Furore over diversion of petrol by marketers

25 July 2015, Abuja – The lingering fuel crisis in the country, no doubt stemmed from the refusal of private marketers to import fuel cargoes due to the failure of the federal government to meet its obligations in the payment of subsidy claims as stipulated in the Petroleum Support Fund (PSF) scheme.

IPMAN-fuel pumpBoth major and independent marketers are owed huge amount of money in subsidy claims and foreign exchange differentials and interests that arose from the delay in the payment of subsidy claims on imported cargoes.
Following the inability of the government to liquidate the outstanding claims within the 45 days stipulated in the PSF scheme, the marketers are unable to repay borrowed funds.
To protect the depositors’ funds, the banks responded appropriately by denying the marketers access to credit facilities to fund further importation.

The refusal of the banks to finance importation of petrol forced the marketers, which used to account for about 60 per cent of imported products, to stop importation and rely on the NNPC for product allocation.
In order to realise its statutory mandate of ensuring adequate supply of petrol in the country, the NNPC has to increase the volumes of product imported so as to bridge the supply gap arising from the refusal of the marketers to import.
Also in view of its lack of storage and reception facilities to receive imported cargoes, the NNPC also signed throughput agreement with some private depot owners to use their facilities to store and distribute petrol imported by the corporation.

Diversion by Marketers
Despite the massive importation of Premium Motor Spirit (PMS) by the NNPC to flood the market, the marketers have continued to create imbalance in the distribution of the product through diversion.
This has caused distortion in the market and tightening supply, with the current attendant scarcity situation, which has refused to abate since March.
The scarcity, which is fueled by the supply imbalance created by the marketers , encourages the sale of product at exorbitant prices in the outskirt of towns and cities where the officials of the Department of Petroleum Resources (DPR) are unavailable for monitoring of retail outlets.
As a result, petrol that is meant for Lagos, Abuja and other major cities is diverted to the hinterlands and sold above official pump prices, while scarcity persists in the cities and towns.
Recently, the NNPC raised the alarm over the alleged diversion of trucks of petrol meant for Abuja and other major cities to unknown destinations, where they are sold at high prices.
Sources at the Pipelines and Products Marketing Company (PPMC), a subsidiary of NNPC, had told THISDAY that 111 trucks were loaded to Abuja on a Friday but 70 per cent of the petrol stations in the city were not selling on the following day being Saturday.
“I don’t believe all those volumes had been sold on Friday to warrant the long queues in the few stations selling. What I suspect is that most of the volumes have been diverted outside Abuja. If you take a drive along the Suleja-Kaduna Road, you will see that all the stations along the road are selling despite the fact that we didn’t supply fuel to them.
“The question is where are they getting the supply from? 111 trucks can refuel a total of 73,260 vehicles at the rate of 50 litres per vehicle,” said one of the sources.
Another top official of PPMC also confirmed that in one week alone, the NNPC dispatched 386 trucks inside Abuja but unfortunately most of the Filling stations were not selling and remained under lock.
According to him, 386 trucks can refuel 234,760 vehicles at the rate of 50 litres per vehicle.
“For as long as the black market exists outside Abuja, the product will definitely find its way to those hotspots where a litre of petrol sells for as high as N120 per litre,” he added.
He also stated that the NNPC would be compelled to read the riot act to the major marketers to desist from diversion of the product.
In a letter dated July 8, 2015, which was addressed to the Executive Secretary of Major Oil Marketers Association of Nigeria (MOMAN), Mr. Obafemi Olawore, the Managing Director of PPMC, Mr. Haruna Momoh, reminded the marketers of their earlier discussions on the need to maintain consistent supply to Abuja “to avoid gridlock, security risks and other problems associated with product scarcity in the Federal Capital, Territory (FCT).”
The letter with Reference Number PPMC/CSD/ED/45B, which was obtained by THISDAY and signed by one Amego FE, on behalf of Momoh, also reminded Olawore of his commitment to ensure that each of the seven marketers loads out between 15 and 20 trucks to Abuja daily.
“We wish to observe that the major marketers load-out to Abuja has remained very low from NNPC discharges to their facilities at Apapa. Available records on daily truck load-out shows more concentration on other areas with little consideration for the federal capital. This fluctuation in products’ deliveries to Abuja by the major marketers is worrisome, despite having strategic and highest numbers of retail outlets in Abuja,” Momoh said.
The PPMC boss also requested Olawore to impress on the major marketers the need to improve and maintain steady product supply to Abuja on daily basis.
“Additional volumes may be loaded from NNPC depots and throughput depots (Capital Oil and Folawiyo in Lagos, Matrix Energy at Warri and Blacklight Oil at Oghara),” Momoh added.
NNPC also warned that henceforth any marketer found to be involved in product diversion would have its Bulk Purchase Agreement revoked.
The PPMC also revoked the lifting licence (Bulk Purchase Agreement) of three independent marketers for engaging in products diversion and sundry infractions.
The affected marketers were identified to include  Funo Alfa, Organizer West Africa  and Rich Oil, adding that the sanction is with immediate effect.

Established cases of diversion
In a strongly -worded letter dated July 7, 2015 and addressed to the Area Manager of PPMC in Kaduna, the Depot Manager in charge of Suleja Depot, Mr. Gwarzo AT accused some major and independent marketers of diverting petrol from January and June 2015.
The letter, which has reference number PPMC/SUL/DM/206, also identified the erring marketers, which also included NNPC Retail Stations.
“It was observed that some IPMAN, who are not Suleja-based marketers were also loaded for Suleja from various depots, which subsequently diverted the product. The period is from January to June 2015.  The major marketers and NNPC Retail claimed that after loading, the trucks were converted to local dispatch, which they could not substantiate,” Gwarzo said.
Apart from the NNPC Retail Limited, some of the affected marketers include, Forte Oil, Conoil, Oando, Total, MRS Oil Nigeria Plc, and Mobil Oil Nigeria Plc.
Others include independent marketers such as AA Butu & Sons; Alafam Nigeria Limited; AYM Shafa Limited; Asta Nigeria Limited; Bisfarn Limited; Bonlake Nigeria Limited; Jismah Investment; Lofas Investment; M Tila; Magali Oil; Favour Oil & Gas and Funo Alfa.
Others are Pasali; Rasgoke Investment; SBB Nigeria Limited; SOOIL  Investment; Suabco Petroleum; Toni Oil; Tonimas; Asgit; Tally Oil; Tantano, Rich Oil and Organiser WA.
Mefra Petroleum; Ibro Investment; Jacob Oyerinde; Mohibra Investment; Matrix Eng; Musakmat; Awelewa; Yuhassib Nigeria; Dajitim; Sulaiya Oil and AA Gajaga, among others, are also some of the marketers listed by PPMC.

Marketers’ excuses
But some major marketers and depot owners, who spoke to THISDAY on the condition of anonymity, have blamed the NNPC for the diversion, alleging that the corporation directed that most of the trucks that load petrol in Lagos should discharge in Abuja and the Suleija axis “as if these two cities were the only towns in Nigeria”.
Some of the major marketers blamed NNPC for giving preferential treatment to Abuja and Suleja, thus encouraging diversion of fuel.
“When NNPC allocates 200 trucks to a depot, they will insist that all the trucks must go to major marketers and NNPC mega filling stations in Suleja or Abuja. Is it only Suleja or Abuja that is in Nigeria?
“They will bring their men to the gates to ensure that only trucks going to any of the two places will be allowed to load. That is why trucks meant for those places are diverted,” said one of the marketers.
On the allegation by NNPC that the marketers were diverting to areas where they sell at N120 per litre, one of the marketers also blamed NNPC for this malpractice.
“When marketers pay money to the NNPC for petrol, it takes NNPC up to three months to load the marketer. So the marketer adds all the financial costs of the delay to the cost of the product.
“NNPC has no moral right to sanction marketers that sell above official price,” he added.
The spokesman of NNPC, Mr. Ohi Alegbe, however, stated that the marketers have no excuse for diverting products allocated to them by the corporation.
“We are doing our best. All NNPC stations have fuel. Why are the marketers diverting products? Why are they not selling in their filling stations? Why are they selling to black marketers? They are just indicting themselves,” Alegbe said.
One of the marketers told THISDAY that the problem was not about diversion but unavailability, which has led to high prices.
“Most depots in Lagos and Calabar, for instance, loaded for N94 per litre yesterday. For you to move the product from Calabar to Enugu or Kogi, you will incur an additional cost of N4 per litre on transportation, making it N98. So you cannot sell it at official pump price.
“The only way out is not to sell at Enugu metropolis to avoid DPR. You could instead sell it in filling stations along the Enugu-Onitsha or Enugu-Makurdi expressways or anywhere inside the hinterlands.
“The same thing happens to petrol that is meant for Lagos and Abuja. That is why you don’t find petrol inside the cities. The product that is supposed to be sold inside Lagos is being sold along the Lagos-Ibadan expressway, while Abuja-Suleja roads are flooded with petrol but there is none in the cities,” he explained.
He said the allegation of diversion was meant to distract attention from the inability of NNPC to bridge the shortfall in supply arising from the refusal of private marketers to import due to unpaid subsidy claims.
In response to the accusation by the NNPC, Olawore in a letter dated July 15, 2015, told Momoh that the marketers did not have sufficient petrol at Apapa during the period cited by the PPMC boss in his accusation.
To support his claims that the major marketers received insufficient allocation from the PPMC in the month of June, Olawore also released the individual truck-out of each of the marketers to Abuja during the period.
According to the report, Mobil loaded out 106 trucks of petrol to Abuja; Conoil (15 trucks), MRS (164 trucks), Oando (250 trucks), NIPCO (228 trucks), Total (191 trucks) and Forte Oil (104 trucks). According to Olawore, between June 10 and June 16, three major marketers were totally out -of- stock, while the three others had only few days stock.
He reminded the PPMC boss that the marketers had earlier suggested that two vessels be dedicated to them using Bulk Oil Petroleum (BOP) jetty and four vessels for Petroleum Wharf (PWA) jetty.
“Our investigation showed that you either lacked vessels to do STS (Ship-to-ship) transfer or there was inclement weather on the high seas, thus frequency of vessel visits to Apapa was affected. We did not get priority loading in Oghara and Warri and this left our trucks waiting and idle. The same situation applied at Capital and Folawiyo,” Olawore said.
In order to flood Lagos and Abuja with petrol, Olawore suggested that the PPMC should dedicate PWA and BOP with four vessels, which must be dedicated to only the major marketers.
The MOMAN scribe also stated that Folawiyo should be dedicated to the major marketers only, while three vessels must be provided weekly.
According to him, the measure will ensure that at least 30 per cent of the product is dedicated to Abuja. Olawore also described the current PPMC ticketing as very ineffective and suggested that porgramming should be done by the major marketers.
“Finally, another facility in the east belonging to any MOMAN member should be dedicated to only MOMAN liftings to Abuja and the North and this will ensure that at least 30 per cent are lifted through these locations,” Olawore added.

Complicity of PEF Officials
The marketers have however accused officials of the Petroleum Equalisation Fund (PEF) at the depots of collecting between N70, 000 and N100,000 bribe per truck to help the owners divert to other destinations .
According to the marketers, the PEF officials encourage diversion by manipulating the agency’s online monitoring mechanism, Project Aquila, which was designed to check the diversion of petroleum products.
“Some marketers pay between N70,000 and N100,000 as bribe to PEF officials for each truck. The officials will give them the seal to go to Abuja, for instance. The marketer will not go to Abuja but will divert the product, while the PEF officials will help him to process the online information to prove that the product was delivered to Abuja,” said an official of the independent marketers.
But the spokesman of PEF, Mr. Goddy Nnadi, told THISDAY that the allegation against officials of the agency was false and baseless, insisting that the officials of the agency do not have control on the information concerning each truck, which he said, is dispatched electronically from depot to depot.
Nnadi, however, exonerated PEF officials of alleged complicity in the diversion of petrol, saying that any marketer that diverts product is not paid bridging claims.
According to him, officials of the agency at the depots cannot collect bribes because they do not have the capacity to aid diversion successfully.
“Our staff cannot change what is on the system and the system goes with what is on the document, which is dispatched electronically from depot to depot. If the marketer does not produce the out-turn report duly signed by the manager of a filling station, he is not paid bridging claims,” he said.
Despite the official position of PEF, THISDAY gathered that the Economic and Financial Crimes Commission (EFCC) has commenced the investigation of some marketers, who submitted claims for bridging funds for fuel that was not delivered to the filling stations.
The anti-graft agency is also probing some officials of PEF for their alleged connivance with the marketers.
A member of the PEF management board told THISDAY on the condition of anonymity, that the new Executive Secretary who invited EFCC for the investigation, had also redeployed all PEF staff in Kaduna State, while those suspected to have aided the attempted fraud are helping EFCC in their investigations.
Under the PEF scheme, which is administered by the PEF Management Board, marketers that transport petrol to a minimum distance of 450 kilometres and above are entitled to transport claim, otherwise called bridging claim, which is N11.82 per litre for products moved from depots across distances that qualify for the claims.
The scheme, which is aimed at ensuring that petrol is sold at the uniform official price across the country, also provides that for distances below 450 kilometres, marketers are paid equalisation or inter-district claims which is however less than the bridging rate.
To ensure that marketers do not make false claims, a marketer who moves a truck of petrol from a Lagos depot to Kaduna State, for instance, must report at the NNPC depot in Kaduna for documentation by officials of PEF before the product is moved to any filling station within the areas covered by Kaduna depot, which is one of the 21 NNPC depots across the country.
The manager of the filling station who receives the product must also sign the out-turn report showing that the product has been delivered for the marketer to be entitled to bridging claims.
THISDAY investigation, however, revealed that some marketers who claimed to have lifted products from Lagos depots to Kaduna depot are being investigated by the EFCC after submitting false claims for the payment of bridging for petrol that was not delivered.
Diversion has frustrated efforts by the NNPC to clear the distortion in product supply and maintain equilibrium in the market. Unfortunately, according to a source, “those partly responsible for the distortion in the supply chain are the same people are spreading falsehood about NNPC  in pursuit of their selfish interest,” the source declared.


– Ejiofor Alike, This Day

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