Interrogating NNPC’s Fuel Consumption Figures

Nigeria’s daily petrol consumption data have always been a subject of controversy, with the numbers released by those who should know, sometimes not only conflicting, but wouldn’t just add up. Emmanuel Addeh writes that the Nigerian National Petroleum Corporation’s recent revelation that the country’s fuel consumption rose by over 100 per cent in just four months has further added to the extant confusion.

It is now public knowledge that despite being Africa’s largest oil producer, Nigeria imports all its petroleum product needs from outside the country and indeed outside the continent at huge logistical, handling and foreign exchange costs to the country.

But what is even more controversial is that the trail of the product which is currently fully in the hands of the federal government through its oil industry operations arm, the Nigerian National Petroleum Corporation (NNPC), which is the sole importer, cannot be effectively tracked.

Although, there have been various government attempts in the past to curb the chaos and bring sanity to the distribution system, they have been at best fruitless, and at worst an embarrassment, given that until now, the country still does not know its consumption numbers and relies largely on guesstimates.

Added to that, even when these figures are made public, key players like the ministry of petroleum resources, the NNPC, the Petroleum Product Pricing Regulatory Agency (PPPRA), the Department of Petroleum Resources (DPR) and the Petroleum Equalisation Fund (PEF) give inconsistent numbers.
Indeed, a few years ago, the National Bureau of Statistics (NBS), the repository of the country’s data, admitted that the country did not have reliable information on its fuel consumption, stressing that all the figures being bandied about were hugely untrustworthy. Till today, the situation has not markedly changed. Needless to say that it may have even gone worse.

A history of inconsistencies

Even before Nigeria became a major player in the global oil and gas industry, it was already used to the deployment of fuels, including petrol in transportation, power and so many other uses. What this means is that for close to or over a century, Nigeria has been making use of petrol, but yet doesn’t know what it consumes.

The most shocking aspect is that those that should know have always consistently dished out inconsistencies, whether intentionally to hoodwink the public or otherwise.
Many Nigerians attribute the sometimes, illogical consumption information to the cheap funds available from the highly contentious subsidy payment, which even the government has admitted is ridden with corruption.

In 2012, the figures grew astronomically and unexplainably from below 30 million litres per day to almost 60 million litres during the subsidy regime where private fuel marketers were allowed to bring in the product. Today, only the NNPC imports products into the country.

In 2017, the then Minister of State for Petroleum Resources, Ibe Kachikwu, told a House of Representatives committee that daily consumption of petrol was 28 million litres, saying that the figure dropped from about 50-55 million litres a day that the PPPRA was using for fuel subsidy payment.

In one of its publications in November, 2016, the NBS said about 12.66 billion litres of petrol were consumed in the country between January and September of that year, which would translate to about 51.87 million litres per day.

Interestingly, the figure for that period contrasted firmly with that published by the NNPC in its annual statistics bulletin on its website, which pegged it at 17.41 billion litres, or 47.6 million litres per day of petrol.

Similarly, in August 2017, the NNPC said that consumption figures jumped from below 30 million litres per day to an average of over 50 million litres, peaking at about 84.2 million litres on December 8 of that year.

In February 2020, the DPR stated that the cumulative depot stock of petrol at the depots was 915,771,566 litres and put the daily estimated daily national demand of 38.2 million. The department’s position has not changed in a major way since then.

Added to that, the Minister of State, Petroleum Resources, Mr Timipre Sylva, told journalists in June last year that Nigeria’s daily consumption stood at 52 million, with a huge daily difference of 14.2 million litres when out side by side the DPR data.

In fact, Sylva announced that part of the achievement of his ministry in the last few months, was the reduction of consumption from 60 million per day to 52 million daily consumption. But in April this year, consumption hit a record high of 93 million litres, according to the national oil company.

Kyari’s bombshell

In a shocking revelation in June this year, Group Managing Director, NNPC, Mr Mele Kyari, disclosed that daily consumption had increased from 60 million litres to 103 million litres, with the so-called under-recovery now hovering between N140 billion to N150 billion.

Given the February figure of roughly 50 million litres, many believe that it is simply unthinkable that fuel consumed by Nigerians would rise to over 100 million litres in just three months.
Did Nigeria’s population suddenly jump from 200 million to 400 million in 120 days, between February and May? did the number of Nigerians who own cars increase by over 100 per cent during that period, did the number of Nigerians who provide their own power by using generators suddenly double? These posers remain unanswered.

But Kyari, who spoke when he met with stakeholders, including the leadership of the Economic and Financial Crimes Commission (EFCC), Department of State Service (DSS), Nigeria Customs Service (NCS) and chief executives of agencies in the petroleum ministry, admitted that from the truck-out report from the PPPRA’s data base, Nigeria’s consumption cannot exceed 60 million.

“In very recent data, we saw what we really wanted in the beginning of May and June. There was a day we loaded out about 103 million litres of petrol within one day across the depots,” he stated.
He explained that with the current exchange rate, the pump price of petrol should be N256 per litre, maintaining that if the NNPC was to sell at the going price, and incorporating the current exchange rate, fuel will be selling at about N256 to a litre. “What we sell today is N162, so the difference is at a cost to the nation,’’ he noted

Sylva also expressed his doubts over the figures in what looked during the meeting like a conference of lamentations, even by those who are saddled with the responsibility of cleaning up the seeming mess. But even the meeting was full of contradictions because while one said it was 103 million litres, another put it at less than 60 million litres per day of daily consumption.
“When I first came in as minister, I was informed that the daily consumption in the country was around 60 million to 62 million litres a day, which to me sounded a little bit outrageous, considering the number of cars we have on the road.

“But somehow, the figures, I understand today have come down to around 52 million litres. Maybe the number of vehicles have suddenly reduced, but you will agree with me that something is wrong. That is why the tracking of trucks loading products is essential for us to move forward on this issue of subsidy removal,’’ Sylva said.

Futile Efforts

In the past few years, there have been efforts, even if half-hearted, to track Nigeria’s consumption figures.

In 2019, the ministry of petroleum, the NNPC and other stakeholders launched the “Operation White” project, which it said was geared toward ensuring transparency and accountability of petroleum product supply and distribution in Nigeria.
Sylva noted that the move was aimed at deploying adequate measures in ensuring that all molecules of regulated petroleum products imported by the NNPC were accounted for, noting that the task was to ensure that the petroleum products supply and distribution chain in Nigeria is completely devoid of illicit practices.

These Illicit practices, according to the minister include oil theft, diversion, and smuggling of petroleum products, which he said constitute economic sabotage and haemorrhage of the national revenue through the high cost of under-recovery.
Before the recent attempts, in 2018, The federal government approved a N17 billion automated fuel system management and censor network aimed at revealing the daily fuel consumption by tracking fuel delivery from the point of entry into the country to its final delivery in the petrol station.
At the time, Kachikwu, said the move was an initiative of the Petroleum Equalisation Fund (PEF) conceived to assist in revealing the exact litres of petroleum being consumed in the country every day.

He said the adoption of the PEF initiative had become imperative in view of discrepancies in figures being bandied as daily fuel consumption in the country, and consequently affecting subsidy payment and remittance to federation account while a huge volume of petroleum products is illegally moved out of the country. Unfortunately, even that didn’t seem to have worked.

In another attempt, the government through the DPR commissioned a new technology called the Downstream Remote Monitoring System (DRMS), aimed at checking the same illegal activities in the downstream sector of the oil and gas industry, determine illegal petrol stations actors and provide accurate data on the industry.

Director of DPR, Auwalu Sarki, at the time, said the move represented a digital transformation that would drive transparency, accountability, domestic energy security and availability of products in the country.

He stressed that the initiative would directly reduce smuggling in the country, insisting that the days of illegal operators in the sector were over. He further argued that the DRMS would provide credible information on how the products are being taken out of the borders. All these have proved fruitless.

With the initiatives proving futile, in yet another effort , the ministry of petroleum and the NNPC have now brought in the Economic and Financial Crimes Commission (EFCC), the Department of State Service (DSS), the Nigeria Customs Service (NCS) and the Nigeria Security and Civil Defence Corps (NSCDC) into the fray.
It is still unknown what ‘miracles’ these agencies can pull off where technology appeared to have failed.

Blaming smuggling

In the end, many actors within the oil and gas space seem to be laying all the blame for Nigeria’s inexplicable consumption figures on smuggling along the corridors of Nigeria’s neighbouring countries.

From Sylva to Kyari, the belief is that only smuggling outside the shores of the country is responsible for the figures, which in the surface look largely manipulated.

But even this has position has been jettisoned by a treatise by one Mr Mohammed Ettu, on the issue which went viral last week, arguing that even if all the fuel used by all Nigeria’s neighbours are smuggled from Nigeria, it still won’t hit 70 million litres per day.

In his post titled: “Nigeria: A crime Scene,” Ettu, an engineer, recalled that the DPR in February 2020 told Nigerians that Nigeria’s petrol consumption was 38.2 million litres per day, rehashing that the NNPC also said in June that daily consumption had risen to 103 million litres.

A 64.8 million increase per day and 170 per cent rise, Ettu stressed that the argument that smuggling was responsible for the leakages did not hold water, coupled with NNPC’s position that it currently spends N120 billion daily as subsidy on the 103 million litres of petrol consumed across the country everyday.

“These figures do not add up to the landing cost of petroleum, ”he wrote.

He argued that if Benin, Niger, Chad, Togo, Cameroon, Ghana and Cote d’Ivoire have a cumulative 148.88 million population and Nigeria has a population of 211.6 million, at 0.18 litres/day per person consumption, 149 million people will consume only 26.82 million litres/day in those seven west African nations using Nigeria’s figures to determine their own usage.

He added that since the DPR said Nigeria consumes 38.2 million, even if Nigeria’s figures are added to the West African nations surrounding Nigeria, it will still amount to 38 million plus 27 million litres, which will still give a paltry 65 million litres compared to the NNPC’s data.
“This means that 38 million litres are nowhere to be found and we all know that it is practically impossible for these West African nations to depend solely on smugglers for their petrol supplies,” he argued.

Going by this estimation, Ettu noted that the 64.8 million litres of petrol that is allegedly smuggled out of Nigeria daily will occupy 1,963 trucks, wondering how this is done without any of the security agencies noticing. “Are we saying the aforementioned countries depend 100 per cent on our fuel import,” he queried.

Insecurity Impact on Consumption

In response to an enquiry on his opinion on the consumption data, the Director Centre for Petroleum Economics and Law (CPEEL), University of Ibadan, Prof. Adeola Adenikinju, noted that it was simply impossible for Nigeria to consume over 100 million litres of petrol per day.

He stated that before the rise in nationwide insecurity that has curbed the restriction of movement, even at its peak, it wasn’t possible for the country to use even 50 million litres per day.

“In terms of actual consumption, there’s no way Nigeria is consuming up to 100 million litres of petrol per day. If you look at the history, at a time when the product was badly needed and there was free movement of goods and services, we were not even consuming up to that.

“Around 2019, we were looking at 50 million litres per day, even the then GMD said that even that figure was high, that by the estimate they had done, it was around 30 million litres per day to 35 million litres per day.

“So, it is implausible, it cannot be explained that actual consumption at a time you have limited or restriction of movement because of the security challenges in the nation and so forth, because we are not back to where we were. So, its very clear that this is part of the evil of subsidy, ”he argued.

It may appear that the problem has defied every effort to solve it, but not a few Nigerians believe that with the deployment of appropriate political will and reining in of insiders who may be benefitting from the malfeasance, the challenge that has led to a further weakening of an already bleeding Nigerian economy is solvable.