A Review of the Nigerian Energy Industry

PPMC slashes cost of demurrage on imported fuel cargos

25 August 2015, Lagos – The Pipelines and Product Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC) successfully reduced the high cost of demurrage on imported fuel vessels from $135.94 million in 2010 to $73.25 million in 2014, representing a decrease of 45 per cent.

Oil-tanker-cargo-ship-360x240In a status report made available to THISDAY, the company noted that as at 2010, product import was plagued with high demurrage cost.

The report however noted that there has been a steady decline in demurrage cost between 2010 and 2014, except in 2012 when demurrage due to the high delivery of Offshore Processing Agreement (OPA)/Swap cargoes, to avert fuel scarcity during the subsidy crisis when other marketers refused to import products.

On the state of NNPC’s 21 depots across the country, the report stated that only nine out of the 21 NNPC depots were active in 2010, representing 41 per cent performance, adding that these nine were mainly the refineries, coastal depots and few other depots in the western part of the country.

Also nine segments out of 20 segments of the pipelines were available as at 2010, representing 45 per cent and these active segments were in the south-western part of the south west.

The report also revealed that there were also no butanisation plants for Liquefied Petroleum Gas (LPG), except in Apapa, while poor products accountability led to products gaps at the depots

According to the report, in-depot losses were also high as at 2010 due to obsolete facilities and inefficient operations, while the period was also characterised with long fuel queues at filling stations because of product scarcity.

However, by 2014, the PPMC said 18 out of the 21 loading depots were active, representing 86 per cent performance, while 18 Segments out of 20 (90 per cent), with a total of 4,229 kilometres out of the 5,120km (83 per cent) crude oil and products pipeline network, was available.

There was also wider national coverage of pipeline availability by 2014, with improved supply and distribution of petroleum products in the country and reducing bridging costs.

Also all eight LPG Butanisation Plants were available in Ibadan, Ilorin, Enugu, Kano, Gombe, Gusau, Apapa and Makurdi.

In the area of upgrade of loading facilities, the company had between 2010 and 2014 embarked on the installation of digital loading metres and upgrade of tank gauging systems for efficient product accountability.

Consequently, work has been completed at Mosimi, Calabar, Suleja, Minna, Kano, and Yola depots, while depot losses were drastically reduced and fuel queues eliminated as petroleum products were available nationwide by 2014.

Before these milestones were attained, some of the depots were in deplorable condition for years, while others had been shut down due to incessant attacks on pipelines that supply products to them.

According to the PPMC report, it became necessary to engage the services of more private depots to enable bridging to inactive depots, especially to the Northern and South east regions.

The report noted that in 2013, Benin and Gombe depots, which were out of service for over 10 years were equally re-activated after rehabilitating Warri-Benin and Jos-Gombe pipelines segments, while Enugu depot was also re-activated in 2014.

Currently, 18 out of the 21 loading depots (86 per cent) are active; sustaining distribution and supply of petroleum products and reducing bridging costs.

Within the period under review, the installation of digital loading meters enhanced accurate and effective loading and products accountability.

Before this period, most of the Loading arms in the Depots were installed with analogue meters, thus leading to inefficiency in products dispensing and poor products accountability.

– This Day

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