29 August 2015, Lagos – Despite the controversies surrounding the Crude for Petroleum Products Exchange Agreements, better known as crude oil swaps, and Offshore Processing Agreements (OPAs), entered into by the Pipelines and Product Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC) and oil traders between 2011 and 2014, the corporation, the company has scored itself high in performance between 2010 and 2014. Ejiofor Alike reports.
The perceived lapses of the Pipelines and Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC) have attracted public outrage in recent times, especially with regards to the Crude for Petroleum Products Exchange Agreements, otherwise called crude oil swaps, and Offshore Processing Agreements (OPAs), entered into by the company and some oil traders between 2011 and 2014.
Apart from the alleged corruption in the various transactions cited in the reports of the Nigeria Extractive Industries Transparency Initiative (NEITI) and some foreign agencies, the oil swap deals have also been blamed for the abysmally low output from NNPC’s refineries and the high importation of petroleum products into the country.
Contrary to the perception that that the nation’s four refineries were operating at suboptimal capacity, thus necessitating the massive importation of petroleum products.
The PPMC said in a recent report that it discharged its statutory mandate successfully between 2010 and 2010.
State of 21 depots/pipelines
In a status report made available to THISDAY, the PPMC 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.
“In 2011, Suleja and Minna Depots were re-activated with the rehabilitation of the Kaduna-Suleja-Minna pipelines segments linking them. Jos Depot was also activated with the recovery of Kaduna-Jos pipeline segment. In 2012, Aba Depot which was moribund for about 7 years was re-commissioned after rehabilitating the PH-Aba segment. Also the North western and North eastern depots of Kano and Gusau were re-activated after rehabilitating the Kaduna-Zaria-Kano and Kaduna-Zaria-Gasau pipelines segments,” the report said.
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.
Over the years, some of the pipeline systems became unavailable, thus hindering smooth distribution of petroleum products.
In fact, by 2010 only nine of the 20 segments were active, representing 45 per cent performance.
With the phased rehabilitation works, the pipelines were linked to their depots, with Kaduna-Suleja – Minna segments linking Kaduna to Suleja and Minna Depots in 2011,while in 2012, PH-Aba segment was linked to PH and Aba Depot.
Kaduna-Zaria-Kano and Kaduna-Zaria-Gasau pipelines segments linking Kaduna depot were linked with Kano and Gusau depots.
Again in 2013, Warri-Benin segment linked Warri with Benin Depot.
Jos – Gombe segments were linked to Jos and Gombe Depots, while PH- Enugu pipeline segment was rehabilitated in 2014.
By 2014, 18 segments out of 20 (90 per cent) were available and also a total of 4,229km out of the 5,120km (83 per cent) crude oil and products pipeline network was available.
As pointed out earlier, from 2007-2010, all the LPG Butanisation Plants were dormant, except Apapa.
But by 2014, all eight LPG Butanization plants, except Calabar which was sold, had been rehabilitated.
Ibadan LPG Butanization Plant was the first to be rehabilitated and was re-commissioned in 2012.
In 2013, four LPG Butanization Plants in Kano, Enugu, Gusau and Gombe were rehabilitated and re-commissioned with Apapa LPG Butanization Plant upgraded.
Makurdi and Ilorin LPG Butanization Plants were re-commissioned in 2013. Also the high in-depot losses recorded due to inefficient operations as a result of obsolete depot facilities as at 2010 were by 2014 reduced from 52,664m3 (valued at N3.09 billion) in 2010 to 6,481m3 (valued at N0.56 billion) in 2011, representing 88 per cent drop and savings amounting to over N3 billion.
In 2012, the losses were further reduced from 6,481m3 to standard industry limit of 0.02%.
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.
Tank gauging system was also inoperable at the depots, thus limiting inventory control to manual operations.
But within the period under review, out of 296 installed Analogue meters at the PPMC’s depots,167 of them were replaced with Accuload digital meters representing 56 per cent of installed capacity.
For instance, the installation of the digital meters has been completed in Satellite, Aba, Benin, Calabar Depots; Mosimi, Calabar, Suleja, Minna, Kano, and Yola depots.
The replacement of other 123 meters is ongoing and at various stages of completion.
PPMC also noted in the report that the ongoing Phase I of the rehabilitation and upgrade of Tank gauging systems in 10 depots – Atlas cove, Satellite, Mosimi, Ore, Ibadan, Ilorin, Benin, Suleja, Escravos and Calabar is 50 per cent completed.
According to the report, approval to engage in Coastal loading was granted in 2009, with rehabilitation of the Warri Refinery Coastal facilities carried out.
The report further revealed that the national consumption of LPG was 110,000 MT in 2010 and Nigeria’s per capita consumption was 0.69kg.
In 2012, report revealed that the only available vessel, MT BLUE GAS, was considered unfit to operate within NNPC coastal facilities and therefore was taken out of NNPC’s fleet.
The report argued that the lack of vessel and the epileptic operation of the refineries drastically affected PPMC LPG trading performance till date.
However, with the active participation of PPMC in direct marketing of LPG, national consumption increased from 125,000MT in 2011 to 320,000MT in 2014 .
Nigeria’s per capita consumption of LPG also rose from 0.76kg in 2011 to 1.8kg in 2014
Increase in Internally Generated Revenue (IGR). Sale of LPG and Throughput remain major sources of IGR.
Transparent accounting system
To ensure the adoption of International Financial Reporting Standard (IFRS), the report revealed that PPMC and its Executive Directors had been registered with Financial Reporting Council to enable PPMC adopt IFRS reporting system from 2012
Successful interface of SAP Payroll with SAP FI has since been achieved, thus ensuring faster process and generation of monthly payroll/financial summary reports.
Availability of petroleum products
The report also stated that as at 2010, product import was plagued with high demurrage cost but this has since been reduced by 45 per cent from $135.94 million in 2010 to $73.25 million in 2014.
There has been a steady decline in demurrage cost between 2010 and 2014, except in 2012.
The report however pointed out that in 2012, demurrage was high when there was high delivery of OPA/Swap cargoes, to avert fuel scarcity during the fuel subsidy issue when other marketers refused to import products.
Service division achievements
The report listed the achievements of the service division since 2010 to include the provision of conducive work environment; acquisition of office accommodation for PPMC HQ Annex in Lagos; phased replacement of old office furniture and equipment for staff in the headquarters and locations; renovation of Learning Centre at PPMC HQ Annex in Mosimi and inauguration of a modern standard Confidential Registry in PPMC HQ, Abuja.
Others include the improvement of Business Objectives Cascade through Company-wide Performance Review; increase in computer literacy through In-house computer training; and increase in Learning Plan implementation
The report also noted that in 2014 1,577 Staff (90 per cent) were trained out of 1,735 PPMC workforce; while there was improvement in performance at Management Promotion Interviews
In 2013 promotion exercise, 40 and 10 staff were promoted from SS1 to M6 and M6 to M5 respectively.
In the 2014/2015 promotion exercise, 46 and 24 staff were promoted from SS1 to M6 and M6 to M5 respectively.
The company has also since 2011 achieved a harmonious relationship between management and in-house unions; while compliance with regulatory agencies on Jetty operations was also achieved.
The service division has also obtained the Nigerian Maritime and Safety Administration (NIMASA) Certification for all PPMC Port Facilities Security Officers (PFSO) at PPMC jetties at Escravos, Okrika, Warri, Calabar and Atlas Cove in accordance with International code and regulations.
Other achievements include an improved Security Surveillance in all locations; commissioning of CCTV Control Centre in HQ, Abuja to monitor activities at various locations; construction and Commissioning of Observatory Towers in Suleija, Warri, Escravos, Aba, Benin, Ibadan, Ilorin, Port Harcourt, Kano and Jos Depots.
PPMC has also between 2011 and 2014 provided and installed Closed Circuit Television (CCTV) cameras in all PPMC locations and executed nine community projects in the host communities.