Fuel crisis: Why we create scarcity – Marketers

18 May 2015, Lagos — The lingering fuel  crisis may continue till the May 29 handover date to Gen. Muhammadu Buhari government, as oil marketers have resorted to hoarding the product to force government to pay the outstanding debts as claimed, Vanguard learnt.

IPMAN-fuel pumpThis is coming on the heels of the fact that the Nigerian Railway Corporation, NRC, is yet to fulfill its promise to begin evacuation of petroleum products from tank farms and depots in Apapa area nine months after.

It was learnt that marketers resorted to hoarding fuel due to fears that they might not be paid their outstanding subsidy claims for imported fuel, and as a result, decided to create the scarcity as a way of forcing the government to speed up the process of effecting payment of the subsidy.

A marketer, who preferred anonymity, told Vanguard that it is better to hoard petrol so as to force the government to agree with their terms before the change in government.

He said: “My friend, we are not sure what the incoming government will do with us as from May 29. We need to force the present government to pay us our outstanding claims now. We love this country, but we need to be sure we have products now, because we do not know what will befall us in the next two weeks.”

Another marketer also corroborated: “We are all aware how a new government behaves in Nigeria. There is uncertainty of what the incoming government will do with us as regards the subsidy. If you were in our shoes, wouldn’t you make sure you get every kobo owed you by the present administration? What better way can you do that than to keep what you have?”

Vanguard also learnt that the marketers decided to create scarcity in order to compel the government to pay them the losses they incurred when the government reduced the pump price of petrol from N97 per litre to N87 per litre.

Marketers’ subsidy claims

At the last count, the marketers, under the aegis of Major Marketers Association of Nigeria, MOMAN, and Depot Petroleum Products Marketers Association, DAPPMA, claimed that the Federal Government is owing them more than N200 billion as at February this year.

Executive Secretary of MOMAN, Mr. Obafemi Olawore, painted a grim picture of the situation thus: “The industry is bleeding. Our suppliers are at our necks. Our members are finding it difficult to bring in products.”

Olawore doubted the sincerity of the Federal Government to pay the debts before the end of President Goodluck Jonathan’s administration.

“At one of the meetings we had with the Minister of Finance, we told her that we are being owed N200 billion but she insisted it was N131 billion. The way to resolve that figure is the timing. She was using the old figure but we were using the current cut-off date we had at that time. She decided to set up a committee made up of PPPRA, DMO, CBN and her office to verify the claims. Our opinion was that there was no need to re-verify what has been verified by PPPRA.

“We thought it was just a ploy to delay payment; it is a delay tactic. As at the time we met, they had three weeks for the regime to end and with that time frame there is no way a committee can work. She specifically directed them, but there is no way a committee will not delay and get late. That is why we were not comfortable,” he said.

He insisted that the issue of verifying claims should not arise as the Debt Management Office, DMO, had transmitted the cost to the Minister of Information.

Olawore said that marketers had only been paid N154 billion contrary to the claim by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, that N156 billion was paid. He also said there is the likelihood that the fuel scarcity will continue if the federal government did not care to pay the marketers soon.

Over-pricing and under-dispensing

Meanwhile, marketers are not only sabotaging the economy through hoarding, but are also engaged in all manner of sharp practices, including arbitrary pump price hike and under-dispensing of product to reap huge profits.

While pump price had almost more than doubled at between N120 and N170/litre depending on outlet and location, quantity purchased had also reduced proportionately. Pump pressures have been so adjusted and manipulated to almost half a litre for a regular quantity even at very high cost.

However, industry regulator, the Department of Petroleum Resources, DPR, watches helplessly as no marketer has been brought to book, even as the situation escalates.

Trucks nightmare in Lagos

In addition to having to pay much more for very much less, motorists and commuters were also subjected to daily nightmares in and out of Apapa as at last Thursday by petroleum trucks who take over the highways to load products from the depots and tank farms located in Lagos.

Bucks have been passed back and forth among contending stakeholders – the Federal Government, owners of the highway; the Lagos State Government, which reaps bountifully from levies collected from the truck drivers and the Petroleum Truck Drivers, PTD, who claim they are not to blame for the blockade of the highways.

Olawore noted that about 6,000 trucks come to Lagos daily to procure petroleum products. The large number of tankers getting to Lagos could be attributed to the inability of the railway to commence haulage of products to the Northern parts of the country.

Railway yet to lift petrol

Nine months after the Nigerian Railway Corporation, NRC, expressed the hope that the traffic gridlock within the ports access roads will be a thing of the past as the corporation would begin the evacuation of petroleum products from tank farms and oil depots, the situation has remained the same.

Last week, The NRC said they have begun negotiations with MOMAN as well as the Petroleum Equalisation Fund, PEF, to begin lifting of petroleum products by rail.

Director of Operations, NRC, Mr. Niyi Alli, told Vanguard that the corporation had all the capacity to lift 1.8 million litres, an equivalent of 30 truckloads of PMS at once through rail, adding that once discussions were concluded and all safety concerns resolved, lifting will commence in earnest.

He said: “The issue here is that we are trying to have a meeting with the Major Oil Marketers Association of Nigeria, MOMAN, to iron out major issues concerning lifting of PMS. The major issue has been around loading and offloading because we are talking about moving petroleum products which is quite risky because of the nature of the product.

“We, as the Nigeria Railway Corporation, have gone ahead to do all the sidings for the major oil marketers and have acquired wagons which are to be used for the movement across the country. In terms of the issues with the major marketers, we have scheduled a meeting between the NRC management and the major marketers this week.

“We have also engaged the PEF to ensure that the price of PMS is maintained, in terms of the PMS movement. For us, it is all about ensuring that all safety issues are resolved. This is because carrying PMS is not the same as carrying AGO. PMS is highly inflammable. But the good news is that all stakeholders are sitting around the table to ensure that safety is not compromised.

“At the moment, we have the capacity to move 900,000 litres of PMS, an equivalent of 30 trucks, at once. In all, we have two big trains that can move 1.8 million litres of petroleum.

But the question is how many times can we move in a week and how many times can we move in a day? So once we start, we can grow gradually.

Alli explained that certain measures need to be taken into consideration before haulage of petrol is carried out.

NNPC petrol

It was also gathered that the premium motor spirit, PMS, or petrol in circulation is the supply made by the Nigerian National Petroleum Corporation, NNPC, which is responsible for about 50 per cent of the fuel supply in the country.

The NNPC and its downstream subsidiary, the Pipelines and Products Marketing Company, PPMC, said it had 1.2 billion litres of petrol in stock. The figure translates to 31 days sufficiency going by the 40 million litres daily consumption of the product in the country.

According to the Managing Director of PPMC, Mr. Haruna Momoh, 21 additional vessels laden with petroleum products are offshore Lagos waiting to berth.

He said the NNPC had made adequate arrangements to ensure energy sufficiency in the country and reassured motorists that the noticeable queues at the filling stations would thin out in the days ahead.

Momoh noted that the NNPC also has 21 days sufficiency of Automative Gas Oil, AGO, otherwise known as diesel and 18 days sufficiency of Dual Purpose Kerosene, DPK, otherwise known as kerosene.

He explained that as part of efforts to ensure petroleum products sufficiency and distribution, the NNPC embarked on aggressive reception depots rehabilitation in 2011, adding: “As at today, 18 depots out of the 23 depots have been fully recovered with the exception of Makurdi, Yola, and Maiduguri due to the activities of pipeline vandals.”

According to him, “Carrying PMS is not that easy, there are safety implications. Also, NRC cannot just load PMS from a tanker; you have to have sidings to the tank farms. And the offloading sidings have to have sidings too. There are also the issues of the PEF. These are not the things you hurry over because of the safety risks involved. PMS is highly inflammable, so we are very careful with the way we intend to handle its movement. But the good thing is that there are discussions going on already to make this possible within the shortest time possible.

“We have scheduled a meeting between the management of MOMAN and the NRC to finalise all the issues that need to be resolved. If all goes as planned, in the near future, we could begin to lift. The key challenge for us is that it is difficult moving petroleum products. The fact that the railway is functional doesn’t mean that every product could be moved with ease. There are different types of products which could be moved which are not as volatile as petroleum products.

“Now if we rush into hauling petroleum products and there is a major incident relating to safety, you can imagine what the cost implication will be. We also consider the fact that we are entering a market which has been cornered by different people. So there is bound to be challenges. The only way is through negotiations which we have started now. But moving PMS is our highest priority now and that is why we are trying to clear all bottlenecks in order to make headway.”

“What all these imply is that the Corporation, despite its capacity to lift still has to contend with the issues of safety while trying to manage and balance the interest of the oil marketers as well.”

Vanguard however learnt that conflict of interest between tanker owners and NRC has been the major reason why petroleum products haulage is not done through the railway.


– Vanguard

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