A nation of adulterated fuel and adulterated stories

For decades, Nigerians have been living in denial about the state of our country’s petroleum refining and distribution system. Even non-specialists without any training in elementary petroleum economics know there is something wrong with our petroleum products refining, importation, and distribution regime and regulatory systems.

Unfortunately, even with enacting the protracted Petroleum Industry Act, Nigerian leaders have not mustered the political will to address the issue for reasons of political convenience and economic motives.

One of the critical problems is that Nigeria, as one of the largest producers of crude oil globally and the largest producer in Africa, has been shamelessly engaging in importing petroleum products because the refineries are not in good working condition.

Nigeria has a corruption-ridden and devastating oil subsidy regime, a poor and ineffectual regulatory framework that negatively impacts its economy. There is a need for systemic change to eliminate the importation of petroleum products, get the refineries working, and ensure a fit-for-purpose regulatory framework with little or no room for abuse.

One issue that merits consideration alongside this envisioned overhauled system is total deregulation of the sector to attract private investment.

Last week, as is the case with the pervasive substandard products – drugs, industrial products, cosmetics, drinks, and other consumables – imported into Nigeria, substandard petroleum product or, more appropriately called, the off-the-specification product was imported and distributed across the nation with devastating implications on users of the products.

This event sparked off a lot of fury and reactions. Typical of Nigeria, we have focused on the blame game, and nobody accepts responsibility, not even NNPC. This event is not the first time we imported petroleum products that did not meet national and international standards and will certainly not be last.

The successful importation and distribution of “adulterated fuel” has vast implications, from economic losses, large scale deterioration in the performance of car engines, environmental pollution to most importantly, failure of regulatory enforcement.

Now we face this monumental challenge; the critical issue is unravelling the truth, examining the lessons, proffering solutions on the way forward, and rejigging our supply and regulatory systems to make them more effective and efficient. The big question is, do we have the political will?

Although ill-fated and hugely damaging to our economy and image, this substandard PMS brouhaha may be an opportunity to revisit our PMS importation and distribution system and the regulatory regime to get it right once and for all times.

The usual reaction by Nigerians and the government is what we are witnessing now: the Federal Government will call for investigations, the Ministry of Petroleum will set up an investigation panel made up of the same people who should have prevented this from happening in the first place.

The National Assembly will condemn and set up a committee of those with oversight responsibility to ensure this system failure did not occur ab initio. Investigators make a scapegoat of a few petroleum importing companies who acted on behalf of NNPC and use one “truth” to cover another truth until the truth becomes the casualty in the process of trying to unravel the truth.

This process is cyclical and produces nothing tangible. Soon we will forget, like a collective that suffers amnesia, and new events will show up to overshadow previous ones, and we, as usual, move on as if nothing happened.

This issue of substandard or adulterated fuel raises five critical questions that could lead us to the truth: What standards of refined PMS petroleum products are prescribed for consumption in Nigeria?

Has the market regulator and regulatory process for importing petroleum products failed? Did the multiple quality control mechanism for imported petroleum products fail? How did the “off- the – standard” pass into the market and escape all checks by the regulator? Do the regulator, supplier, and testing laboratories have the requisite capacity?

Why has the importation process of petroleum products been shrouded in secrecy for so long? As we transition to complete deregulation, what are the regulatory systems we are putting in place to ensure Nigerians do not suffer from consuming “adulterated products”?

Why would a major oil-producing nation be a significant petroleum product importing country for over 40years? Why are our refineries refining little or no fuel inspite of billions of dollars in maintenance bill over a 25 year period?

The specific infraction that sparked this instant reaction is that methanol, in unacceptable percentage, was found in premium motor spirit (PMS), otherwise called fuel, supplied to retailers.

The product was traced to cargo delivered by Litasco, the Swiss trading arm of Russia’s Lukoil. NNPC ltd, in trying to explain its involvement in the matter, inadvertently caused panic, brought about a disruption in the supply chain, leading to long queues due to panic buying.

MRS Nigeria, the retailer that raised the alarm, also issued a statement denying importing this specific cargo but instead received it through NNPC. MRS Nigeria further explained the steps she had taken to mitigate the situation.

A consortium under the Direct-Sale-Direct-Purchase (DSDP) contract also issued a formal statement to explain her side of the story. This poor information management or miscommunication confused Nigerians about the truth about this adulterated petroleum product.

Industry professionals have said that testing for methanol is typically not the conventional practice because it is a blending component for petroleum products. Methanol in acceptable quantity in PMS raises the octane level and minimises engine knock. However, PMS (fuel) with high methanol content harms car engines, leading to structural failure or the explosion of car engines.