The current fuel scarcity in Nigeria’s major cities on account of petrol high in methanol raises questions about the NNPC’s quality control process, as investigations reveal that the dirty petrol first arrived Nigeria in the second week of January.
Sources with knowledge of the quality control process told BusinessDay that this particular batch with impurity takes about 12 minutes for the result to surface when tested in the laboratory, but apparently this was missed by the Nigerian National Petroleum Corporation (NNPC).
The corporation went ahead to supply the dirty batch to depots that had been contracted to lift the products. As of the time of going to press, the NNPC had not responded to BusinessDay’s questions but multiple sources confirmed the timeline.
Meanwhile, the Nigerian Midstream and Downstream Petroleum Regulatory Authority issued a release Tuesday night admitting that a limited quantity of petrol with methanol quantities above Nigeria’s specification was discovered in the supply chain and that it had been isolated and withdrawn from the market.
Following complaints by customers that bought the tainted petrol at some filling stations that it may have damaged their vehicles, extensive testing was done upon which it was discovered that a particular batch did not meet specifications.
Arinola Shobande, corporate communications lead at Ardova, where some stations were affected, said the company promptly shut down the affected petrol stations. Although she did not disclose the volume of products affected, as two other marketers also declined comment on the volume affected. After the NNPC was alerted, the process of recalling the off-spec product commenced.
After the shut down of the affected petrol stations, they began draining the dirty fuel from their storage tanks and began the process of cleaning their tanks for new supply. This led to widespread dislocation in the supply chain leading to queues across the country.
Since Nigeria’s refineries are in a state of disrepair, the NNPC invites bids from oil traders who buy Nigeria’s crude that should have been refined locally, and exchange them for imported refined products. This crude-for-product swap has been criticised for being opaque and prone to abuse.
According to an investigation conducted by an extractive sector watchdog, the Natural Resource Governance Institute, it is difficult to independently evaluate and assess if Nigeria is getting fair value for its crude. It is unclear how much petroleum products can be exchanged for 20,000 barrels per day of crude, calculating shipping and other crude oil derivatives.
Last year, the NNPC picked 16 consortia for the contracts for one year starting in August. The list included major Swiss trading firms Trafigura, Vitol and Mercuria, oil major Total as well as large Nigerian traders Sahara Energy, Oando and MRS Oil.
The corporation decided to pair local marketers with foreign oil traders in a consortium that would receive 20,000 barrels per day of crude oil in exchange for products. A total of 320,000 barrels per day of Nigeria’s output was awarded last year.
However, the consortium that includes Litasco/PV Oil/Overbrook/Northwest, sources tell BusinessDay may have imported the dirty petrol in exchange for 20,000 barrels of crude oil.
This implies that the dirty batch may have been received by filling stations owned by Overbrook Resources, Northwest, Ardova, PV Oil, among others.
The shut down of the petrol stations due to the irregular specification of the petrol they were given is the last-ditch effort to contain the spread. But many Nigerians report that their vehicles have already been affected.
“A lot of people have already complained that their vehicles have been damaged by the fuel already. My official vehicle is inclusive. If you can, don’t buy fuel for now,” warned a Twitter user.
This could open both the NNPC and the petrol stations to liabilities if it can be established, legal experts say.
“Where the relevant car owner can prove that the direct cause of the damage to his car is the fuel from the relevant filling station, the filling station should be responsible,” said Ayodele Oni, energy lawyer, and partner at Bloomfield Law Firm.
“However, I expect the filling stations to have insurance policies covering this,” Oni said.
Read also: Scarcity in Lagos over dirty petrol NNPC recalled
Oil marketers have since confirmed that impure products have been on sale. The Independent Marketers Association of Nigeria told journalists on Tuesday that dirty fuel was being mopped up and this had caused dislocation in the supply chain.
Apart from a statement on January 26, the NNPC had remained silent on the development drawing condemnation from Nigerians on social media.
“The NNPC wishes to assure the public that the company has sufficient PMS stock to meet the needs of Nigerians. The public is therefore advised not to engage in panic buying of petrol; and to ignore all rumours that may suggest otherwise,” the statement signed by Garba Deen Mohammad, its spokesperson stated.
Industry experts say one option opened to the NNPC to quickly contain the situation is to begin blending the dirty products with some of the good products to improve quality, and this could take about a week.
