Off-spec Fuel: The Blame Game Continues…

The current controversy surrounding the importation of substandard petrol, a process supervised by NNPC Limited, the sole importer, remains a source of embarrassment to Africa’s biggest oil producer. Added to that, the development has dealt a huge blow to the national oil company’s much-vaunted ‘TAPE’ agenda, a corporate policy under which the firm asked Nigerians to hold it to the highest standards of conduct, writes Emmanuel Addeh.

It took a while before the authorities began to admit that there was a fundamental problem within the country’s fuel supply chain, but by the time the confirmation came, a lot of damage had already been done. First brought to mainstream media attention by THISDAY/Arise Television, the situation has since snowballed into a national energy crisis, further compounding, confounding and indeed worsening the country’s already struggling economy.

In the last few days since the controversy got into the country’s public space, it has been a long chain of buck-passing, from the sole importer (which doles out contracts under a barter arrangement), to its partners, the oil traders to the contractors themselves. In the most seemingly thoughtless of statements, head of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, easily regarded as the downstream sector’s “police”, blatantly refused to take responsibility.

“Actually, I don’t want to pass blames, but I also won’t take responsibility,” Ahmed told a bewildered nation, before going on to say that a development that has clearly thrown the nation into chaos is a “ learning curve” for him.

‘TAPE’ IN TATTERS

In July 2019, at his maiden town hall meeting with the staff of the corporation at the NNPC Towers, Abuja, Group Managing Director of the NNPC, Mallam Mele Kyari presented his agenda he entitled “Roadmap to Global Excellence.” Under the roadmap, Kyari stated that NNPC’s operations under the new management would be anchored on Transparency, Accountability and Performance Excellence (TAPE). For close to three years, the NNPC has not failed to remind Nigerians that it now has a clean break from its no so enviable past, mouthing the TAPE agenda at every breathe.

To throwback to that July 24, 2019 date, Kyari said that the ‘Transparency’ component of the agenda was aimed at maintaining a positive image and share the values of integrity and transparency with all stakeholders.

Added to that, he noted that the ‘Accountability’ leg of the campaign would ensure compliance with business ethics, policies and regulations while ‘Performance Excellence’, would entrench a high level of efficiency anchored on efficient implementation of business processes.

But with the latest happenings in the sector, that agenda, it would appear, remains currently embattled, challenged and gasping for breath. The handling of the issue, with statements from the company further confusing matters, remains largely questionable.

SEASON OF BUCK-PASSING

After days of dilly-dallying, last Tuesday, the NMDPRA finally admitted what had already attained a huge part of the country’s national conversation: the presence of bad fuel in circulation.

The new agency announced that it had found methanol above national specifications in the imported products, stressing that in an attempt to withdraw the substandard petrol from circulation, there had been a disruption to the supply chain.

Although THISDAY gathered that President Muhammadu Buhari had asked that the Authority’s boss should be queried, Ahmed came short of pointedly pushing the blame on NNPC’s inspectors, saying that even they (the inspectors) could not detect that there was anything wrong with the fuel.

It wasn’t long before the NNPC’s head, Kyari, came out to list those it contracted out the deal to bring in petrol into the country to. In a broadcast he did late in the night, the NNPC GMD laboured to absolve the oil company of complicity in the importation and distribution of millions of litres of off-specification fuel, which has led to long queues across the country.

Disclosing that the product was imported from Antwerp in Belgium, the NNPC head ironically appeared to have unwittingly let all suspects off the hook when he stated that petrol brought into Nigeria usually does not include the test for the level of methanol content. The NNPC helmsman added that cargoes’ quality certificates issued at the loading port in Belgium, by AmSpec Belgium, indicated that the product complied with Nigerian specification. Furthermore, he maintained that the NNPC quality inspectors including GMO, SGS, GeoChem and G&G conducted tests before discharge, which showed that the cargo also met the country’s standard.

“It is important to note that the usual quality inspection protocol employed in both the load port in Belgium and our discharge ports in Nigeria do not include the test for per cent of methanol content and therefore the additive was not detected by our quality inspectors,” he said.

Kyari listed MRS, Emadeb/Hyde/AY Maikifi/Brittania-U Consortium and Oando and Duke Oil, an NNPC trading arm of complicity in importing the product.

“All defaulting suppliers have been put on notice for remedial actions and NNPC will work with the authority to take further necessary actions in line with subsisting regulations,” he added.

But a pertinent question has been raised pertaining this last statement. Can there be a defaulter, where there is no standard for the particular substance in contention?

Since the NNPC statement, there have been torrents of denials and counter-denials. All the companies accused by Kyari, bar one, Duke Oil, have denied the allegation.

In separate publications, MRS, Emadeb Consortium, Brittania-U and Oando rejected the imputation by Kyari that they imported the high methanol petrol, describing it as misleading.

MRS stated that it remained a responsible corporate citizen and would not be involved in the purchase, importation, distribution or marketing of substandard petroleum products in the country.

“Due to the current subsidy regime, NNPC is the sole supplier of all PMS in Nigeria. Consequently, the NNPC through their trading arm, Duke Oil, supplied a cargo of PMS purchased from international trader Litasco and delivered it with Motor Tanker (MT) Nord Gainer. This vessel discharged in Apapa between the 24th and 30th of January, 2022,” the company stated.

Also, Emadeb-consortium exonerated itself from having a hand in the importation of bad fuel, saying listing it among those partly responsible for the importation of the off-specification petrol by the NNPC was misleading.

It pointedly told NNPC to single out Brittania-U, an initial member of the coalition, which it claimed opted out of the arrangement, instead of lumping everyone in the consortium.

But in its reaction to the allegation, Brittania-U, also denied involvement in the importation of the off-spec petrol in circulation.

“Our imported products from our mother vessel, MT Torm Hilde, met all NNPC/NMDPRA product specifications, and we’re duly cleared by DPR (now NMDPRA),” it stressed.

While pushing back on the allegation, Oando Plc., on its part denied any involvement, saying that its project was certified okay by the authorities.

“We hereby state that Oando did not import and supply PMS that was adulterated or substandard. The PMS supplied by Oando met Nigeria’s import specification,” it argued.

As the blame-shifting exercise continues, question remains: Who imported the off-spec petrol that has caused pains and embarrassment to the government and people of Nigeria?

How was it possible that the firms paid by the NNPC to vet products coming into the country, failed in their duty. Will the federal government summon the courage to wield the stick anyone found to be complicit?
A HISTORY OF ADULTERATIONS

Aside the substandard diesel and kerosene processed by illegal oil refiners in the Niger Delta, which sometimes slip into the mainstream supply chain, usually in negligible quantity, no such major incident of contaminated fuel has taken place under the Buhari administration, apart from the current one.

But suffice to say that Nigeria has had a handful of cases where substandard products were imported into the country in the not so distant past.

Under the late Gen. Sani Abacha, in 1997, Nigeria imported foul smelling fuel, which caused serious damage to car engines and posed health challenges to many Nigerians.

At the time, it was reported to have been imported into the country by Abbey Court and Glencor, but was distributed by the Petroleum Product Marketing Company (PPMC), which later expressed remorse over the incident.

Eleven years later, precisely in February 2008, Oando delivered 33,000 metric tons of fuel imported from Gunvor International BV Amsterdam, a commodity trading firm in Switzerland.

After several reports of damaging vehicles, Oando admitted in a press statement that the fuel was contaminated with ethanol after confirming with the supplier.

Like in the current case, it slipped through the lenses of the defunct Department of Petroleum Resources (DPR) which did not test for ethanol, saying that like in the extant situation, it was not part of the specification of Nigeria grade for petrol.

AN AVOIDABLE SITUATION

Nigeria shouldn’t be boxed into this corner in the first place, if it had the refining capacity. Furthermore, the situation would probably be different if the NNPC wasn’t the country’s sole importer.

Basically, the government stopped private businessmen from importing the product because it felt they could not be trusted and weren’t really transparent in their dealings.

In addition, the shortage of forex in the country has ensured that dollars are only made available to the national oil company. Although in 2020, Kyari stated that the it had nothing to gain from being the sole importer of the product and was working assiduously with the Central Bank of Nigeria (CBN) to ensure availability, nothing has changed since then. While under the Petroleum Industry Act (PIA), the NNPC has been empowered to function as a commercial entity, but the fact that it’s a sole importer will continue to impact it negatively.
WHAT IS METHANOL?

While the presence of methanol in petrol is not bad in itself, however it has to be within certain limits. “Methanol is a regular additive in petrol and is usually blended in an acceptable quantity,” the downstream sector regulator recently said, but when in excess, methanol can have damaging effects in vehicles, THISDAY learnt.

It could affect components such as vehicle gaskets when the methanol content in fuel becomes higher than permitted, thereby corroding the parts. While the global average for methanol additive could be somewhere between 2 per cent to 3 per cent, the latest problematic fuel brought into the country was said to have as much as 20 per cent methanol. Experts believe that a large quantity of methanol must have been mixed in the petrol that came to Nigeria because it is cheaper, in fact being the cheapest alternative fuel in India, for instance.

CONTROL MECHANISMS FAILURE

A Petroleum Engineer, who weighed in on the matter, Bala Zaka, feels that all the three principal control mechanisms in the process of getting the quality of the imported fuel failed.

“The first one is the preventive control mechanism, then the detective control mechanism and the corrective control mechanism,” he stated.

Zaka noted that if preventive control mechanism was effective, it would have stopped the contamination from happening in the first place.

“So, if preventive control mechanisms had been in place, the dirty fuel or adulterated fuel should have been prevented from leaving the point of loading and heading towards Nigeria. So, to that extent, at the point of prevention the preventive mechanism failed.

“Between the preventive mechanism is the detective control mechanism which should have detected the wrong fuel. So, what happened was that the detective control mechanism also failed and the dirty fuel or adulterated fluid was able to get into Nigeria.

“Even the corrective mechanism failed, because as an afterthought, we couldn’t prevent it from coming in. We didn’t detect it. Then when it started causing the harm, we were supposed to have corrected it, the corrective mechanism failed and that was why people started crying out,” he argued. Zaka stated that it was unfortunate that the regulatory authority and other persons concerned took more than 48 hours to give an explanation as to what happened.
WHAT NEXT?

Going by the antecedents of this government, it’s unlikely that anyone will be sanctioned for this action, or better still inaction, that has caused millions of Nigerians unbearable pain. In a few days, things will probably return to normal and Nigeria will go back to its “business as usual” mode. Will the authorities prove Nigerians wrong and mete out appropriate sanctions where necessary? That remains the million tonnes question (pun intended) waiting to be answered.