Fuel crisis: Vandalism reduces Suleja Depot to parking yard

An immediate solution to the perennial fuel scarcity in the country may be a mirage as fresh facts emerged during the week that the Suleja Depot of Pipelines and Product Marketing Company (PPMC), a subsidiary of Nigeria National Petroleum Corporation (NNPC), has been converted into a mere parking yard for petroleum products.
The Suleja Depot in Niger State, which has capacity to store 48million litres of PMS and 33.2million litres AGO, is supposed to receive petroleum products from Kaduna Refinery through pipeline and supply same to Abuja, Niger, Nasarawa as well as parts of Kebbi and Kogi States.

But when the Senate Committee on Petroleum (Downstream) paid an oversight visit to the depot, the site was a mere parking yard for petroleum products.

Findings revealed that Suleja Depot has been engaged in bridging from source depot in Lagos for many months now. The practice involves the lifting of petroleum products with trucks through the roads, storing them at the Suleja Depot to check the quality and quantity, for onward transportation to the petrol stations in the concerned states.
Although officials of the depot told the Senate Committee on Petroleum Downstream that the equipment are still functional, a visit by BDSUNDAY for a cursory look at the equipment at the loading bay, tanks and other sections in the depot, indicate that they look rusty and desolate.

Vice Chairman of the Committee, Jibrin Barau (APC, Kano North), who had earlier visited Kano Depot and Kaduna Refinery, attributed the problem to pipeline vandalism.

Describing the Kaduna Refinery as ‘analogue’ due to obsolete equipment he met at similar oversight visit there, the senator, however, added that vandalism had made it impossible for the refinery to receive crude for refining or to pump refined products to Suleja Depot and other depots across the country.

The Committee broke into two delegations: one led by Uche Ekwunife, Chairman of the Committee to the southern part of the country and the other led by Barau to the northern part of the nation.

“We have gone to several areas and we have heard from them, the major problem is the issue of pipeline vandalism which is going on every day. We are going round to see how we can proffer solutions through legislation to solve these problems so that Nigerians can always have sufficient petroleum products.

“We went to Kaduna and they explained to us that Kaduna Refinery had no problem but the major challenge was no supply of crude oil so it could not refine because of pipeline vandalism,” he said.

He added that if the Kaduna Refinery had normal supply, it would rake in N350 million daily.
The Senate had in November ordered the Minister of Petroleum to end fuel scarcity within two weeks.
It also directed the Ministry of Petroleum to do everything within the jurisdiction of the establishment to ensure that there is availability of the products across the country within the stipulated period of two weeks.
The Senate further directed that, in addition to end the scarcity, relevant agencies should ensure that fuel, when supplied, was sold at the officially approved pump price of N87 per litre all over the country, as against the current discrepancies in the prices in different parts of the country.

This matching order was issued by the Senate Committee on Petroleum Downstream, when the officials of the Ministry of Petroleum; Nigeria National Petroleum Corporation (NNPC), Pipelines and Product Marketing Company (PPMC), Petroleum Products Pricing Regulatory Agency (PPPRA), came to explain to the Committee why the nation was hit by the persistent scarcity.

The Senate had earlier mandated the Committee to urgently examine all the issues associated with the current scarcity of petroleum products in the country and determine how the Legislature would collaborate with the Executive arm of government to bring lasting solutions that would prevent any future problem of fuel scarcity in the country.
The directive followed a motion brought to the upper legislative chamber by Jibrin and co-sponsored by 23 other senators, which they entitled, “the current fuel scarcity all around the country and the need to urgently resolve the crisis”.
Issuing the directive, Ekwunife noted that what Nigerians needed at this point in time was to see an end to the menace and not to listen to stories from stakeholders.
Both NNPC and PPMC had earlier briefed members of the Committee on efforts they have been making to bring the scarcity under control.

For instance, Managing Director of PPMC, Esther Nnamdi Ogbue, decried the activities of pipeline vandals, who she also blamed in part for the current scarcity. She stated that following the huge disruption caused by vandals, PPMC had to engage in product trucking to ensure proper distribution.
She disclosed that this year alone, PPMC lost about 551 million liters of PMS valued at N50bn to the activities of vandals. “As a result, we have to truck heavily from Apapa ports, creating serious traffic challenges in that area of Lagos,” she said.

However, she said marketers used the opportunity to embark on criminal diversion of the products they received from PPMC. Ogbue, who described the activities of the marketers as economic sabotage called for their immediate prosecution by the Federal Government.

She disclosed that following frustrations in the hands of the marketers, PPMC had to involve the Directorate of State Service (DSS) and the police to help monitor the distribution of the products to avoid diversion.
According to Ogbue, even when the products eventually get to the filling stations, marketers devise other means to frustrate sale, which increases the scarcity.

Executive Secretary, Petroleum Products Pricing Regulatory Agency (PPPRA) Farouk Ahmed, who also spoke during the budget defence, had explained that the N413b subsidy contained in the supplementary budget comprises N120.52bn areas for 2014, while the balance of N294.43bn represents subsidy that accrued from January to December 31 this year.

When asked by the lawmakers how his agency arrived at the figures, Ahmed disclosed that PPPRA has a template for determining the cost, which it usually submits to the DMO for certification.
He said all claims are subjected to serious verification based on discharges at the ports, which are usually certified by other agencies of government at the ports, including the Nigeria Customs, officials of the Petroleum Ministry, those of the Central Bank, amongst others.

On what government spends on subsidy at the moment, Ahmed stated that costs of delivering fuel to pumps is N100 (Open Market Price), including cost of importation and logistics.

He said since the official price is N87.00, government pays N13 as subsidy for every liter of fuel. He put the average Open Market Price of fuel in 2014 at N139.40, making government to pay a subsidy of N42.45 on every liter consumed then.

Ahmed said that because of the low price of crude in the international market, between November 2014 and January 19, 2015, when the price of fuel was reduced to N87 from N97, government was making a profit of N2 on every liter of fuel purchased.
He however explained that the profit was wiped off by the exchange rate of the Naira against other international currencies, particularly the United States Dollars.

Although the National Assembly had approved N522billion in the 2015 supplementary budget for fuel subsidy, the World Bank has told President Muhammadu Buhari that the present moment when the price of crude oil is at its lowest level in the global market is the best time for Nigeria to do away with the contentious fuel subsidy.
World Bank’s Lead Economist, John Litwack during the launch of the new edition of Nigeria Economic Report, stressed that if the government really meant to take a decision on the issue of fuel subsidy removal, the best time to act would be now.

“The $35 billion cost of the fuel subsidy during 2010 – 2014 was one of the reasons why Nigeria was unable to accumulate a fiscal reserve n the Excess Crude Account that could have protected the country from the recent oil price shock,” Litwack stated.

The World Bank chief who noted that fuel subsidy obligations is likely to consume about 18 per cent of all government oil revenues in 2015, averred that if the current regulated price regime of N87 per litre was retained, subsidy is projected to increase to more than 30 percent by 2018.

President Buhari had already proposed N63.29 billion for payment of subsidy in 2016 fiscal year.
Throwing more light on the functionality of the equipment, Deputy Manager, PPMC Suleja Depot, Shuaibu Rabo, said the facility was capable of receiving products, storing and sending to them fillings stations in the area.
“Due to vandalism, what we are doing here is almost 100 percent bridging. We cannot receive products from Kaduna because of pipeline vandalism.

He said that the depot still had products in its tanks and injects them from time to time when the queues are getting too long.

Depot Supervisor, Kayode Erinoso also disclosed that the depot initially had products that could fill 120 trucks but had to release 65 trucks when the scarcity was biting harder.
This, he said, leaves the depot with only 55 trucks in its strategic reserves.
Erinoso said: “We have been restricted to doing only bridging. In November, we had cause to go for fire fighting in Abaji line because of vandals. If our pipelines are okay and we have products in our tanks we will be able to distribute effectively.

“But what we do is that we receive bridging trucks from source depots in Lagos and Warri, so they bridge in to Suleja but because of the road, they take up to 8 days on some occasions”.
He said that the depot had been dispatching between 150 to 200 trucks daily for the past two months.
Erinoso said that the depot lifts an average of 320 trucks daily, adding that with such amount of trucks, there will be no shortage of the product.

However, when BD SUNDAY asked around, workers in the depot could not remember the last time any truck was loaded with products from the tanks in the depot. There were no trucks assembling within the premises as they were all seen outside the premises.

 

OWEDE AGBAJILEKE