Home NEWS Fuel Scarcity Looms As NNPC Depot Runs Dry

Fuel Scarcity Looms As NNPC Depot Runs Dry

by InlandTown Editor
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In what seems a baptism of fire for President Muhammadu Buhari in his first week as Minister of Petroleum Resources, pockets of queues in filling stations in some major cities across the country appear to have stretched as the fuel scarcity worsened on Friday.

In spite of assurances by the Nigerian National Petroleum Corporation, NNPC, industry operators remain sceptical that these were ominous signs the country may be heading for a big mess in the run up to the coming yuletide season.

The operators’ scepticism is fuelled by reports that stock of petroleum products at NNPC facilities across the country was grossly insufficient, with supply from local refineries incapable of supporting imports.

The Executive Secretary, Depot and Petroleum Products Marketers Association, DAPPMA, Olufemi Adewole, said on Saturday that all its members who own most of the products storage facilities across the country were fast running out of stock of products.

Mr. Adewole offered no hope that the situation might ease in the near future as most marketers do not seem to possess the financial muscle to undertake further fuel importations.

“We are loading what we have,” Mr. Adewole explained.

“But, it is one thing to load, and another thing for it to be adequate. We are loading what NNPC is giving us. As it stands now, almost all marketers have run out of stock.

“Sadly, nobody has the means to import. No marketer has received payment for products imported since August last year.”

Although the president gave approval a fortnight ago for the payment of about N413 billion as part of the subsidy arrears to marketers, Mr. Adewole said they were yet to receive the money.

“We learnt money has been approved, but the payment is yet to be made. Not one marketer has received a kobo. We are still waiting for the payment. If we got that, it would help us do better than we are doing at the moment,” he said.

The Petroleum Products Pricing Regulatory Agency, PPPRA, which is responsible for approving such payments, said in the wake of the reports that it was yet to get details of the approval by the president.
Neither the Executive Secretary, Farouk Ahmed, nor the spokesperson of the agency, Lanre Oladele, answered calls to their telephones by our reporter. They equally did not respond to the text messages on Saturday.

One of the marketers, who asked not to be named, as he was not authorised to speak on the issue, said feelers from the Pipelines and Products Marketing Company, PPMC, were that the stock of products at the depots was terribly low.

He said the NNPC depots at Mosimi and Ejigbo in Lagos as well as in Ibadan were currently facing acute shortage of products, as the pipeline servicing them are constantly attacked by vandals, particularly at the Arepo axis in Ogun State.

Details from the NNPC Operations Report for September showed that out a total of 287 pipeline break incidents recorded in June, about 151 cases affected the Mosimi line.

PREMIUM TIMES gathered that about 78 from 218 incidents were on the same line in July; 79 from 225 attacks in August and 22 from 236 breaks in September.

Other locations affected include the Kaduna line, which recorded 47 incidents in June; 36 in July; five in August, and 12 in September, while Port Harcourt had 71 incidents in June; 72 in July; 117 in August, and 170 in September. Warri had 10 incidents in June; 27 in July; 20 in August and 26 in September.
Besides, the marketer also pointed at the low supply of refined products from the three refineries in Port Harcourt, Warri and Kaduna to support a declining stock of imports by the NNPC and major marketers in recent times.

Although Executive Director (Commercial) PPMC, Justine Ezeala, said in Abuja on Friday that a stock of 1.4 billion litres of Premium Motor Spirit, PMS, popularly called petrol for distribution nationwide is projected for November, production figures from the refineries remain abysmally poor.

The combined capacity utilisation of the three refineries is at the lowest level at the moment, moving from 13.62 percent in July, to 24.08 percent in August, and 1.96 per cent in September.

Apart from the 210,000 barrels per day-capacity Port Harcourt refinery, which accounted for the entire 261,371.14 barrels, or 35,648 metric tons (MT) of crude oil processed during the month, NNPC report showed that those in Warri and Kaduna are currently not functional.

During the month, finished product yield from the crude oil allocation for local refining was only 23,465 MT, or 72.01 million litres of PMS, at about 4.15 per cent capacity utilisation.

Out of a total of 639.6 million litres of petrol supplied through Offshore Processing Arrangement, OPA, and local refineries in September, PPMC accounted for 456.8 million litres distributed. This was about 21.3 million litres per day.

With the country’s national consumption capacity put at an average of 40 million litres, the difference is expected from imports, an exercise the marketers say has been hampered with the refusal by OPA and crude swap dealers to pay their debts to NNPC.
The NNPC accounts for more than 55 per cent of total products imports, with the balance shared between members of the Major Oil Marketers Association of Nigeria, MOMAN, and the Independent Petroleum Marketers Association of Nigeria, IPMAN.

But the marketers blame their inability to meet their quota on a number reasons, including none payment of outstanding subsidy claims of about N470 billion from August 2014.

The marketers claimed the Debt Management Office (DMO), which works with the Finance Ministry and PPPRA to guarantee the payment of subsidy claims, had already informed them that there was no money in the Central Bank of Nigeria, CBN, account to redeem such payments.

Besides, under the new administration, marketers said such payments required the approval of the Senate, resulting in delay after the approval by the President a fortnight ago.

The marketers also accuse the CBN of denying them foreign exchange for fuel importation, apart from the commercial banks, which they said routinely default in letters of credit confirmations.
An average of $20 million is required to import a cargo of 30,000 MT of PMS.

But CBN’s Director of Communications, Ibrahim Mu’azu, denied the marketers’ accusation, saying the bank had always been conscious of the need to give priority attention to fuel importation in its allocation of foreign exchange.

“We give fuel marketers top priority in our FX allocation policy, because of the impact on the economy.

“We are conscious of the fact that anything capable of worsening fuel crisis would put undue pressure on the economy,” he explained.

On the issue of LCs by commercial banks, Mr. Mu’azu said the problem may be as a result of uncertainty from unpaid outstanding loans by marketers, which the banks may want settled before fresh facilities are granted.

Regardless, the situation appears to have eased a bit on Saturday in Abuja, as most filling stations, including the NNPC mega station, were selling fuel. However it worsened in other states like Kano where the few filling stations selling the product sold for about N130 a litre.

How long consumers would wait before the scarcity is fully resolved may depend on how soon government resolves its problems with the importers.

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