16 October 2018, Sweetcrude, Lagos — The Major Oil Marketers Association of Nigeria, MOMAN, says the current business model for distribution of petroleum products in the country is unsustainable.
Chairman, MOMAN and Managing Director, MRS Oil Nigeria Plc, Mr. Andrew Gbodume, disclosed this on Monday to journalists in Lagos.
Gbodume, who lamented the N130.7 billion owed the marketers by the Federal Government as at August, said the current situation whereby the Nigerian National Petroleum Corporation, NNPC, is the sole importer of petroleum products into the country does not give room to private marketers to thrive.
Oil marketers have been unable to import products due to the huge debt, making NNPC the sole importer of petroleum products. After importing, NNPC usually sell to marketers through its subsidiary, Pipelines and Products Marketing Company, PPMC.
“We must praise PPMC for working with us to sustain distribution and availability of products across the country, and in making sure that what happened in December (last year) doesn’t repeat itself. However, we need to begin to look at the future and agree on a new supply model that will generate enough money for us to be able to pay salaries, put pipelines in place and then be able to build refineries,” he said.
“This business model must have a sustainable supply stream,” he added.
According to him, banks were currently unwilling to lend MOMAN member companies fresh funds due to the backlog of unpaid debts being owed the banks by marketers.
He noted that as a result of accumulated interests on the loans, cost of doing business has become higher, adding that the cost is indirectly being paid by Nigerians.
“We need money to survive if are to continue being in business. We need to repay our debts so that we can have access to more loans. Even the rate at which interests on the loans accumulate is alarming,” he said.
The debt being owed the marketers by the government has been on ground before the current administration, and several reconciliation meetings to determine the actual debt figure have been held, following which the National Assembly had voted money for the settlement of the debt.
“We don’t have funds to operate and this is affecting our productivity. This debt has been on ground for over four years and some of us can’t pay salaries anymore. Our staff have been receiving same salaries for the past four years, which ought not to be.
“Now is the time for government to listen to our pleas and pay this money. Since figures have been agreed on, why haven’t we been paid?” he lamented.
Since its inception, MOMAN has gained a reputation as key player in the Nigerian petroleum industry. The association began in early 2000s as Coordination, a marketers operation committee whose role was to liaise with the NNPC for petroleum products supply and distribution throughout Nigeria.
However, in the past 10-15 years, the downstream oil industry has been a downward spiral due to lack of investment in infrastructure and distribution network.
The industry has been unable to keep abreast with healthy safety security environment and quality, HSSEQ development in other parts of the world.
“The current business model unfortunately does not generate enough revenue for oil marketers to inculcate technological and other advancements to meet international safety, quality and environmental standards, standards that we at MOMAN believe the Nigerian populace deserves”, he said.
Mr. Gbodume said with the association’s collective debt of expertise, access to technology, intellectual and other resources, the downstream petroleum industry private sector is best placed to correct the downstream slide the petroleum sector has suffered.
“MOMAN is repositioning itself to take advantage of its combined knowhow and operational synergies to partner with MDAs and other downstream stakeholders such as the NNPC, PPMC, DPR, PPPRA, FRSC and others” through several initiatives to develop and promote HSSEQ standards in the industry, drive business efficiencies, identify logistics opportunities and lead the industry in raising and meeting international standard for meaningful contributions in the society”, he said.