After the Nigerian National Petroleum Corporation (NNPC) issued a statement literally accusing some of the contractors it engaged to swap crude for petrol, these contractors are denying responsibility as they accuse the corporation of playing fast and loose with the truth.
Sources close to the transaction tell BusinessDay that greed and excessive profiteering may have played a role in the scandal that has petrol with an unusual amount of methanol sold to Nigerians at the pump across major cities.
According to Mele Kyari, the NNPC CEO, on January 20, 2022, the corporation received a report from its quality inspector on the presence of emulsion particles in petrol cargoes shipped to Nigeria from Antwerp-Belgium.
Kyari said NNPC investigation revealed the presence of methanol in four petrol cargoes imported through the Direct-Sale-Direct-Purchase (DSDP) suppliers including the consortium MRS, Emadeb Consortium, Oando Consortium, and Duke Oil.
He said the cargoes’ quality certificates issued at load port (Antwerp-Belgium) by AmSpec Belgium indicated that the petrol complied with Nigerian specification and that “the NNPC quality inspectors including GMO, SGS, GeoChem, and G&G conducted tests before discharge, which showed that the gasoline met Nigerian specification.’’
As a standard practice for all petrol imports to Nigeria, the said cargoes were equally certified by an inspection agent appointed by the NMDRA, he noted.
“It is important to note that the usual quality inspection protocol employed in both the load port in Belgium and our discharge ports in Nigeria do not include the test for percent methanol content and therefore the additive was not detected by our quality inspectors,’’ he said.
However, these suppliers insist that the NNPC should bear the blame and produce evidence of tests that were certified by the NNPC and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the downstream regulator. One consortium Emadeb/Hyde/Ay Maikifi/Brittania-U Consortium disowned member, Brittainia-U.
“We hereby state that the said importation of the contaminated PMS was executed by a member of the consortium, to wit: Brittania-U.
“Therefore, the blanket claims made against the consortium by the NNPC are misleading and contradict the actual events that happened; they do not fully reflect and/or represent what transpired,” said a statement signed by Emadeb Energy Services Limited, the lead consortium.
However, BusinessDay got the clearance NNPC/NMDRA issued to Brittania-U for the supply of 19,993Mt of petrol on January 11, released to the Integrated Terminal for onward delivery to Ibru Jetty before the product was released into the market. What is even more confusing is that Brittania-U claimed it purchased the contaminated petrol from Duke Oil, which is NNPC’s oil trading subsidiary.
MRS, which is also part of another consortium fingered by the NNPC as having delivered the contaminated product under the DSDP, has since issued a statement saying its products were bought from Duke Oil.
“As one of the beneficiaries, MRS received the product in its depot and distributed the product to only eight of its stations in Lagos.
“Following delivery into the tank, it was observed that the product appeared hazy and dark; management immediately directed that further sale(s) should be stopped and the product isolated. Urgent steps were taken to analyse the product to determine the basis for its contamination.
“The product analysis revealed that the PMS discharged by MT Nord Gainer had 20 percent methanol, which is an illegal substance in Nigeria.
“As a company, we are aware that alcohol/ethanol is not permitted to be mixed in PMS specification. We immediately informed NNPC, NMDPRA, and MOMAN and it was confirmed that other members had similar experiences,” the MRS said.
However, sources tell BusinessDay that blending petrol with high volumes of methanol was a gambit to supply a product 50 percent cheaper than the usual grade of petrol allowed in Nigeria to give them room for profit maximisation.
A BusinessDay investigation that involved speaking with well-informed private and government officials involved in the downstream sector of the petroleum industry, shows that the bid was a deliberate ploy to make huge profit.
According to a source, “The people who did this knew exactly what they were doing. They knew that Nigeria does not test and if the methanol proportion had not been excessive, it would have passed without much fuss.”
This revelation casts an uncomfortable glare at Duke Oil, an NNPC trading subsidiary from the marketers who allegedly bought the product. Duke Oil, registered in Panama, had operated quietly since 1989. Today, its activities are coming under intense scrutiny from Nigerians online.
Following the subsidy scam of 2011, where oil marketers fraudulently collected huge sums of money for petrol that was not supplied, they have not fully earned the public trust. Suspicion of misdeeds immediately swirled around them following BusinessDay’s revelation that the scarcity of the products was borne out of contamination or dirty petrol.
However, oil marketers in Lagos told our reporters that the acute shortage of petrol in the Lagos and Abuja areas is getting better after the arrival of a 39,000 tons vessel yesterday. They say the current system whereby the NNPC contracts out petrol importation to selected friends in an opaque system that must end.
Last year, 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.
A leading engineer with significant retail petrol experience says, “The NNPC adopts this rather opaque and uncompetitive process whereby it chooses the company which it gives crude oil and they in return bring back to the country, refined products. NNPC chooses the companies, the volume, and the fiscal regime. The process is shrouded in secrecy and when it blows up like now, all Nigerians are meant to pay the huge price.”
This is why accountability groups, like the Natural Resources Governance Institute and Publish What You Pay, have called on the NNPC to let in the sun on the award process.
“It is not true that the oil and gas sector cannot function effectively with the government at the core of management. It is simply that the state and its agents have internalised corruption in the sector and have defied every known model that seeks to reposition the sector,” states Audu Liberty Oseni, analyst at Publish What You Pay-Nigeria.
Oseni notes that this is mainly because, both the state and its agents in the sector benefit when corruption goes on, saying, “When that happens, accountability is not encouraged and primitive capitalist accumulation continues.”
Read also: NNPC reassures Nigerians of remedial action over dirty petrol
To clear up the mess created by the shortage, Nigeria is now having to buy refined products from the spot market where traders charge huge margins.
In place of the current process, marketers are calling for an open, competitive, and fair process that will involve opening up the market to any Nigerian firm with the competence to handle such national tasks.
President Muhammadu Buhari is reportedly angry over the affair but as the petroleum minister, it is unclear who his anger is directed at as his refusal to deregulate the sector is partly to blame.
Kyari is also angry and it is believed this accounted for the naming of the contractors now blamed for bringing in the off-specification petrol. But many Nigerians say this is passing off responsibility because as the sole importer of petrol it should bear the responsibility for the mess.
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