The current dirty fuel saga has raised tension across major cities in Nigeria on account of high methanol in the petrol distributed in the country. The process of recalling the tainted batch led to fuel scarcity and the consequent hike in prices and distrust from the public.
BusinessDay investigations revealed that the adulterated fuel first arrived in Nigeria in the second week of January.
However, having methanol in the fuel supply is not unexpected; it only has to be within certain limits, which for Nigeria has not been made public even though different countries also have their methanol limits.
This piece seeks to provide vital details concerning the continuing saga.
What is Methanol?
According to the Methanol Institute, methanol is a clean-burning, high octane blending component for gasoline that is made from alternative non-petroleum energy sources such as natural gas, coal, and biomass. Methanol with co-solvents has been commercially blended into gasoline (petrol) at various times and locations since the late 1970s.
Correspondingly, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) said, “Methanol is a regular additive in petrol and is usually blended in an acceptable quantity.
It is believed that adding alcohols such as ethanol and methanol to petrol allows the fuel to combust more completely due to the presence of oxygen, which increases the combustion efficiency and reduces air pollution, as noted by a Science Direct article.
However, when in excess, as noted by another publication the corrosive effects of methanol become a concern.
“To ensure vehicular and equipment safety, the limited quantity of the impacted product has been isolated and withdrawn from the market, including the loaded trucks in transit,” NMDPRA said.
Who imported the dirty petrol into Nigeria?
The Nigerian National Petroleum Company (NNPC) Limited has recognized four firms as being guilty of importing the tainted gasoline into the country.
Read also: Flight delays worsen across Nigeria over aviation fuel scarcity
These firms include MRS (MT Bow Pioneer LITASCO Terminal, Antwerp-Belgium); Emadeb/Hyde/AY Maikifi/Brittania-U Consortium (MT Tom Hilde – LITASCO Terminal, Antwerp-Belgium); Oando (MT Elka Apollon – LITASCO Terminal, Antwerp-Belgium); and Duke Oil (MT Elka Apollon – LITASCO Terminal, Antwerp-Belgium) (MT Nord Gainer-LITASCO Terminal, Antwerp-Belgium).
While noting this, on Thursday, February 17, Nigerian National Petroleum Company (NNPC) Limited affirmed that five Nigeria-bound petrol-laden vessels from Belgium were turned back.
“We checked their origin and confirmed that five other vessels are coming from the same shipping terminal that loaded this and we rejected all of them; they did not sail into our waters,” Mele Kyari, NNPC Group Managing Director, said.
However, these companies have refuted the claims by the NNPC and have laid the blame on a subsidiary of the corporation, Duke Oil.
What is the DSDP Agreement?
The Direct Sale Direct Purchase (DSDP) agreement is a type of swap whereby a certain amount of crude is exchanged in return for the equivalent amount of refined petroleum products. It typically lasts for a year, according to a national newspaper, (not BusinessDay).
The Nigerian government adopted the direct sale-direct purchase agreement (DSDP), to replace the controversial oil processing agreement (OPA) in 2015.
This was lauded as a value-added deal that has achieved one of its purposes — the supply of petrol in the country.
Was the Dirty fuel under the DSDP contract?
Sources close to the business contract tell BusinessDay that the petrol cargoes shipped to Nigeria from Antwerp, Belgium were not under the contentious direct sales direct purchase (DSDP) arrangement but under a more opaque contract, seen for the first time in the history of Nigeria’s petroleum sector.
“Under the DSDP contract, NNPC sells its crude oil to selected middlemen for refined petroleum products.
“But the contract of dirty petrol saga showed NNPC sold its crude oil to middlemen who sell the product to an international buyer, making super profits thereafter proceeds to get cheap petrol from another refiner in Europe,” a source who has access to the details of the contract says.
However, this development contradicts the claim by the group managing director of NNPC, who said the four petrol cargoes with methanol-blended petrol came in under the DSDP arrangement.
“Investigation revealed the presence of methanol in four petrol cargoes imported through the DSDP suppliers including the consortium MRS, Emadeb Consortium, Oando Consortium, and Duke Oil,” Kyari said.
Luqman Agboola, head of energy and infrastructure at Sofidam Capital, disagrees with Kyari’s claim, saying, “Something shadier than the DSDP contracts we all complained about is happening in this business. The number of middlemen is increasing, which is increasing the cost of business and increasing NNPC’s expenses.”
Middlemen Saga
The controversy concerning dirty petrol has exposed more rot in Nigeria’s opaque oil contracts as the latest findings reveal middlemen involved in crude oil swap are exploring the system to short-change the Nigerian National Petroleum Corporation (NNPC) and ensure Nigerians remain hooked on cheap fuel.
According to the source, “This means the number of briefcase companies or middlemen involved in the value chain of Nigeria’s petroleum sector is increasing every day.”
This development contradicts the claim by the group managing director of NNPC, who said the four petrol cargoes with methanol-blended petrol came in under the DSDP arrangement.
However, Luqman Agboola, head of energy and infrastructure at Sofidam Capital, disagrees with Kyari’s claim, saying, “Something shadier than the DSDP contracts we all complained about is happening in this business.
“The number of middlemen is increasing, which is increasing the cost of business and increasing NNPC’s expenses.
He said, “This middleman is obsessed with making more margins than adding value.”
In the same vein, Ademola Henry, former team leader at the Facility for Oil Sector Transformation (FOSTER), expressed worry about the secrecy of the contracts, noting, “Why can’t NNPC deal directly with refiners.”
How many people were affected?
According to BusinessDay findings, Nigerian households and businesses use millions of litres of premium motor spirit (PMS) on a daily basis for powering their vehicles, and generators in a country that is currently putting everything in place to get power generation and distribution right.
Premium motor spirit is the most used fuel in Nigeria, in view of the number of commercial and private cars that ply Nigerian roads and many households that are forced to use generators due to epileptic power supply.
This explains why a Twitter user warned that “A lot of people have already complained that their vehicles have been damaged by the fuel. My official vehicle is inclusive. If you can, don’t buy fuel for now.”
On average, Nigeria consumes about 57 million litres of PMS daily. This consumption varies across the six geopolitical zones.
Data culled from the National Bureau of Statistics (NBS) report, shows that the total consumption and importation of Premium Motor Spirit popularly known as petrol is N5.362 trillion.
The breakdown of data also shows that by region North Central N0.98 trillion, Northeast N0.38 trillion, North West N0.99 trillion, Southeast N0.60 trillion, South-south N 0.88 trillion, and Southwest N1.54 trillion.
In addition, the North-West geopolitical zone consumes on average about 18 percent of the whole PMS utilised across the nation daily, North-Central geopolitical zone consumes about 18 percent of the nation’s PMS, North-East consumes about 7 percent of the nation’s PMS, South-East uses 11 percent of PMS, and South West uses 29 percent of the nation’s PMS.
This means that the southwest region, according to the data, coupled with the South-south region would have been most hit by the scarcity of petrol and also the importation of the dirty fuel.
What has been done?
The Nigerian National Petroleum Corporation (NNPC) has assured that it has made adequate arrangements for fuel supply, adding that “30 vessels will deliver an additional supply of 2.3 Billion litres of PMS into the country till month-end of February 2022
The NNPC said on February 15, that it had commenced 24-hour operations at its depots and retail outlets to restore normal supply and distribution of petrol across the country.
This has made the corporation affirm that it has over a billion litres of petrol that is safe for use in vehicles and machinery as of Tuesday.
“NNPC Ltd wishes to reassure Nigerians that it has put adequate measures in place to accelerate the nationwide distribution of PMS earlier disrupted by the quarantine of methanol-blended petrol.
“As of today, NNPC has over One (1) billion liters of certified PMS stock that is safe for use in vehicles and machinery.
“As part of NNPC’s strategic restocking, over 2.3 billion litres of PMS is scheduled for delivery between now and the end of February 2022, which will restore the sufficiency level above the national target of 30 days,” NNPC Ltd said.
House of Representatives probe NNPC
The Nigerian National Petroleum Corporation Limited has been requested by the House of Representatives to suspend Oando Plc and other companies allegedly involved in the importation of tainted fuel into the country.
It also instructed its Committee on Petroleum Resources (Downstream) to investigate all PMS and other petroleum products imports from January to date.
These were some of the resolutions that resulted from the Chief Whip of the House, Mohammed Monguno (APC, Borno), moving a motion of urgent public urgency on Thursday, February 10, 2022.
Isiaka Ibrahim (APC, Ogun), speaking in support of the motion, said that the tainted products may be imported because people know there are no penalties for disobeying the rules.
He warned that if the same error had occurred with aviation fuel, the results would have been disastrous.
“This must come to an end,” he emphasised. “Mr Speaker, if they had brought contaminated aviation fuel, and the way vehicles are halting on the roadways, picture planes falling out of the sky.”
Concurrently, Idris Wase, the deputy speaker, who presided over the session, took the motion when it was put to vote.
