No End in Sight to Fuel Queues, Kachikwu Finally Admits

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  • NNPC to increase oil swaps, reduce import allocation

Tobi Soniyi in Abuja
After weeks of promises by the Nigerian National Petroleum Corporation (NNPC) and its subsidiary, Petroleum Products Marketing Company (PPMC), on their capacity to meet domestic demand for petrol and end the fuel shortages, Nigerians were finally told yesterday not to expect fuel queues at filling stations nationwide to disappear very soon.

Finally admitting to the enormous challenges of importing petroleum products into the country against the backdrop of dollar shortages, moribund refineries, and the misallocation of fuel imports by the Petroleum Products Pricing Regulatory Agency (PPPRA) for the first quarter of 2016, the Minister of State for Petroleum, Dr. Ibe Kachikwu, said there was no quick fix to the perennial problem.

Since his appointment as the Group Managing Director of NNPC (he holds both portfolios) about eight months ago, Kachikwu has been gung ho about bringing back Nigeria’s three refineries, which have suffered years of underfunding, neglect and mismanagement, back on stream to meet up to 40 per cent of domestic demand of an estimated 40 million litres a day. But this has not happened.

Seeing that this was going to be a pipe dream, more recently he promised to end fuel importation in 18 months. The ambitious target, he said, will be met through the co-location of greenfield refineries in the existing refinery complexes under joint venture arrangements with international oil companies or commodity traders.

But even this strategy has been questioned by industry analysts who have wondered if oil firms would be willing to invest in refineries in a low oil price environment and razor-thin margins without mouthwatering incentives that will be impossible to resist.

Nigeria’s fuels shortages have also been compounded by PPPRA’s ill-advised first quarter allocation of petrol imports which saw NNPC getting a greater share of 72 per cent, relative to private oil marketers which were asked to import 28 per cent of the country’s fuel requirements between January and March 2016.

PPPRA was believed to have altered the allocation, which for over a decade, stood at 60:40 for oil marketers and the NNPC, in a bid to please Kachikwu.

But historically, NNPC and PPMC have never proved to be efficient in the importation, distribution and marketing of petroleum products, thus necessitating the liberalisation (deregulation) of the fuel importation regime by the General Abdulsalami Abubakar administration in 1998 after years of perennial fuel shortages during the General Sani Abacha administration.

The bigger snag, however, is that even if PPPRA were to give private marketers higher import allocations, they would still be hamstrung by the scarcity of dollars in the foreign exchange market, except the Central Bank of Nigeria (CBN) ensures that their dollar demand is met promptly.

The minister, who spoke with State House correspondents after President Muhammadu Buhari met with him and the leadership of Nigeria Union of Petroleum and Natural Gas (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), said it was a sheer magic to achieve the present level of supplies of fuel.

Under the present circumstances, NNPC has been forced to resort to crude oil swaps, which the minister previously said the government would end, in the hope that at least 50 per cent of domestic demand is met, but would not see the back of fuel queues.

Asked when queues would disappear from filling stations, the minister replied: ”One of the trainings I did not receive is that of a magician but I am working very hard to ensure some of these issues go away.

“And let’s be honest, for the five or six months we have been here, the Nigerian National Petroleum Corporation has moved from a 50 per cent importer of products to basically a 100 per cent importer.

“And the 445,000 barrels that is allocated to it covers between 50 and 55 per cent importation. So it’s quite frankly sheer magic that we even have the amount of products at the stations.

“We are looking to see how to get foreign exchange, so the president and I discussed extensively on how to get more crude directed at importation (presumably oil swaps). His Excellency would rather have less crude and have individuals in the society suffer less of the inconveniences, than have more crude and have them continue to suffer.

“So we are going to put a new model to enable us increase the pace and actually get the major (marketers) as part of those to bring in more products so that the NNPC will sort of go back on the capacity of what it used to import and the majors will take over the balance of importation.

“I think if we do that, although I don’t want to put a time frame, but I will expect that over the next two months or so we should see some improvements. Of course, you are aware that the DSAP programme begins in April, so over the next two months we should see, quite frankly, the complete elimination of this.

“Our strategy is that whatever is produced in the refineries will not go for sale, we are going to keep them in strategic reserves, because the key problem here is that there are no reserves anytime there is gap in supply.
“So we are going to dedicate the next couple of months to moving all the products that we produce to strategic reserves so that we can pile up reserves in the nation and that will push up the reserves in the nation.

“Believe me this is giving me and my team sleepless nights and we are working on it and we are committed to making this go away, Nigerians should please bear with us.”

He said the meeting with the president was basically to review some of the concerns in the oil industry which the president himself is trying to find joint solutions and share thoughts on.

Asked what the demands of the unions were, the minister said they raised concerns over the Petroleum Industry Bill (PIB), fuel scarcity, the refineries, utilisation of depots, logistics issues, and loss of jobs in the petroleum sector.

He however stated that government was working with the oil majors to ensure that the anticipated job loss in the sector never happens.

Kachikwu also pointed out that lots of the challenges facing the oil sector were inherited by the Buhari administration.

He said: “Like you know, His Excellency has too many constituencies; first, will be politics, second, army and the third, will be the oil industry, so a matter of this nature touches his heart very much.

“And this is the first opportunity that the unions have had to spend a bit of time with him. So we shared thoughts, areas of concerns and some solutions and agreed to collaborate and work together.”

Also speaking, the National President of NUPENG, Mr. Igwe Achese said they had a successful meeting with the president.

He said: “Quite interesting in terms of the emotional attachment of Mr. President on the issue of the oil and gas sector and the challenges we are facing as a nation.

“We tabled the issue of fuel scarcity, the quick passage of the PIB and to see how the sector can bounce back economically and to make Nigerians smile again.

“Clearly we talked more on the corruption in the oil and gas sector and products allocations. Also, Mr. President has assured that both NUPENG and PENGASSAN would continue to be part of the restructuring and that he is going to look into these issues and to make sure that scarcity is reversed at our filling stations.”

The President of PENGASSAN, Mr. Olabode Francis Johnson also said: “We had a very successful meeting with the C-in-C and one of the highlights of the meeting was when he spoke on how he created the NNPC. He is emotionally attached to it and that everything that is going to happen in NNPC must follow due process.

“He said he was concerned about what Nigerians are going through and he bears their pain and whatever it takes to end the misery, he will adopt.”

Additional  report by Ijeoma Nwogwugwu

  • Chima Okereke

    NNPC about to reintroduced the same demonized crude swap arrangement that Goodluck Jonathan administration introduced to end fuel scarcity? Reality hits.

    GEJ stated that Nigerians will ask for his return after a season. It is happening already.

    APC deceit, propaganda, lies are unravelling by the day. Day dreaming and building castles in air has suddenly ended.

    Hope we will be more careful with our choices next time.

    • gabriel akwaja

      NEVER. IMPOSSIBLE. NO NIGERIAN WILL EVER DREAM OF GEJ RETURN EXCEPT DASUKIGATE MOGULS AND PDP LEECHES. GEJ IS GONE FOR GOOD. KILL IT. SETTLE DOWN TO CHANGE MY FRIEND, AND STOP HOPING AGAINST HOPE.

      • JayGeeX

        You are just a late adopter… As to you advise about settling down, I think Brace Yourself is better..

    • samal54

      Sorry, there is no vacancy in Aso Rock

      • JayGeeX

        It the vacancy in the heads of the current occupants that’s the problem really…

        • Imoduu

          This is an upper cut reply. Kudos.

        • AA

          Kudos men! That’s a Tysonosaurus bloW!

        • William Norris

          You are WICKED…..you must be what Nigerians call AGBERO !!!!

  • Toby

    Buhari better teach Kachikwu how to be a magician. Showman minister. Talk, talk grammar and rotate in a circle.

  • Daniel Obior

    This is another item in the endless list of U-turns by this incompetent administration. Now faced with reality, it is embarking on crude swaps it brutally criticised the last administration for. Do we need any more evidence we were sold a dummy of an administration? The Buhari administration is turning out to be a monumental failure. Where is the press that sang praises to high heavens? Where are the “feel alright” youths of the social media? Where are the foreign countries such as the US and UK? How do the progressives of the southwest now feel? It is hoped they are seeing how things are beginning to unravel. As it is said, a country deserves the (bad) leaders it chooses.

    • William Norris

      Of the US & UK, well The Economist magazine Western mouthpiece that endorsed him for the elections is now in full WAILING mode lol, you need to see their latest article on Brainless Bubu Buhari. Really, you need to.

      • Daniel Obior

        One thing we can say of The Economistis that they are less hypocritical by coming out and saying it the way it is, compared to their western governments that have been relatively stone silent, by the embarrassment called Buhari.

  • oyeols

    Just deregulate the damned thing!!!

  • kenn

    Did I really hear the minister say “crude oil swap”. I thought this is the same business model the last administration was vilified for and called all sorts of unprintable names. As each passing day goes by the sheer buffonery and utter cluelessness of this ragtag administration comes to light. God save us

  • Troy

    Very correct analysis! The sad thing is that instead of facing the real issues head-on, the ruling party is funding contributors on e-platforms to continue with propaganda and attacks on anyone holding a contrary opinion. policy somersaults and deceit has been the hallmark of this government. Kachikwu has allowed his hard earned reputation as a seasoned technocrat to be rubbished by a stubborn C-in-C who doesn’t take advice. Now GEJ will having a good laugh at those who were decieved into calling him clueless. Everybody’s eyes don open now. we know who is truly clueless…. and they have started campaigns saying there is no vacancy in Aso Rock come 2019. This is a serious insult on Nigerians. But I guess we deserve what we got…. we made the choice, we must enjoy the consequences of our poor choice

    • shakara123

      Well said.

  • christopher

    It does not get any more CONFUSED than the current Nigerian leadership.. Wake me up when this boring JOKE is over!

  • Okpomo

    Seeing government through the lenses of a know-it-all opposition is a different thing entirely. We advised.

  • Okpomo

    And GEJ remarked: ”when i leave government, that’s when Nigerians will value my presidency”. You were right GEJ.

  • E.Udah

    I knew from onset that we will get to this, but will this joke and bad dream be over? They’re talking about reelection in 2019 already!
    Nigerians, this is an insults on the little intelligence left in us after the deadly mistake of bringing this useless administration into power!

  • Kingsley

    Full disclosure: I have been closely associated with Nigeria’s Oil and Gas sector for over a decade and I almost owe my entire means of livelihood to it.

    I have seen numerous CEOs bestride the landscape and I hereby call on President Muhammadu Buhari to make Emmanuel Ibe Kachikwu an ex-Minister and an Ex- NNPC GMD.

    I don’t envy Our President! He came riding a wave of huge discontent with a “clueless leader” and as the rejected President was busy packing out of Aso Rock, the mainstay of the National Economy began to experience a dizzying nose dive at an alarming rate.

    However, Kachikwu has been a disaster since almost Day One. When last did Nigerians who rejected Jonathan and embraced Buhari had fuel to buy without long lines at the Filling Station?

    His latest outburst about the likelihood of fuel scarcity lasting till the Middle of the Year means the man has no solutions and has only made a bad situation worse. He has been in the saddle since August last year and it is on record that we have never been able to have seamless fuel supplies since he came on board.

    Never in the history of my engagements in the Oil and Gas sector have we had fuel scarcity lasting almost seven months. NEVER! NEVER!! NEVER!!! Kachikwu is a failure.

    I would advise our President not to be swayed nor fooled by his lyrical talking points gleaned from Havard. The man is a time tested lawyer. Anyone who knows a good Lawyer would agree that they can make you believe a Virgin can get pregnant without insemination. The man knows how to wriggle himself out of any tight rope by just rehashing his lies.

    How else can anyone define FAILURE??? For over seven months, the nation has consistently had fuel scarcity and fuel queues everywhere and the man’s speeches only succeed in making things worse. He is a specialist at snatching defeat from the jaws of victory.

    At the height of a scarcity last year December, he spoke and said Government was planning to increase fuel prices; again just yesterday, he said the queues would last another two months.

    I advise Buhari, please relieve this man of his huge burdens so that he does not become your albatross. He has nothing good to offer your government and I am sure he has no stake in it because unlike some of us who campaigned and voted for you, I doubt if he even has PVC.

    • Ehi Ehinomhen

      Has it occurred to you that it may be that Kachikwu needs to resign to savage his integrity considering the disposition of Buhari to things generally and the oil and gas sector in particular? Remember that Kachikwu was not there when Buhari and his APC so much vilified the crude swap deals that ensured that there were no queues during GEJ’s administration and promised to eliminate them. Kachikwu’s initial view of the refineries last year, for example, was to privatise them. That of course, was contrary to Buhari’s position. I understand, however, that Kachikwu can do better with the information he releases.

    • HONESTY

      You will soon learn that, that is grand plan of his BOSS. Make the Country and the people so impoverished that they see any little drop from FG as ‘gold’. Or haven’t you heard of N350b bail-out coming soon from the President to the Citizenry. In my friends joking words “DEY THERE MAKE PANT DEY WEAR YOU”

    • AA

      My only problem with ur otherwise brilliant analysis is why u spare the minster of petroleum. I just wonder. Or is he there for decoration and to award contracts to his cronies?

  • MIke Oke

    “Secret” to ending fuel queues: CBN stop selling dollar at 199 Naira and instead at a price closer to 320 Naira; allow oil marketers to charge whatever they like for fuel. Marketers doing that nationwide currently charge between 120 to180 Naira per liter and wherever they do that you will not find fuel queues; finally NNPC should end it’s crude swap programme and save the dollars it otherwise would earn and hand that to government.
    Rest assured that Buhari would NEVER do any or all of the above, so you will continue to have fuel queues and the economic situation WILL continue to worsen. This is as clear as night and day. You cannot game nature, water will always find its level.
    The best we can hope for is that lightning will strike him down and the VP shall take over. If that were to happen expect a very drastic turnaround of things as the VP WILL do the right thing which in turn will boost investor confidence that has been lost under this dullard. Wake me up when lightning strikes. I’m going to bed.

    • Jon West

      That’s what you people were hoping for when you voted him in. However you don’t know the Hausa/Fulani very well. They are obsessed with political power and will kill even their own children for it. The VP will never, repeat, never be President, even if the Certificateless One serves two terms. You have given the baboon a cup of water, now try to retrieve the cup and see your lives taken away. Opportunism is worse than HIV and the Afonja elements of Soutwest politics will suffer the effects of that affliction. Sai Baba!!!

      • MIke Oke

        Lol! Egbon Jon, I respect your hustle boss! Not all of us voted for Buhari. Believe it or many of us voted GEJ and will follow him to the grave, once Bubu is the only option. I simply believe anyone with a certificate would do better than the Certificateless One. And VP is more than well qualified in that regard, so I’ll manage. I don’t care that he’s Yoruba. I know many Hausa/Fulanis that would do exceedingly better than Bubu and I won’t hesitate to vote for them too.

    • AA

      lol! Una no go kill person with laff o! But this is brilliant.

    • William Norris

      I’m really not sure the VP Osinbajo will be any better. I think it’s an ideological matter.

      The PDP is more market oriented, the APC is more socialist/feudalist. You can see it in how Tinubu converted Lagos into a family dominated business with his daughter, sons in law and wife all imposed into government positions.

      Their tendencies are a reflection of their dominant tribes. The Fulani & Yoruba are culturally more submissive to hierarchy and its prerogatives.

      In a way this is good, so Nigerians MAY start thinking in ideological terms, in addition to the usual TRIBAL considerations.

      • MIke Oke

        Anybody with a basic education would do much better than Buhari. The VP will do just nicely. I detest APC and their propaganda but right now I’m willing to cut them some slack under the VP so we can at least start to pull ourselves out of this economic slump. We can go back to pulling them down when the we get closer to the elections.

  • William Norris

    I knew Ijeoma had to have contributed to this report. It’s very well written, better than the usual crap produced by Nigerian journalists.

    Ijeoma I want to marry you.

    • MIke Oke

      My friend don’t dare go near her! Me and you will put leg in one trouser! Stay clear!

      • JayGeeX

        Back of fellas..

        • William Norris

          You are AGBERO, you have no place in this contest !!!

          • JayGeeX

            Don’t make me cut you!

    • UOU

      She is someone’s wife or don’t you know okonjo iweala’s P.A, is the husband?

      • William Norris

        Ooooops, I didn’t know ! Ijeoma sorry. Wait, but I’m richer than that guy. Does that count?

        • UOU

          Richer than PA to former Finance Minister, is it about cash?

          • William Norris

            It’s also about strength & power. I will have my boys throw him in the Lagoon and then I can have Ijeoma all to myself.

          • AA

            lol! U are no crazy, Willam! lol

  • UOU

    This kachikwu guy is turning into a big joke, better he throws in the towel now, save a bit of whatever he has left of, his integrity than let it go against him, fully. No one will talk for you kachikwu, delta people are extreme minority, they will mess you up, completely, mistaking you as Igbo, which you are not

  • samal54

    Kachukwu forgot that Nigerians prefer the liars who will tell them it is white when actually it is black.

  • MUkintu

    CRUDE OIL SWAP? ARE YOU KIDDING ME?