Examining PPMC’s role in fuel distribution

21 February  2016, Lagos- The Pipelines and Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC) appears to have within the past couple of months found the spark for taking strategic action and producing visible results under the leadership of Ms.Esther Nnamdi-Ogbue.

Esther Nnamdi-Ogbue, PPMC MD

Esther Nnamdi-Ogbue, PPMC MD

This is coming after decades of a seeming helplessness in the face of under-investment in infrastructure, inefficient operations and most significant of all pipelines vandalism, which has cost the nation billions in lost revenues and led to the trucking of petroleum products, with the resulting pressure and gridlocks on national roads and increase in bridging claims.

Now, the PPMC is a very important organ of the NNPC and plays a very critical function in the fuel distribution value chain: These roles include distributing crude oil to the country’s three refineries for processing and also acting as a channel for distribution of refined petroleum products across the country for easy supply to consumers. However, frequent vandalism of pipelines by criminals and oil thieves has made it nearly impossible for the pipelines to perform those key functions  effectively, leading to trucking of the products and the associated increase in costs of transportation, which ordinary Nigerians are made to pay for.

In a country like ours where institutions and systems are weak, brilliant professionals in charge of key agencies, who possess the right expertise, diced with a healthy dose of positive anger and desire to do things differently are sine qua non to progress. They are the difference between failure and progress.  Ms. Ogbue, a petroleum law expert with over thirty years of executive-level experience in the oil and gas sector, who was appointed in August 2015 by the Minister of State for Petroleum Resources and Group Head of NNPC, Dr. Emmanuel Ibe Kachikwu, is fast proving that she is a professional in that mold.

Before her appointment, Ms. Ogbue was the General Manager, Board Matters and Management Committee Department (BMMC) in the Corporate Secretariat and Legal Division (CSLD) of the NNPC.

Beyond the political will of President Buhari and the vision of the Minister, Dr. Ibe Kachikwu, to drive fundamental change in the oil and gas sector – both critical success factors for the PPMC boss – the combination of her industry experience, expertise, youthful vigor and deep knowledge of the issues at stake must have made her the ideal pick to provide the needed close leadership and vision translation for the government’s reforms at PPMC. Her confidence, eloquence and the passion with which she articulates the challenges and solutions to the perennial problems of PPMC during media appearances, indicate that she has a good understanding of her mandate, as well as having an appreciation of the gravity of the challenges that she needs to confront.

Since assumption of office, the trademark low-cut wearing, bespectacled and youthful first female Managing Director of PPMC has with the support and guidance of the Minister, Dr. Ibe Kachikwu embarked on an aggressive campaign to leverage off of ongoing works and complete the total rehabilitation of the 5,120km pipeline network and also get all 21 depots active in the shortest time possible. Although the former PPMC Management had in a 2014 report stated that 18 out of the 21 loading depots were active, the bad state of the 5,120 kilometers of pipeline network has consistently made it impossible to pump products through pipelines to these depots.

As a first step, Ms. Ogbue has pre-occupied herself with getting the key arteries of the pipelines and major depots working, so as to boost distribution of petroleum products into the hinterland. Early this month, the PPMC for the first time in 16 years was reported to have successfully pumped about 10 million liters of Premium Motor Spirit (PMS) from the Port Harcourt, Rivers State refinery to Aba, Abia State depot; achieved the successful operationalization of fuel transmission from Atlas Cove to Mosimi, Mosimi to Ibadan and Ilorin, Kwara State and also restored the transmission line from Enugu to Makurdi, Benue State.

As a result of this development, economic activities have since come alive at the linked depots like Aba, Abia and Mosimi.  Oil marketers in those areas no longer need to travel long distances to major depots in Lagos to truck fuel back to their locations.

In addition to the pipeline rehabilitation campaign, Ogbue is also overseeing the implementation of a tight regime of zero tolerance for oil pipelines vandalization and other related acts of sabotage. There has been in the recent past an intensive mobilization of third party contractors, private security companies, community leaders, the Nigerian Navy, Army and Police Force in a major move that aims to ensure a 24-hour surveillance over the nation’s pipelines.

According to the PPMC boss, the third party contractors are expected to deploy fiber optics technologies that facilitate remote monitoring of pipelines. The monitoring system are to be armed with remote sensors, so that once the vandals approach the pipelines, triggers would be activated to prompt an emergency response team that will immediately intervene in a timely manner to stop acts of sabotage. The idea is to enable PPMC to move from merely reacting to already committed cases of vandalism to pre-empting the attacks before they happen so as to ensure a free flow of products on the pipelines as required.

One of the major discoveries of this energized PPMC security network so far, is the successful detection and destruction of about 80 valves inserted by oil thieves to illicitly siphon fuel between the Port Harcourt refinery and Aba depot.

The new vigor and direction which Ogbue has brought to bear on PPMC’s operations under the vision and direction of Dr. Ibe Kachikwu is significant and deserves commendation because it signals a new era of practical, sincere and determined efforts by the authorities to rehabilitate and protect the over 5,120 length of oil pipeline infrastructure that should help to power economic activities.

Needless to say, the country has lost billions of dollars as a result of vandalized pipelines. According to Ms. Ogbue and as confirmed by several industry experts, It is estimated that from January to September 2015, 2,055 vandal points were recorded on different sections of the PPMC pipeline network. Some of the more active pipelines like the Atlas Cove were said to record as many as 50 vandal breaks monthly. Within this period, the country is reported to have sustained a total loss of 531 million liters of PMS, which amounts to about N50 billion. That is a whopping N5.5billion loss for each month!  These are revenues that the country can no longer afford to lose at this critical time, given the drastic fall in the national revenues as a result of the sharp drop in oil prices.

Ogbue’s understanding of the gravity of the problem, the urgent need to take serious action to close the massive leakage, and her personal understanding that “stopping it is a must and we cannot afford to relax” reassures Nigerians that we are headed in the right direction.

Beyond the immediate need to fix the pipelines, the work is also very important considering the fact that the federal government plans to bring private sector participation and investment into the management of the nation’s pipelines.

In 2015, The minister of state for Petroleum Resources announced that PPMC would be unbundled in the ongoing restructuring of the NNPC in order to make it viable for private investors. What this means is that Ms. Ogbue’s good work at PPMC would help to stimulate investor confidence, enhance the value of the nation’s pipelines and make it more attractive to investors.  Even though some critical routes of the pipelines are coming on stream, majority of the routes are still down and trucking of petrol products from point to point is still going on with its challenges.  Amongst this the perennial issue of diverting products to areas outside the allocated destination by marketers. For instance, in December 2015, there was a situation where the location of about 218 trucks that were dispatched with petroleum products from Lagos could not be established after a month.

To fix this entrenched problem which has apparently gone on for this long because of complicity of previous managements and staff of PPMC, Ms. Ogbue in a major move in January 2016 commenced the implementation of a real time tracking system on petrol distribution trucks to totally eliminate diversion of petroleum products and ensure seamless supply of products nationwide. This has helped to significantly reduce cases of diversion and to ensure that petroleum products are actually taken to the destinations that they are billed to go.

Despite Ogbue’s strides at PPMC, no one should be under any illusion that the many problems would disappear. It will take the committed efforts and dedication by all stakeholders for these challenges to be fixed. The good news is that with the support and political will of President Muhammadu Buhari, the visionary industry leadership of the Minister of State for Petroleum Resources and Group Head, NNPC, Dr. Emmanuel Ibe Kachikwu and the pragmatic PPMC leadership of Ms. Ogbue, the job can be done.

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