16 October 2018, Sweetcrude, Lagos — The Chairman, Major Oil Marketers Association of Nigeria, and Managing Director, MRS Oil Nigeria Plc., Mr. Andrew Gbodume has described the current business model for the distribution of petroleum products in Nigeria is unsustainable.
Mr. Gbodume who made the disclosure during a chat with journalists lamented the N130.7 billion (as at August) fuel subsidy including interest owed the marketers by the federal government, said current business model where 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 through its subsidiary, Pipelines, and Product Marketing Company, PPMC, sells to marketers.
“We must praise PPMC for working with us to sustain the distribution and availability of products across the country, and in making sure that what happened in December 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 new business model must have a sustainable supply stream,” he added.
According to him, banks are currently unwilling to loan its members more money due to the unpaid debt.
And as a result of accumulated interests, cost of doing business is higher, the costs which are then being indirectly being paid by Nigerians, he said.
“We need money to survive if are to continue being in business. We need to repay our debt so that we can have access to more loans. Even the rate at which interests on the loans accumulate is alarming.”
The debt has been on the ground before the current administration, and several reconciliation meetings to determine the actual debt figure have been held, after which the House of Representatives had vetoed the money to be paid to the marketers.
“We don’t have funds to operate and it’s affecting our productivity. This debt has been on the ground for over four years and some of us can’t pay salaries anymore. Our staff has been receiving the same salaries for the past for years which ought not to be so”.
“Now is the time for the 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 a key player in the Nigerian petroleum industry. The association began in the 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 know-how 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.