Fuel queues to persist on NNPC’s restructuring challenges

Long fuel queues seen in recent times across the country are not easing as fast as expected, and will likely persist in near term as government efforts at restructuring the Nigerian National Petroleum Corporation (NNPC) and improving efficiency in the white product availability are yet to offer any tangible result.

Industry analysts say the problem is being compounded by the recent transfer of fuel importation from Pipelines Products Marketing Company (PPMC) to Crude Oil Marketing Department, which they claim, seems not to understand the urgency required in meeting the yearnings of Nigerians who are sleeping in fuel stations or buying fuel at N200 per litre in some cases.

They say the structural problem of the corporation could only be solved if the different units are given autonomy in their operations without recourse to the Federal Executive Council for approval.

The corporation was initially reorganised into 12 subsidiaries, later reduced to 11 units and then 10 units before the advent of the current minister, who broke it further into more units.

Ibe Kachikwu, minister of state for petroleum and group managing director of NNPC, says he expects that by the end of this month, the three refineries will get crude and begin to work to soften a bit the pressure.

But, he is concerned that the way the refineries are configured right now on the basis of 50 percent PMS and 50 percent other products will not have them produce significant result until a full set of repairs and terms are done.

This, he says, could not be achieved even when they are producing on a 100 percent capacity basis or 20 million litres daily, considering that our consumption is closer to 40 million litres per day.

But, some stakeholders are demanding for a frame work that would make the promised 445,000 barrels capacities national refineries work within the next 18 months, and allow the country to stop importation of petrol.

Babajide Soyede, a former general manager  of Warri  Refinery,  said given  the  current  financial  situation of the government, it would be  difficult  for her to finance  the  rehabilitation  of the refineries, which would require over $500 million  to  bring to the capacity that would be  able  to reduce the  current level of importation significantly.

Soyede, who advised Kachukwu to stop giving himself unrealistic targets, suggested that the minister should present to the public the studies carried out on refineries rehabilitation  in order to convince Nigerians  that  the government was serious and  not a mere policy statement, as it was in the case  when he said the government would  deregulate  the downstream sector of the oil and gas industry only  for him to revise himself.

The NNPC was set up by the Nigerian government with a structure to bring in an average of 50 percent of national consumption of PMS. But currently, the corporation is doing literally 100 percent import, as the major and some independent oil marketing companies are unable to bring in products; some of them due to foreign exchange challenges, while others due to cash flow challenges.

According to Kachikwu, “we have given them licences and we have given them allocations to bring in these products, but they just haven’t, and if we stay where the mandate calls for, we might run into massive petroleum shortages all over the country. So, we need to rise up to that game and try to bring in as much as we can.”

Poor or low refining capacity is another major bottleneck militating against the adequate supply of white or refined products for local consumption in Nigeria.

“Our refineries are back, but currently, the three of them have finished what I would call minimal term, which means that there is a lot more work that needs to be done. So, you don’t need to put crude to them,” Kachikwu said.

Another big challenge is pipeline security, as most of them have been out of use for years owing to vandalism or aging factors.

Official sources told BusinessDay that the Federal Government was now aggressively trying to recover most of the pipelines, such as the Escravos, from where it claimed that oil was now being pumped all through to Ilorin, Kwara State.

However, the pipeline recovery effort is being prosecuted in phases and sections, with public claims by Kachikwu that “we’ve got the Port Harcourt into Aba area.

“We couldn’t obviously pump oil to the Warri refinery, which supplies Kaduna. So, once you don’t have stock in Warri, you can’t push it up by pipeline to Kaduna, and that basically impaired those two refineries,” the minister further said.

The Escravos pipeline was being repaired of previous damages, and work was almost 90 percent done on the facility before it was attacked and blown up again on January 16, cutting gas supply to some power plants.

In the interim, the ministry of petroleum has resorted to moving at least a cargo of crude into Warri using vessels on a temporary basis for one month.

However, these are very expensive efforts and were cancelled when Kachikwu first resumed work as the petroleum minister, saying the efforts did not make any financial sense.

OLUSOLA BELLO & YANGE IKYAA