A Review of the Nigerian Energy Industry

NNPC blames fuel scarcity on pipeline breaches

NNPC06 March 2014, Abuja – The Group Managing Director, Nigeria National Petroleum Corporation (NNPC), Mr. Andrew Yakubu, yesterday attributed the current fuel scarcity in the country to the disruptions in the pipeline network leading to its depots.

Yakubu who made this claim while answering questions from journalists after defending the agency’s 2014 budget before the Joint National Assembly Committee on Upstream Petroleum and Gas, said the NNPC had 20 depots with pipelines stretching as long as 5,000 kilometres.

Meanwhile, the Department of Petroleum Resources (DPR), yesterday in Abuja, said it had sanctioned 57 marketers that were found guilty of various offences ranging from hoarding of petroleum products to diversion of products and sale above approved pump price in and around the Federal Capital Territory (FCT), Abuja.

It also clarified the statements credited to the agency during its budget defence at the Senate on Tuesday, stating that it had developed a pragmatic approach to monitoring the supply of Premium Motor Spirit (PMS) within its jurisdiction.

According to Yakubu, this type of fuel scarcity only occurs when the distribution network is breached, promising however, that the challenge is temporal as effort is being made to fix the breach.
“The best way to distribute fuel is through the pipeline network to our various depots that are all over the country. We have over 20 of them and about 5, 000 kilometres stretch of pipelines and that is the best and the most efficient way to distribute petroleum products, but when they are breached, then you have this kind of challenge.

“Making use of 1,000 kilometres per day to distribute fuel across the country is usually not the best but when we are faced with this situation,  then the fall back will be the truck and that should be temporary. As soon as we fix the pipelines normalcy will be restored,” he said.
The NNPC boss also said in the corporation’s bid to address the security breaches, which usually culminate in fuel crisis, exploration of seven other basins besides the Chad basin is ongoing.
Disclosing that such basins are located in Yola, Dahomey, Bida, Sokoto and three other unnamed places, Yakubu added that the NNPC had already acquired data for the exploration and currently on the sixth phase of the project.

He said: “The projection of a daily crude production of 2.44 million is realistic. However, with the security challenges occasioned by the breaches, we have the capacity but we need additional investment to address the security breaches that we continue to have.

“There are seven other basins apart from the Chad that we are exploring.  What we did last year was to acquire the aero magnetic data from the Geometric Survey Department. We have  Yola, Bida, Sokoto,  Dahomey and others.

“The main focus now, which was a result of an extensive geological study that was done a couple of years ago is on the Chad basin. The data for the other basins had been acquired and as we progress with the chad basins – it has 13 phases and we are now in phase six.”

He also attributed low performance by the Chad basin to increasing spate of insurgency in the region adding that in government’s commitment to address the problem, it has continued to open up basins for exploration with contracts awarded four years ago.

“The low performance in the Chad basin was as a result of insurgencies in the region. However, work’s progressing in line with government’s aspiration of opening up all known sedimentary basins for exploration. A seismic acquisition contract was awarded in 2010 in respect of Chad basin,” he added.
He, however, said the agency in collaboration with  the Department of Petroleum Resources (DPR), Pipeline Products and Pricing Regulatory Agency (PPPRA), NNPC and the Pipeline Products and Marketing Company (PPMC) had deployed an ad hoc team to Lagos with the assignment to find lasting solution to the menace.

While expressing hope that beginning from yesterday, the crisis would begin to fizzle out, he said so far, over 1,000 trucks had been dispatched to Lagos and other areas.

“We have a full team right now in Lagos, Last week, the team was in Abuja. We went round the  clock to  clean it up; to get strategic reserve released to the stations and we are able to reduce the fuel queues. We shifted to Lagos at the weekend and we have injected quite a lot into the Lagos market.

“All the marketers, the DPR, the PPRA, NNPC and the PPMC have a very strong team out there to ensure that the deliveries are made. Offshore, we have some vessels that had not been offloaded into the tank farms in Lagos and a lot of supplies have gone into most filling stations. In the last couple of days,  we have close to 1,000 trucks that had been loaded out of the various depots and jetties in Lagos and the entire fuel is being supplied to the various stations in Lagos and beyond.

“As at the close of business on Tuesday, most filling stations in Victoria Island and Ikoyi were dispensing fuel and we expect that other parts of Lagos will be impacted by the increase in the fuel supply strategy that the combined team has been doing. Hopefully by the end of work today (Wednesday), we would begin to see a change in the fuel scarcity situation in Lagos,” he said.
However, NNPC’s claim that the scarcity was caused by breach in network was in contrast with the submission of DPR on Tuesday.

DPR’s Zonal Operations Controller, Aliyu Halidu,  equally told the committee during its budget defence that the current fuel scarcity was caused by non-renewal of contracts of some independent marketers who import the product as well as non-payment of subsidy fund to other marketers by the federal government.
These contradictions leave Nigerians confused regarding which of the two positions they should believe on the real reason for the protracted shortage in fuel supply.

The Zonal Operations Controller while making reference to the shortage in supply of petrol in cities across the country, said: “we have checks and balances as to know whether the marketer is hoarding or not. Those we have found hoarding we have sanctioned them, we have informed PPMC to stop them from loading products and the sanction will remain for at least one month.”

“We equally tell PPMC to charge them the commercial value of the product. Within this period we have found two marketers, one along the airport road and one along Kaduna road and we have already informed PPMC. For DPK we have sanctioned over 55 marketers this year and we have already informed Warri refinery that they should charge them the commercial price of the product,” Halidu further said.
He maintained that due to the intense monitoring mechanism deployed by the DPR, most marketers now refrain from bringing kerosene into Abuja and environs.

He said: “All the filling stations that have lifted products from PPMC which are on our records we ensure that they sell at N50 a litre. We station our staff there sometime for five consecutive days so that they monitor the sales at N50 per litre.

Unfortunately because the marketers know that we do monitor them and enforce the N50 price some of them are not interested in bringing the kerosene to Abuja. They are not bringing it anymore because we have intensified our surveillance, we have sanctioned over 55 marketers and have told PPMC to charge commercial value for the product in addition to some of them been suspended for one year.”
He also informed that the Department was partnering with the Nigerian Civil Defence and Security Corp (NCDSC) as well as the Abuja Environmental Protection Board (AEPB) to rid the city of the menace and practice of black market operators who further complicate the supply situation.


– This Day

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