A Review of the Nigerian Energy Industry

No special levies for oil bunkering business – Osahon

George Osahon, Director, DPR14 January 2014, Lagos – Oil, gas and maritime operators in Nigeria will no longer go all the way to Senegal, Cote de Ivoire, Cape Verde and Singapore to fuel their vessels as the Federal Government has resuscitated downstream business in the Nigerian maritime environment, legally referred to as bunkering, which includes fueling of ships of all kinds in the high seas, inland water ways and within the ports. Director of Department of Petroleum Resources , DPR,, Mr. George Osahon unveiled this plan to journalists in Lagos, recently

We understand that bunkering operations were carried out in the country but were suspended few years ago. What were the mistakes that led to the suspension?

There were quite a number of mistakes in the past. First and foremost, if anybody says we do not have challenges with the regulation of the prices of petroleum products in Nigeria, the person is not saying the truth. Now, if you take petroleum products at a particular price, which is subsidised by government – you take it to an ocean-going vessel, nobody is there to monitor the price you are going to sell it. So, how much are you going to sell it? This is between you and your conscience. Business is not done in accordance with conscience. In those days when I used to travel as a young man, the first time in my life that I was inside the plane, I took one of those magazines inside the plan and the first page I opened was talking about somebody, who was organising a course. The course was on how to do business and the person, who organised it said that you don’t get what you deserve in business but what you negotiate. The government is not going to leave anything to chance. That is why we are now looking at bunkering a second time and saying that some of the issues that militated against our continuing with the business at that time are no more there. So, let us start again.

We expect that there should be classifications of participants in this business because it is not all participants that have money and all fingers, they say, are not equal. So, we expect that there should be categories of operators involved in the business. Are you thinking along that direction?

The categorisation will eventually take care of itself. It is not our business to categorise the operators, otherwise you end up introducing too many obstacles for people that will go into the business. This is a new business. Let the operators have the freedom to establish at their levels. We should not put any constraints or restraints on them. Let them run the way they want. A man who has the ability to build a filling station that has ten pumps should be allowed to build it. The man who has the ability to build a filling station with only one pump should also be allowed to build it. By the same token, if you have a bunkerer that has a vessel that can supply 10 ocean-going vessels, so be it. If you have somebody who can buy a vessel that can supply just one ocean-going vessel, so be it. We do not see the need to categorise them. Let them run in accordance with their capacities. That is the way we see it.

How huge is this bunkering business and what is the government’s projection in terms of how it is going to grow the economy?

First and foremost, you cannot operate bunkering in Ilorin, Kwara State because there is no water there. That means that we are concentrating in a particular part of the country – anywhere we have water where vessels can go back and forth. I mean those ones that can bunker non-regulated petroleum products. How big can it be? It could be as big as anything. Singapore today, is a big hub for bunkering. How come? It is simply because they started somewhere and they have the facilities to do it. They run it very well; they manage it very well. Most importantly, you will definitely go anywhere you have the assurance that you will get your petroleum products. It is not a matter of price now but availability and assurance that you will get what you want when you go there. If you won’t get what you want, why do you want to try? That is what we are looking at.

We learnt that only N250 million will be generated yearly by DPR as revenue from bunkering operations in Nigeria. Is this revenue not rather too small for such a huge business?

You are talking about the revenue being too small. What revenue has anybody mentioned to you? Those figures are figments of people’s imagination. The Federal Government makes money from taxes. There are no special levies for running a bunkering business. If you own a filling station today, the only thing you pay to the government is your tax. There is no special levy or special charge by anybody because you operates a filling station. It is the same thing in bunkering, but in this case you are operating a filling station just for vessels. The money that government makes is not different from what they have been making from other areas. The only business in this country that attracts special levy is the crude oil business, where government says the tax regime is 85 per cent, not 30 per cent. In every other business it is 30 per cent and that is why you talk about Petroleum Profit Tax (PPT) and normal corporate tax, which is CITA (Company Income Tax).

We want to take you back to why the government suspended this in the first place. Do you think we have started rightly, considering the concerns being raised by some people?

There is no way you will start and will not have one or two issues you will have to sort out along the line. We are not afraid to make mistakes. When we identify the mistakes, we correct them. I do not see any better way to start than what we have done right now. We have communicated with the operators, held meetings and collaborative discussions with all the other stakeholders – Nigerian Navy, Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Customs, and other relevant stakeholders. As far as we are concerned, once we sort out the concerns of the government and the people, there would be no problem. What are these concerns? The first one concern is security. The second one is that we do not want anybody to use this one as a disguise to go into another business, we are not interested in. You should know what I am talking about. Once we have taken care of these concerns, there should be no problem. More importantly, there is nothing that is in this bunkering business that is related to regulated petroleum products. That makes it easier and that is why I am saying that there should be no constraints in what we tell people to do. We do not limit people. Let them run in accordance with their size and weight.


– Ejiofor Alike, This Day

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