Over-pricing, under-dispensing: The many antics of fuel marketing companies

25 February 2016, Lagos -Call it a game of cat and mouse you will not be wrong. But it is a game where the mouse surprisingly appears to be having the upper hand, using a combination of guile and subterfuge  to outsmart the bewildered cat. This is the story playing out between the Department of Petroleum Resources, DPR, and petroleum products marketing companies in Nigeria.

Fuel at station - Nairobi

Fuel at station – Nairobi

At the centre of this inconceivable, indeed confounding, drama are aggrieved consumers who accuse fuel marketing companies of employing sundry antics to ensure that they(consumers) are over-charged or don’t get their money’s worth of fuel purchased at different filling stations in the country.

To buttress one strand of this complaint, the experience by a motorist in Lagos may suffice. According to him,  he had driven into this filling station located in the Isheri/Idimu area of Lagos recently and after having his car filled, asked the attendant to fill his 10-litre gallon with N1,000 worth of petrol. But to his consternation, the fuel pumped  into the gallon was well below the covering cap. This is in spite of the fact that the station displayed that it was selling petrol at N86.50 litre.

More baffling for the motorist was the fact that a couple of days back when he bought N1,000 worth of petrol from the same filling station, the gallon was filled to the brim, in fact almost spilling over.

But as he raised his voice in complaint over the situation, the young female attendant quietly approached him and said in a hushed, conspiratorial tone: “Oga please don’t shout; I know you’re our customer. Next time you come to buy fuel here, don’t use this pump, go to the other one over there; that’s the only one that can dispense the correct quantity of fuel for the amount you are paying”.

Betraying young informer

And in other not to give the game away by betraying his young informer, the motorist left without further fuss. Arising from this encounter, Vanguard Features investigation was to confirm that many filling stations do indeed have what is known as a dedicated pump in the midst of other pumps that have been adjusted or tampered with to under-dispense fuel, thus cheating their customers in the process. It was learnt that the idea behind the dedicated pump was to deceive DPR officials into believing that all is kosher when they come snooping around to check on the compliance of fuel marketing companies to the new price regime of N86.50.

The story is that the dedicated pump is meant to satisfy the visiting DPR officials that the filling station is not only selling at the approved price but also at the approved quantity. Unfortunately most motorists are oblivious of the scam that the none dedicated pumps represent since the fuel is pumped straight into their vehicles.

Those buying in gallons are usually directed to the dedicated pump to forestall them blowing the whistle on the cheating that goes on with the adjusted non-dedicated pumps. VF checks reveal that the DPR has indeed been and up and doing but has so far failed to curb the antics of fuel marketing companies, including failing to enforce the new approved pump price of N86.50 per litre and check-mating the prevailing under-dispensing of the products at their various filling stations.

For in stance, the National Bureau of Statistics in its latest report claimed that petrol did not sell at the government approved price within the month under review. According to the report, Nigerians actually paid above an average sum of N109.59 for a litre for the product in the same month government removed fuel subsidy. For instance, in Abia State the product sold for N129.33; N99.60 in Abuja and N120.00 in Akwa Ibom State. In Bayelsa State, it sold for N96.13 whereas in Delta State it sold for N98.50.

Indeed VF state by state investigations reveal how prevalent and worrisome the situation has become. In Warri, Delta State In Delta State, under-dispensing is rather rampant with Shylock marketers making hay and smiling to the banks. But motorists, especially commercial vehicle operators, are devising appropriate response to get their monies worth, including identifying and shunning dubious filling stations.

Justice Okoro who operates a keke(commercial tricycle) in Warri explained thus: “We are able to identify the cheating filling stations by buying with gallons. Once we identify them we stop buying from there.  We even know which of their pumps are okay because some have dedicated pumps that also under-dispense, especially during scarcity”. Nathaniel Ibe, a commercial bus driver, shares the same sentiment. Even the Public Affairs Officer at Warri’s territorial office of the DPR, Agusa Goddey, corroborated the public perception to a large extent. “You can say it has been rampant.

From the stations we have visited, about 70% are involved with 50% of these defaulters under-dispensing to the the level that is intolerable. The tolerable limit is between 10.0 and 10.30. You pay a fine of N100,000 for under dispensing. Depending on the level of default, we sometimes can make the defaulter sell at a crashed pump price, usually below the prevailing pump price; some can be very serious,” Agusa said.

Normal pump price In one of the stations visited in Warri, an independent marketer was caught under-dispensing by two litres of every ten litres sold at N140/litre. “Normally if we seal your station for under-dispensing, it is shut to business for at least one month, depending on the level of offense, the payment of the fine notwithstanding.

Where there’s scarcity and people are suffering you want to guard against closing the few that are selling even if caught cheating. Rather than shut the station, we resort to forced selling of the product below the normal pump price as punishment in waiver of prolonged shutdown,” Agusa explained.

To deal with impunity among defaulters, the department now even arrest recalcitrant dealers who operate a station that has been sealed before the seal is lifted. When the department revisits to reseal, the fine now is N1 million. “Quality checks is still very much part of our responsibilities.

During routine surveillance, we have colleagues who collect samples from filling stations. People from the Safety and Environment unit collect a litre from each station we visit. They run analysis on them and if there is any issue with product quality, we visit and sanction depending on the veracity of the situation.

“All controllers’ numbers are even on the DPRC website. People send in text, call to make complaints or seek clarification on our role. If you go round you will find that the level of compliance has really improved. As a department we are doing our best. We will continue to do our best. Most times people send in text to say kudos, we are impressed,” the DPR man further said.

Not surprisingly, virtually all marketers, independent and representatives of majors approached to state their side of the story declined comments. An independent marketer with multiple fuel outlets popular in Warri said the propensity to cheat on the pump is forced by some compelling challenges extraneous to routine cost of running a fuel station.

The marketer said: “Most times competition for the limited products we buy from the depots or tank farms is so high that you have to incur extra cost if you must get regular supply. Personal interest “At other times, the sharp practices are as a result of the personal interest of station supervisors. Most station owners, after putting a management team in place, hardly stay around. With digitalized meters everywhere, adjustments and tampering with the machines can be a matter of minutes. So sometimes supervisors and pump attendant play foul games behind their proprietors.”

Enugu/Anambra states:

Motorists and residents in Enugu and Anambra states have never had it so bad over the refusal by the independent marketers in the two states to comply with the new approved pump price of N86.50 per litre for PMS as directed by the Federal Government with effect from January 1. VF checks showed that filling stations in the affected   states have been selling fuel at N105 per liter despite directives from Nigeria Union of Petroleum and Natural Gas Workers, NUPENG and the Federal Government to sell at the approved pump price of N86.50 per litre.

This came as the  DPR revealed that it had in a bid to step up action against the antics of major and independent petroleum marketers across the South-East and South-South geo-political zones, sealed 86 filling stations in Enugu, Ebonyi and Anambra and Delta states found violating ethical practices. A break-down reeled out by the DPR showed that 45 filling stations were sealed in Anambra State while 23, 12 and six filling stations were shut down in Enugu, Ebonyi and Delta states. Amaechi Ukwuani, a motorist in Enugu regretted that DPR officials had been moving about enforcing the new pricing system and sanctioning defaulters in other parts of the country, but in the South-East geopolitical zone, especially Enugu and Anambra states, it had remained business as usual for the marketers, who continued to sell fuel between N100 to N105 per litre.

Ukwuani challenged the relevant authorities to take necessary action on the matter as it seems that DPR officials in the two states had been compromised by the marketers. “One is shocked to see that all filling stations in Enugu and Anambra states have been selling fuel above N86.50 per litre despite the directives from NUPENG and FG for them to sell at controlled prices.

“Daily, we see stations being sealed off by DPR for selling above N86 all over the Northern and Western parts of the federation. Why is the DPR in the South East states not saying or doing something? It looks like they have been compromised as usual.” But when contacted, the DPR Operations Controller in charge of Enugu, Anambra and Ebonyi states, Mr. Peter Ijeh, assured motorists and residents that the DPR had rolled up its sleeves to rout major and independent petroleum marketers, who hoard, adulterate, and divert products in the regions, which had brought avoidable economic hardship on the people.

According to the DPR boss: “We have struck a synergy with the Nigeria Security and Civil Defense Corps, NSCDC, Department of State Services, DSS, and Police to prosecute erring filling station operators, who after we must have sealed their stations, open to the public at night.

Monitoring and surveillance

“We have beefed up our monitoring and surveillance machinery to ensure that operators play by the rules. Both major and independent marketers buy at N77.66. But the independent marketers will always claim they bought at high price. That is why they sell to black marketers, because they do not want to buy from the approved source. We have sealed most filling stations in South-East that are selling above N86.50 per litre.

“We are appealing to the public to quickly call us if they see any filling station selling above N86.50. We are determined to ensure quality control and accurate meter reading all in a bid to ensure value for money paid by motorists and residents.”

Aba, Abia State:

Motorists in Aba, Abia State have decried the hike in the pump price of PMS in the city, stressing that the situation has caused them untold hardship. This is even as the DPR has vowed to sanction any petroleum marketer who sells above the approved N87 pump price in the city.

VF gathered that PMS now sells between N100 and N120 per litre at filling stations, while black market sells between N130 and N150. The situation has led to queues stretching over a kilometre at some filling stations selling at N100. A visit to various motor parks reveal that prices of transport fares have sharply increased. Mostly affected are intra city routes such as Park to Osisioma, Park to Ariaria, Port Harcourt road to Park, Ogbor Hill to Park, among others.  Arising from the high cost of fuel, many commuters now abandon their cars at home for public transport services in a bid to  cut cost.

A cross section of motorists who spoke to VF at different motor parks in Aba lamented that they have been forced to increase transport fares because of the hike in the pump price of PMS. According to a driver of a Toyota Sienna bus, Ndubuisi Eke, who plies the Aba-Owerri route: “We are calling on the government to ensure that fuel is sold at the approved pump price of N87. In Aba here, we buy fuel between N100 and N120. Few filling stations are selling at N100 which you cannot easily buy it because of the queue. As transporters, your passengers will never be patient to allow you to queue to buy fuel. We have no choice but to increase fares. It has not been easy for us”.

Petroleum marketers

Others accused petroleum marketers of diverting products meant for their stations to independent marketers where they will make more profit than when they sell the product at their respective stations. Also many business owners, especially, the small and medium scale owners: barbers, hair dressers, welders and other artisans who rely on generating sets   for their businesses due to erratic power supply, lamented that the high cost of fuel had added to their woes as they have increased prices of their services.

No fuel:

The situation had since been compounded in Aba, as most of the filing stations regularly display the ‘NO FUEL’ sign at the front of their stations.   VF investigations revealed that some of these filing stations, including the Nigerian National Petroleum Corporation, NNPC, depot at Osisioma Ngwa area of the city, are yet to receive supply of product making majority of the filling stations in the city to remain close while a few that dispenses sell at exorbitant price.

As at the time of filing this report, the NNPC Mega station along Aba –Owerri road, Aba, had no fuel. Motorists accuse marketers of hoarding fuel: Motorists have attributed the hike in the pump price of fuel to the illegal activities of some petroleum marketers who hoard fuel to create artificial scarcity in order to sell at cut throat prices. According to them, such marketers who use their filling stations to hoard fuel connive with some officials of the Department for Petroleum Resources, DPR, and other agencies to sell above the approved pump price.

Regulatory agencies

According to a dealer in petroleum products, Mr. Ikechi Justice, “Government said fuel will be sold at N87. But we are still buying it above N100 and in some filing stations, we buy N120. If the regulatory agencies like DPR and others were alive to their responsibilities, the petroleum marketers will not be selling products at exorbitant rate as it is being done in Aba.”

Petroleum marketers react: Some of petroleum marketers, who declined to have their names on print, attributed the hike in pump price of PMS to the cost they incurred while sourcing and transporting their products to their filling stations from other parts of the country. They insisted that it would be difficult for them to sell at the approved pump price of N87, outside the southeast zone.

“The government knows the problem. For now, it is not possible for marketers to sell fuel at N87 in Aba, because we source these products outside the South East zone. For now, I source products from Calabar depot which is even a federal intervention programme and bring it to Aba. You talk about transportation and other expenses. We will not hesitate to revert to the government approved pump price as soon as we start getting the normal product supply at Osisioma depot.” DPR TO THE RESCUE

However, the Department of Petroleum Resources, DPR, Aba Zonal field said stiffer sanction awaits both major and independent petroleum marketers who indulged in selling of petroleum products above the approved pump price. Controller of Operations, DPR, Aba field office, Paschal Ezemandu dismissed the allegation that DPR officials connive with marketers to hike the price of product in the city , stressing that he was yet to receive report against any officer of the agency by the public.

On the claims of the marketers that they sell above the approved pump price to cover cost as they sourced the products outside the state, Ezemandu said, “there is something that we call bridging. It is done when you source for products outside the state. They, marketers, should bridge their products at the Osisioma depot. They don’t have any right to sell above pump price even if they sourced for the product outside the state because as long as they bring the product in and get it registered at the depot in Osisioma, government will pay them the bridging cost.”

He warned that the DPR in conjunction with other agencies including the DSS would embark on monitoring of the product sales to ensure there was conformity in the pricing system, and warned that any marketer who sells above the approved pump price will be sanctioned.

He disclosed that through routine surveillance, his office were able to identify two major marketers in Aba who were in the habit of diverting products meant for their stations to other places, stating that they were going to write officially to PPMC to stop such marketers from lifting products from the depot.

Ezemandu added that such measure would serve to stop diversion of products, and urged the public to assist the agency with the necessary information about illegal activities of marketers to ensure that petroleum products are sold at regulated prices.

PORT HARCOURT, RIVERS STATE

Under-delivery of petrol is still an issue at many filling stations in Port Harcourt, Rivers State. At Station   Road where there are three filling stations operated by major marketers, motorists, particularly taxi drivers prefer to buy product from one of them. Most times you saw queues at the filling station while the other two were empty.

VF spoke with some of the taxi drivers who shared their experiences on the matter. “ We buy petrol for business as taxi drivers and overtime we have observed that this particular filling station has a better meter. You get what you pay for. The other two filling stations just rip off customers. This is our observation. So I prefer to remain on the queue to get value for my money,” Mr Emenike , a taxi driver said.

Another motorist, Mr Ahamafula Oji , said he investigated claims by the taxi driver himself when he bought with jerrycans at the three filling stations at separate times. “ I think at the end of my investigation I had ample reason to agree with the taxi drivers. There is product under-delivery in the other two stations,” he claimed. It is the same story of product under delivery with many other filling stations.   On Industry Road, one of the filling stations allegedly has only one pump dispensing accurately to customers. “

It is only when you are told by their workers you will know this,” a motorist who did not want his name in print said. A bus driver, Sam Okpeba said he is not sure   if there will be up to ten filling stations in Port Harcourt that will not be guilty of product under-delivery. Zonal Operations Controller, Port Harcourt zone of Department of Petroleum Resources, Mrs Chioma Njoku could not be reached for comment. Meantime, DPR had in the past   sanctioned several filling stations in the state for under- delivery of product to customers and other sharp practices.

In the North

In the northern part of the country,  Mr.  Usuma Ndanusa, Kaduna Zonal Cordinator, DPR stated that compliance around the Kaduna metropolis is almost 100 per cent, adding that it is intensifying its activities in the remote areas of the state.

He said: “We are still in process of going round the interiors, but within Kaduna metropolis, the compliance is almost 100 per cent;   but we still have to go to places like Birni Gwari and other places where we have to take two to three hours. There are still some level of non-compliance, we do go there and give them our numbers for any station that are not complying. We also ask for receipt; based on this, we sanction marketers that sell above pump price.

For instance, we have about 13 filling stations have been suspended for violating this policy in the last two weeks.” On his own part, North East Coordinator, DPR, Mr. Idris Zoaka said: “Product supply is not complete, there are problems here and there that where they convey the product through Maiduguri depot, we normally have six or seven, but recently, we have between 15 and 20. In Borno and Yobe , its mainly in the metropolis because its not too safe to go to some areas but within mauiduguri, things are stabilised.

“In Yobe, we reach out in Damaturu and Potiskum   and we have achieve some level od stability  and product supply coming , we set the monitoring team both in Yobe and Maiduguri. In Bauchi and Gombe, they have formed monitoring team and they are up and doing; there are supplies. currently.

“In Yola and Taraba, there have formed the team and they are up and going too, things are good. Compliance is okay at the metropolis but at the hinterland, that is where we have challenges which we are trying to see how we take care of.

“The monitoring team are working with the security agents and PPMC, we go out almost every now and team, including team from DPR.” As a means of ensuring compliance,  Director of the DPR, Mr. Mordecai Ladan disclosed that any petrol station found under-delivering, the pump would be charged N1000 per litre while the station would be closed down.

He said: “Any filling station owner found manipulating pump price will be shut down and we will charge the marketer N1 million and close for three months. Those under delivering products would be charged N100,000. If you are selling above pump price, we will charge N100,000 per pump, so if you have six pumps, it will be charged N600,000 and the station closed down for three months . “If you hoard product, as the minister has directed us to do, we are going to sell the product free to the public. We have been doing that. However, Abuja is not a problem in that regard.”

 

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