January 5, 2018

Fuel Scarcity: FG hopes on NASS to okay money for debt payments — BARU

Fuel Scarcity: FG hopes on NASS to okay money for debt payments — BARU

From left: Minister of State for Petroleum Resources, Dr. Ibe Kachukwu; Group Managing Director, NNPC, Mallam Maikanti Baru; Chief Operating Officer, Downstream, Mr. Henry Nkem-Obih and Chief Operating Officer, Refineries, Mr.Anibong Kraga, during the Joint Public Hearing by the National Assembly Committees on Petroleum Resources (Downstream) over fuel scarcity at the National Assembly Complex, Abuja. Photo by Abayomi Adeshida 04/01/2018

•FG rolls out incentives for oil marketers, tanker drivers, labour
•PPPRA to review pricing template, landing cost
•CBN to guarantee forex supply, cut LC charges, grant waivers

By Udeme Akpan, Michael Eboh and Ediri Ejoh

THERE are indications that the National Assembly will soon appropriate funds for the settlement of N800 billion subsidy debts to oil marketers as part of moves to enable them import petroleum products.

From left: Minister of State for Petroleum Resources, Dr. Ibe Kachukwu; Group Managing Director, NNPC, Mallam Maikanti Baru; Chief Operating Officer, Downstream, Mr. Henry Nkem-Obih and Chief Operating Officer, Refineries, Mr.Anibong Kraga, during the Joint Public Hearing by the National Assembly Committees on Petroleum Resources (Downstream) over fuel scarcity at the National Assembly Complex, Abuja. Photo by Abayomi Adeshida 04/01/2018

This was one of the recommendations of the Nigerian National Petroleum Corporation, NNPC, towards ending the prolonged fuel scarcity to the Joint National Assembly Committees on Petroleum Downstream in Abuja, yesterday.

Group Managing Director of the NNPC, Mr. Maikanti Baru, who made the presentation, stated that the Corporation will solicit the National Assembly in writing to appropriate funds for the settlement of outstanding claims.

He said the Federal Government has agreed to undertake a review of the pricing template and landing cost of petrol in addition to a number of incentives for oil marketers, petroleum tanker drivers and labour in a bid to ensure uninterrupted supply of petroleum products across the country.

The incentives were unveiled by Baru, in his presentation to the Joint National Assembly Committees on Petroleum Downstream in Abuja.

Baru noted that the major complaints and challenges confronting Major Oil Marketers Association of Nigeria, MOMAN and the Depot and Petroleum Products Marketers Association, DAPPMA, include complaints of outstanding subsidy payments, insufficient volumes and high landing cost which had brought about low margins.

Others are freight differentials, especially at the Port Harcourt and Calabar ports and low draft at the port of discharge of petroleum products.

Subsidy payments

In response to these challenges, Baru said the Federal Government was banking on the National Assembly to appropriate monies for outstanding debt payment, while the Central Bank of Nigeria, CBN, is to provide foreign exchange guarantees, especially during periods of high foreign exchange demands.

He also stated that the Nigerian Ports Authority, NPA, had been directed to “dredge the water channels to address the issue of low draft at the ports, while the Petroleum Products Pricing Regulatory Agency, PPPRA, is to undertake a review of the petroleum products pricing template as well as the landing cost to address the issue of freight differentials, high landing cost and low margins.”

For Petroleum Tankers Drivers, PTD, Baru said: “The Federal Government and the CBN will guarantee truck loan facility to the National Association of Road Transport Owners, NARTO, to address the challenges of ageing trucks, while the Federal Ministry of Power, Works and Housing will rehabilitate roads across the country to address the complaints of bad roads.

“The Federal Government is also considering reviewing the duties for spare parts of trucks, to address the transporters’ complaints of high duty on spare parts, put at 35 per cent compared to five per cent.”

Manpower shortage

Also, petroleum workers unions’ concerns bothered on manpower shortage, outstanding subsidy payments, while Baru stated that in addition to writing to the National Assembly for appropriation to offset the outstanding claims, the NNPC will conduct a recruitment exercise to inject new manpower.

The NNPC boss also said the CBN will henceforth, expedite or waive certain requirements for PMS import and downstream facilities, as well as ensure effecting same day payment to beneficiaries upon advice by the NNPC to address marketers’ complaints on long processing time for Letters of Credit (LC) and payment delays.

Letters of Credit

In the aspect of high LC charges, Baru stated that the CBN has agreed to remove such charges for petroleum marketers or reduce same to commercial banks’ rate of 0.25 per cent.

In addition, Baru said the NPA will henceforth, accept evidence of payment to CBN to allow marketers clear petroleum vessels, instead of insisting on receipt of confirmation of payment for port charges.

“The NPA is also to remain within the provisions of the PPPRA template, instead of the imposition of new charges, such as stevedoring charges,” he added.

Meantime, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, urged the National Assembly to criminalise the activities of illegal marketers of petroleum products to serve as a deterrent to saboteurs and unscrupulous individuals seeking to profit from crisis in the sector.

In addition, Kachikwu reiterated the need for the country to address the issues of the refineries and infrastructure deficit, while stating that there is the need to take a critical look at a piping system that would be sufficient to transport refined fuel.

Fixing refineries

Kachikwu noted at the hearing that the Federal Government was working assiduously to revamp the country’s refineries to address the lingering fuel crisis.

The minister, who decried the poor state of the refineries over the years, condemned their inability to produce sufficient fuel for the country.

According to him, it was shameful that a country after over 35 years, cannot produce sufficient fuel for its citizens.

“I have said that selling crude is a fairly wrong model which is akin to selling our agricultural products in the wrong way and nobody does that anywhere in the world anymore.

“Unless we have operational refineries, there will be no permanent solution to the fuel crisis in the country. The gearing up of private refineries and the modular refineries will complement the efforts of the government-owned refineries to ensure there is adequate supply of petroleum products in the country.”

He said government had mapped out strategies to ensure availability of petrol which will be sold at government regulated price.

Sympathising with Nigerians for the difficulties experienced during the period of fuel shortages, Kachikwu blamed it on the inability of major oil marketers to import fuel due to price differentials between rise in price of crude oil and the cost in Nigeria.

“Before you have both sides complementing each other because 100 per cent supply is demanding and people took advantage of the situation to perpetrate a lot of diversion. There is always a commercial reaction.

“The business module of fuel supply in the country is not yet where it should be but within the 18 months period, we are expected to have the refineries working. We are working on how to accept benefits of crude price increase and ensure fuel sells at regulated price”, he said.

OrderPaper demands progress on Baru-gate probe

Meanwhile, OrderPaper Nigeria has challenged the National Assembly to provide an update on its probe into the $25 billion contracts award scandal at the NNPC.

A statement by Oke Epia, Executive Director of OrderPaper Advocacy Initiative, said that Nigerians will hold the Senate to account on the Baru-gate probe it announced with much fanfare in October 2017 but on which nothing has been heard since then.

According to OrderPaper, “Nigerians are very worried that three months after the Senate sensationally announced and constituted an Ad-Hoc Committee to investigate damning allegations of breach of due process and corruption in contracts awards to the tune of $25bn in the NNPC, no progress has been reported by the Red Chamber,” adding that “mum has been the word as there appears to be an institutional conspiracy to sweep the matter under the proverbial carpet.”

Noting that the current fuel scarcity could have been averted if the Baru-gate probe was diligently pursued by the Senate, the statement said: “Nigerians are worried that the National Assembly, which is constitutionally empowered to investigate and expose corruption and waste in government, seems to be defaulting in its responsibility in providing effective oversight in the critical oil sector and then slacking on leads on illegal, unwholesome and corrupt practices provided by useful sources.

“Nigerians will continue to hold the National Assembly, particularly the Senate, to account both on the abandoned $25bn NNPC contracts breach investigation and the now hurriedly launched hearing on the yuletide fuel crisis. Nigerians demand concrete changes to their lives from the gains of the country’s rich oil and gas resources.

“When the Minister of State for Petroleum Resources, Dr. Kachikwu, blew the lid in his famous leaked letter to President Buhari on disregard for due process and untidy deals by the Dr. Maikanti Baru-led management of the NNPC, not a few Nigerians were peeved at the sordid revelations which, if properly investigated and addressed by appropriate authorities, could possibly have averted the current fuel crisis.

“As the Presidency played casual over such grievous expose, it was therefore, reassuring when the Senate took on the issue and expanded the scope of its probe by calling out the NNPC in the application of the Direct-Sales-Direct-Purchase arrangement to unduly favour certain companies.

“According to Senator Samuel Anyanwu, who moved the motion on October 4, 2017 which was adopted by the Senate, an oil firm was incorporated in 1989 in Panama specifically to play a dominant role in the trading of petroleum products especially crude oil in the international oil market. The Senator further affirmed that the company, compared to other major players in the sector, was still grappling with the basics of what it was registered to do in spite of massive support from the NNPC.

“He had therefore, queried “the decision by the current GMD to allocate almost all products to the company in addition to its automatic inclusion in the lifting of Crude Oil, Gas, etc, which thus made it a money spinning outfit that is accountable only to NNPC. Since NNPC owns NNPC Trading Limited and the refineries, they also shortlist companies that get allocation of products, lifting of crude oil and importation of products thus, giving undue advantage to the in-house company, even where it lacks the capacity and requisite requirements to do what it is doing today.

“The Senate naturally hugged the headlines the next day. And then days turned to weeks with no concrete word as to when the Committee would be inaugurated. It was when tongues began to wag over the delayed take-off of the Senate probe that the Committee Chairman, Senator Aliyu Wammakko, spoke and dismissed suggestions that the investigation had met a solid brick wall.

“A statement from his office denied “intense pressure whether from the Presidency or elsewhere,” and blamed the absence of key committee members who “were out of the country to Russia with the Senate President” for delay in take-off. This was in the last week of October 2017.

“Fast-forward to January 2018 and without a word about that seemingly abandoned investigation, the Senate is out to regale Nigerians with another merry-go-round scandal mill that may lead the country nowhere.”

“In an earlier statement on the heels of Senate’s announcement of the Baru-gate probe, OrderPaper had cautioned against hinging parliamentary investigations on sensationalism and stressed that particularly on Baru-gate “the National Assembly should note that the highly short-changed and increasingly restive Nigerian public will hold it to account on the swiftly announced intervention this time around.”