BusinessDay
NigeriaDecides2023

NNPC’s evolving strategy to contain fuel scarcity

Analysts say the complete deregulation of the downstream sector will lead to an end to fuel scarcity, but implementing full deregulation is a government policy. Until this is done, the Nigerian National Petroleum Corporation (NNPC) Ltd, state-owned oil firm has the mandate to prevent recurring fuel scarcity.

Around February this year, there was a major disruption in the supply and distribution chain of Premium Motor Spirit (PMS) on account of the the discovery of Methanol-blended petrol in the volumes imported into the country. This led to the immediate withdrawal of the commodity from the markets across the country creating scarcity and an opportunity for exploitation.

Months later, normalcy has since been restored and prices that rose as high as N300 per litre has normalised to around N165/litre across major cities in Nigeria. With the normalcy, it is becoming clearer the role played by the NNPC in resolving this crisis and how it is strategising to prevent future occurence.

Migitating damage to customers’s cars

Shortly after the discovery of the off-spec fuel, NNPC, in collaboration with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), immediately announced a massive withdrawal of the contaminated products nationwide. This was to ascertain the levels of methanol, determine the appropriate actions to mitigate harm to millions of vehicles.

An inquest and stepped up monitoring

Shortly after withdrawal of the off-spec fuel, NNPC launched a major investigation to unravel the causes of the unsafe quantity of methanol in the petrol imported into the country. In one of such inquests, the GMD/CEO NNPC, Mele Kyari summoned all the parties involved in the importation of the off-spec molecules and told Nigerians the situation and named companies it said imported the four petrol cargoes as MRS, Emadeb/Hyde/AY Maikifi/Brittania-U Consortium, Oando and Duke Oil, and ordered the holding back of all the affected products in transit (both truck and marine).

Since the incident, inquiries show that the NNPC quality inspectors, including GMO, SGS, GeoChem and G&G have stepped up testing of proucts into the country.

Stepping up emergency supply

After recalling the off-spec fuel and commencing investigation into the matter, the NNPC asked oil trading firms to immediately embark on an emergency supply of petrol to replace cargoes that were rejected because of their poor quality. In most of his meetings with the oil traders, the NNPC CEO maintained that the only way out of the menace is for those products suppliers to go wherever they need to go in the world to look for alternative cargoes that will immediately replace the off-spec PMS they supplied.

Read also: Airlines’ fuel imports plan stalled, NNPC intervenes

NNPC Sustained Products Supply & Distribution

In the midst of this ensuing crisis, NNPC delivered over 2.3 billion litres of PMS before the end of February 2022. This was all aimed at containing the situation. For instance in the week of Saturday, March 6 2022, the Company released details of the distribution of an additional 381.88 million litres of Premium Motor Spirit (PMS) to Nigerians.

According to the PMS Evacuation Report of the NNPC, the product was lifted from the depot and distributed to Nigerians through retail filling stations within a one-week period covering February 21st and 26th.

The release of the 381.88 million litres of petrol to Nigerians by the NNPC, represents an average daily distribution of 63.65 million litres. This is in addition to the 387.5 million litres of petrol that was released to Nigerians during the week covering February 14th to February 20th. A breakdown of the NNPC weekly national evacuation report showed that 80 percent of all the distribution took place at the top 20 high loading depots. It stated that the remaining 20 percent of the evacuation took place at the other loading depots.

NNPC Activated its Fuel Situation Taskforce

The NNPC GMD/CEO immediately activated the company’s fuel situation taskforce, which involves mainly some management and operational staff drawn from the various business entities of the NNPCs Downstream Directorate. In its war-room like daily meetings, the Taskforce reviewed the daily products discharge and allocation, supply to depots, vessel plan and visibility, intervention loadings and products dispatch to various states.

Other indices reviewed within the daily Taskforce meeting include: days sufficiency, stock sufficiency and distribution, queue situations across all 36 states of the federation, vessel status, evacuation trend, proposed truck plan and depot performance. During its meetings, major decisions are taken with regards to ramping up products availability at filling stations nationwide, even as necessary interventions were offered to ensure that states which have queues challenge become adequately wet with products.

Frequent communication of crises situation

In the past, Nigerians usually have little or no information at all during fuel crisis situations. Leveraging Transparency, Accountability & Performance Excellence (TAPE) mantra, the NNPC activated a robust stakeholder communication approach, analysts say.

This gave Nigerians access to up-to-date, real-time information on the situation, telling its story and taking charge of the narrative, especially online. For instance, on NNPCs verified Twitter handle which has about 400,000 followers, the company published the names of the top 20 high loading depots that were used to evacuate the PMS, in one of the weekends.

These were: Pinnacle-Lekki, which evacuated the highest volume of 40.25 million litres, AA Rano (22.43 million litres), AYM Shafa (19.23 million litres), Prudent (17.78 million litres), 11 PLC (17.78 million litres), Rainoil Lagos (15.93 million litres), and Avidor (15.63 million litres). There is also Fynefield with 12.39 million litres, Bull Strategic (12.2 million litres), Matrix (11.99 million litres), Koenamex (11.99 million litres), and Pinnacle (11.76 million litres). The rest are NIPCO (10.78 million litres), Swift (10.01 million litres), Total Apapa (9.5 million litres), TSL (9.19 million litres), Sobaz Nig Ltd (8.94 million litres), Mainland (8.88 million litres) and Ardova (8.83 million litres).

NNPC Redoubled its Stakeholder Engagement

Still in the wake of the immediate past fuel crisis, NNPC intensified its stakeholder engagement efforts, beyond what was done in the past. At many fora, the GMD/CEO Mallam Mele Kyari engaged critical stakeholders across the entire downstream value-chain. From Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), Petroleum Tanker Drivers Association (PTD) and Independent Petroleum Marketers Association of Nigeria (IPMAN) to Major Oil Marketers Association of Nigerian (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) and Association of Distributors and Transporters of Petroleum Products (ADITOP), it was very evident that the NNPC helmsman didnt want to take chances. Add that to the regular interface with security agencies such as the NSCDC and the Nigeria Customs Service, and it becomes obvious that NNPCs stakeholder engagement during this past fuel crisis is indeed commendable.

In engaging these crucial stakeholders, the NNPC boss made the imperitive of energy security clear to them. In essence, his message was that: while there is nothing wrong in making gains from sales margins in business, they should be nationalistic enough to know that any lapse in fuel supply value-chain is a national issue which could trigger a major crisis.

So far, the NNPC strategy has ensured supply has been maintained across the country even as analysts insist a full deregulation would go a long way to reduce future fuel scarcity.

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