claims.

Speaking to THISDAY on behalf of the marketers, the Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN), Mr. Thomas Olawore, said the NNPC had never single-handedly curbed fuel crisis in the past, adding that the situation has lingered because major marketers have not been importing fuel owing to funding challenges.

Olawore noted that the major marketers did not deliberately abandon fuel importation for the NNPC but were forced to do so because of the non-payment of their all outstanding subsidy claims by the government.

He acknowledged that there was a problem in payment of subsidy claims in the country, which justified the setting up of the Aig-Imoukhuede Committee to verify and reconcile the claims but noted that the attempt to solve this problem had created some discomfort to the marketers.
“We do not get our subsidy claims as regularly as we would want. Now, if you do not have money, there is no way you can import fuel. If a bank gives you money and you don’t go back to pay the principal and the interest, the bank is not going to give you more loans. That is where we are now. We have brought in products but we have not been fully paid. The Minister of Finance has paid some of our claims but we wish to appeal to her to please pay all the outstanding claims because delays will increase the interest payable,” he said.

On NNPC’s recent claims that it has sufficient stock of products that could last for over 30 days, Olawore said there was a difference between fuel stocks that are readily available in depots and the stocks that are on the high seas, popularly referred to as marine stocks.
He stated that NNPC’s stocks on the high seas could not easily be made available to motorists and other fuel users, adding that these stocks cannot also solve the immediate problem of fuel scarcity.

“You need to trans-ship from the mother vessel to the daughter vessel. You need the daughter vessel to go to the jetties and you also need the vessel to pump into installations before trucks start loading the products and moving out. All these processes take a very long time to be completed. The NNPC’s Atlas Cove Depot is out because their pipelines at Arepo were vandalised.  So, if NNPC has stock, then where will they discharge it? They have contracted some depot owners and they are discharging into their facilities but that is not enough,” he added.

Olawore also argued that even if the NNPC imported enough products to meet the daily demand, the corporation lacked the facilities to store and distribute the products to the various parts of the country.

“All NNPC’s facilities are prone to vandalism and those that are not vandalised are even dilapidated. So, you find a situation where the NNPC may even have the products but there are no facilities to keep the products. If you check, you will find out that anytime there are queues in the country, it is only the NNPC that is importing products.

“But once we, the marketers come in, the problem will fizzle out. When I say we, I mean both the major marketers and the independent marketers. We are spread all over the country and once we bring in products, we will distribute to all corners of the federation,” he said.

Other oil marketers, who reacted to the development, accused the Ministry of Finance of inflicting hardship on poor Nigerians by not releasing claims on imported product to oil marketers. They argued that if the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, and the Aig-Imoukhuede committee were sincere in the subsidy probe and administration, they would have exposed all those paper companies that were linked to government and the ruling Peoples Democratic Party (PDP) who were real culprits in the subsidy saga.

“They are instead destroying reputation of companies that have very huge facilities in Nigeria, and have contributed immensely to the economy of Nigeria through job creation. Unfortunately, these companies are now sending most of their staff back to the labour market, due to lack of money to pay their salaries”, said one of the marketers.
Alleged Complicity of Marketers

Reacting to allegations made by the Federal Ministry of Finance that some marketers fuel the crisis to discredit the government for embarking on the subsidy probes, one of the major marketers told THISDAY that the ministry of finance could not have meant that.

He stated that NNPC’s dominance of importation was responsible for the current crisis, adding that former President Obasanjo’s partial deregulation led to many operators coming into importation and the springing up of tank farms in Ibafo, Calabar and Onne.

According to the marketer, this also ensured that the entire country was wet with products until NNPC took over importation.
“With due respect to the ministry of finance, I don’t think they actually meant that marketers are responsible for the current fuel scarcity. If you go back to the history and check, you will find out that anytime the NNPC is left alone to import, there is always a problem. That is the beauty of deregulation – beauty of allowing more players into the market. The ministry of finance is a government establishment and will always want to defend its position,” he said.

Resolution of the Crisis
Proffering solutions to the lingering crisis, Olawore said payment of outstanding subsidies was the only solution to the crisis.
He said: “To be able to resolve the crisis, we need money and the earlier the better. I am saying it with due respect. The earlier in the sense that Christmas is approaching and we need products to come into the country before Christmas. It takes a while between when marketers get their import allocation, prepare letters of credit and also order for the cargoes and the time the cargoes would sail into the country. If a marketer is very fast, it will take three to four weeks to pass through all these processes and we are moving into December. So, if we don’t quickly do these, fuel supply will be very lean towards the end of the year”.

Other marketers who spoke in the direction said the scarcity would continue until all their outstanding subsidy claims were paid.
“Some marketers have been paid some of their claims but not all. Even for those who are being paid, it is one thing for the ministry of finance to release the Sovereign Debt Notes (SDNs) and another thing for the SDNs to be converted to money. It took a long time between when the last SDNs were released and when the money came in because of some administrative lapses, which the minister of finance has resolved,” explained one of the major marketers, who craved anonymity.

Tags: Business, Nigeria, Featured, Fuel Scarcity, NNPC

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