FG Orders Kachikwu to End Fuel Scarcity

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Ibe Kachikwu
  • NNPC moves to bridge supply gap
  • DPR orders depot owners to give priority to Lagos

Omololu Ogunmade in Abuja and Ejiofor Alike in Lagos

The federal government Wednesday in Abuja, denied insinuations that the current fuel scarcity plaguing the country is a ploy to increase the pump price of petrol.

The government also ordered the Minister of State for Petroleum, Dr. Ibe Kachikwu, to ensure that the scarcity does not exceed this weekend.

Making this disclosure while answering questions from journalists at the end of Wednesday’s weekly Federal Executive Council (FEC) meeting in the State House, the Minister of Information, Alhaji Lai Mohammed, blamed the scarcity on higher demand for petroleum products in cold regions as a result of winter.

According to him, Kachikwu assured the council that there was enough petrol that could serve the country till the end of January 2018, adding that the council gave the minister a matching order to ensure that the scarcity disappears this weekend.

Mohammed also said Kachikwu promised that his team would work assiduously to put paid to the lingering fuel crisis with the assurance to the council that there is nothing to worry about.
He said: “No, the government has no intention at all to increase the pump price of petrol.

“Two, the minister assured the council that we have enough products till the next one month even till the end of January.

“Thirdly, this is winter period. There is always more demand for refined petroleum products during winter period in the colder countries. This is what we are experiencing now.

“Also, it has been the NNPC that has been importing, but he has assured [of adequate supply]. The council gave him a matching order that this fuel scarcity should not last beyond this weekend and they are going to work very hard to ensure that it is curtailed. He assured council that there is actually no cause for alarm.”‘

But in spite of the assurances by the federal government, there were indications that the fuel queues might linger following the decision of some oil trading companies to import diesel instead of petrol as stipulated in the Direct Sale-Direct Purchase (DSDP) contracts between the NNPC and some of the oil marketers, THISDAY has learnt.

THISDAY, however, gathered that the corporation has ordered massive importation of petrol to bridge the supply gap as two imported vessels are being expected to berth in Apapa, Lagos within the next 24 hours.

Also to address the shortfalls in supply in Lagos, the Department of Petroleum Resources (DPR) Wednesday ordered depot owners to give priority to tankers that supply product to filling stations within Lagos.

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 (bpd) of crude oil for imported petrol.
The deals, which were previously referred to as offshore crude oil processing agreements (OPAs) and crude-for-products exchange arrangements, are now known as DSDP agreements.

Under the latest DSDP scheme, the NNPC excluded the big players with strong footprints in the downstream sector such as Italy’s ENI, India’s Essar, Shell-BP, Forte Oil, Mobil (11Plc), Oando, Conoil, and NIPCO in an apparent move to empower smaller companies.

Even international oil trading giants such as Total, Vitol and Trafigura that made the list were allocated the same small volumes of crude – 33,000 barrels per day, with smaller Nigerian downstream players in the list.

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 into 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, is that the market is flooded with diesel, which is also imported by the other private marketers as a deregulated product, while petrol, which other marketers lack capacity to import and have been relying on NNPC for supply, becomes a scarce product, leading to the current crisis.

A source at NNPC, who confirmed this development, told THISDAY that when petrol became expensive in the international market, some of the oil traders approached NNPC to convert their contracts to diesel and the corporation obliged their request.

The source explained: “Ordinarily, diesel is not supposed to be under the DSDP contracts because all the marketers import diesel since it is deregulated. The problem is petrol, which is not fully deregulated and not imported by the private marketers. Some of the companies engaged in DSDP agreements lack capacity and only execute the contracts when it is convenient for them. When petrol was expensive, they requested the NNPC to change their contract to diesel and the market was flooded with diesel because all other marketers also import diesel. Now, there is shortage of petrol in the market because the NNPC, which should import petrol, mismanaged the DSDP by allowing the trading companies to import diesel instead of petrol.”

He explained that unless the NNPC reviews the DSDP and involves the big players, the supply gap may widen and linger till Christmas.

But in a swift response, the NNPC’s spokesman, Mr. Ndu Ughamadu, exonerated the DSDP scheme and told THISDAY that the crisis was as a result of the threat by the Independent Petroleum Marketers Association of Nigeria (IPMAN) to shut down filling stations on December 11.

“IPMAN has issues with the depot operators over ex-depot price. They issued a threat and people engaged in panic-buying. That is the cause of the crisis,” he said.

Speaking on the DSDP contracts, Ughamadu said the scheme had its own challenges like every other new concept but added that these challenges were not responsible for the current queues in some filling stations.

“The direct sale-direct purchase is a new concept to boost supply of petroleum products and ensure huge savings for the federal government. However, like every other new concept, it has its own challenges but these challenges are not responsible for the present crisis. There is enough petrol in the system. The crisis is caused by panic-buying. The Group Managing Director of NNPC, Dr. Maikanti Baru, has ordered for more cargoes. Right now, all NNPC stations in Abuja are dispensing product. So, in the next 48 hours, it will be over if people stop panic-buying,” Ughamadu explained.

THISDAY gathered that two imported vessels were being expected in Apapa in the next 24 hours.
In a related development, the DPR has intensified its surveillance of depots to avert hoarding and profiteering by unscrupulous marketers, who might want to take advantage of the situation.
Speaking Wednesday when she led top officials of the agency to monitor depots in Lagos, DPR’s assistant director in charge of retail outlets’ monitoring the downstream division, Mrs. Ijeoma Otti-Onyeri, urged the public to stop panic buying.

“We are here because of the emergency situation in the country. The public is panic-buying because of speculations that there would be increase in price. The government has come out to say that there is no plan to increase price. So, the public should stop panic-buying,” she said.

She also urged the depot owners to give priority to Lagos since it was the state that experienced the queues.

Also speaking, the DPR’s Deputy Manager in charge of Retail Outlets and Marketing, at the Corporate Headquarters, Mr. Isa Ibrahim, charged the depot owners to sell at government’s approved price.

  • E don do Niaja

    Hear Lai “Alhaji Lai Mohammed, blamed the scarcity on higher demand for petroleum products in cold regions as a result of winter”. Ok Lia Mohammed! Heating system is running 24/7 in winter regions abi na harmattan we dey even call am. Lia Mohammed sabi wetting be winter so?

  • Jon West

    Actually, Goodluck Jonathan is responsible for all this nonsense, like all the other failures of the Certificateless Dullard from Daura.

  • Maria Darego

    Petrol (Gasoline) and Diesel demand peaks globally during the Northern hemisphere summer months (May-September) due to more vehicles on the road. Only Heating oil and Natural Gas demand go up during the winter months. The Minister of Information is either ignorant or lying as usual.

  • MDG2020

    FG ORDERS Baru to AWARD more MULTI BILLION DOLLAR petroleum Kwantrakt, and Kachikwu, to end fuel scarcity!
    A case of Baboon(Kachikwu) dey work, Monkey(Baru+Buhari) dey chop
    Foolani government stylee indeed!

    • ‘ned

      The song is: Poor man dey suffer, monkey dey work, baboon dey chop🎼🎵🎶♩

  • Ofuzo

    Kachukwu, save yourself from further humiliation and ridicule by RESIGNING. You should have known by the experience of Okonjo Iweala and Arunmah Oteh what you were getting yourself into.

    • Tony Ezeifedi

      Ofuzo, I am surprised hearing this from you. Your reasoning is always upside down.

      • Ofuzo

        Why?

    • ‘ned

      The name is Kachikwu not Kachukwu.

  • Mr. Wilson

    That directive should go to Baru. He is the one awarding multi million dollars contracts, he should also be smart enough to solve ordinary fuel scarcity.

    Rubbish.

  • Judith

    Kachiukwu is only the figure head chairman of NNPC, why is he the one being ordered to end the scarcity??? Funny people. He has no say in how the organisation is run, but when there is trouble, he is the one that is ordered to sort it out. Dr. Kachiukwu should resign if only to keep his self respect in tact. Just saying…

    • Romla

      That is the part of the problem in Nigeria.The well educated with high intellect and competence will allow the lowly educated to be barking orders at them. I wonder what someone of Kachikwu’s caliber is still doing there,after the recent issue he exposed.He is as much to blame for having himself pushed around.He should resign.He is marketable worldwide.

  • Romla

    Hmmm,very interesting.Part of the problem is demand in cold countries due to winter.Winter comes every year at about the same time,and you had plenty of time to plan against it.
    I do honestly believe the scarcity is temporary and artificial,I feel people trying to benefit as usual from the higher demand due to travel over the holidays.
    I must laugh though at the thinking of Government.Kachikwu is getting matching orders now that there is scarcity problem,Baru gets matching orders to be issuing contracts.Government of funny characters.

    • Maria Darego

      My Brother, Gasoline (Petrol) demand actually drops in winter. It is Heating Oil and Natural Gas demand that goes up. The Information Minister is either just ignorant or just telling lies.

      • Judith

        Both.

    • FrNinja

      The winter months is when oil refineries undergo seasonal maintenance because demand is low.

  • Sarah

    Osinbajo the Joker.
    The marching orders should have been issued to the substantive Minister for Petroleum (Buhari). Is the Minister for Petroleum (Buhari) not in Kano cutting tapes, taking photos and campaigning for re-election while this crisis festers?
    This government has made clear that NNPC GMD Baru reports directly to Minister for Petroleum/President. If Kachikwu is not able to instruct and direct Baru, how does he control NNPC to end current impasse?
    Apparently it is only when there is a crisis to resolve that Kachikwu becomes relevant.

    • Judith

      So on point.

    • Sylvia

      I blame kachikwu in all this.

    • Maria Darego

      Kachikwu should have some pride and resign.

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