National Assembly on Thursday demanded for the list of oil marketers who reneged on the Direct Supply Direct Purchase (DSDP) contract which contributed to the lingering fuel scarcity across the country.
Senator Kabiru Marafa, chairman, Senate and House of Representatives’ Committee on Petroleum (Downstream) investigating the fuel scarcity, who issued the directive, threatened that the Legislature recommend stiff sanction against the operators for economic sabotage.
Marafa who frowned at the various costs incurred by some regulatory agencies including access forex and exchange rate differential; dollar charges imposed by NIMASA, Petroleum Equalization Fund (PEF) and NPA as well as multiple charges, noted that all these cost are passed to common man across the country.
He argued that the landing cost suppose to be N144 while the additional cost incurred due to the other levies raised the depot price of PMS to about 175 per litre.
According to the Foreign Exchange Intervention documents submitted by Central Bank of Nigeria (CBN), the lawmaker alleged that the oil marketers got total sum of $3.3 billion (about N1 trillion) between June 2016 to August 2017 to supply 6.8 billion litres of PMS or 40 million litres per day.
But he noted that the oil marketers only supplied PMS for 108 days out of the 189 days for which intervention forex was provided by the apex bank.
Senator Marafa stated this in response to the submission of Ibe Kachikwu, Minister of State for Petroleum Resources on who accused some oil marketers declining to take supply in October, 2017, who assured Nigerians that the lingering fuel scarcity will be over within the next two weeks.
He disclosed that the Ministry is already reviewing the incident with the view to ensure that all the oil marketers involved are barred from participating in subsequent scheme and ensure that any prequalified oil marketers have the experience and financial capacity to participate in the supply chain.
Specifically, the Minister assured that issues relating to the N800 billion subsidy inherited from the immediate past administration owed major marketers as well as
According to him, “the landing cost of products today is about N170/171. The price at which we sell it is N145. So, there’s a disparity between the N170 and N145. What that means is that, those individuals who are really there may not feel an obligation like NNPC has to meet national supply with a commercial …so we need to step back to determine what do we do.”
On if the N170/171 is the landing cost or the ex-depot cost, he said the landing cost would be about N160 and asked by the lawmakers if N170/171 is what Nigerians are expected to pay at the pumps, Kachikwu said there are other related costs like NPA, NIMASA, Storage, theoughpu, lighting and other related charges. But the key component is the international selling price of petroleum products. That we don’t have a variable on.
“Our point is whether we established 20 or 25 percent margin, there is a gap and this is where we need your help. How do we deal with that. There are three modalities were looking at in dealing with that, because my position is that whatever we do, given the logistics constrain of NNPC for a 100 percent supply and overriding burden of the situation, we need to free the marketers to do their business. To do that, business, we need to address that pricing issue. To address that pricing issue, we’re looking at three models,” Kachikwu said.
On his part, Senator Odazi who accused some of the private sector operators of sabotaging government’s policy, canvassed for adequate incentives that will encourage their participation.
“Why we spent a week in Akwa Ibom on Petroleum Industry Bill was because we are committed. We know that the root of solving this problem is unbundling NNPC.
“No business man will build refineries when they know that NNPC will import petroleum products,” hence stressed the need for private sector to participate effectively in the industry.
He also chided PEF for defaulting in reimbursing the oil marketers the required fund, despite payment of requisite levies as stipulated by the regulatory agencies.
The lawmakers also frowned at 4,500 trucks alleged diverted and the inefficiency of the Acquilla facility installed by the NNPC.
In his submission, Senator Foster noted that petroleum products sells for between 300 and N600 across the Niger Delta region, without any intervention of the regulatory agencies.
He also demanded for explanation from Major Oil Marketers Association of Nigeria (MOMAN) to give details of the services rendered that led to the accumulation of N800 billion debt allegedly owed by NNPC.
He noted that there are several allegations levels against NNPC on exportation of other products except crude oil, just ad he frowned at the disparity between the differential between the importation of petroleum products being claimed by NNPC and private sector importers.
In her remarks, Senator Rose Okoh, noted that one of the immediate causes of the lingering problem was shortfall in supply and the need to allow the private sector importers to resume importation of
She also frowned at the challenge of round-tripping within the chain and the failed licences given to some private sector to construct refineries.
Okoh alleged that some top officials of NNPC allocate petroleum products to some of their cronies at the expense of other operators.
Also speaking, Joseph Akinlaja, chairman, House Committee on Petroleum Resources (Downstream) who observed that two filling stations sell at N143 and N145 per litre while other sell at N220 per litre, hence asked for the source of their supply.
“They (Filling stations operators) disclosed that they bought at high price from Mosimi and other depots, but they refused to give us their link persons.
He also noted that some MOMAN members refused to sell to deport owners at the price NNPC give to them.
Also speaking, Senator Dambaba, argued that the lingering problem can only be traced to systemic or human failure.
He noted that hitherto before NNPC took over the importation of petroleum products, some oil marketers were give license to import petroleum products.
Dambaba also frowned at the resurgence of the fuel scarciry after raising the pump price of PMS from N97 per litre to N145 per litre as a means of bridging price differential.
He also queried how Customs officials have not been able to halt smuggling of PMS through the borders while it succeeded in halting rice smuggling.
He also lamented that the DPR has only three staff in the entire of Zamfara state, despite having over N33 billion overhead cost.
While speaking, Senator Yusuf who alluded to the documents submitted by NNPC to import additional PMS cargoes between January and March, requested for the statistics on level of national demand per month as well as the capacity of our strategic reserve and demand and supply.
He also asked whether there is any outstanding liability on the 1.9 billion litres of PMS in storage as claimed by PPPRA before the crisis started?
Senator Isah Hamma, asked whether the Minister of State has direct access to Mr. President or has to go through third party before discussing some of the contending issues about the industry or whether his memo was blocked?
In his response, Kachikwu who dismissed the purported memo written to Mr President, denied knowledge of the memo dated 20th October, 2017, describing it as “fake news.”
On the alleged 4,500 truck of PMS diverted outside the country, the Minister who noted that there was need to reconcile the figure with the ones submitted by DPR and PPMC, argued that such diversion was unrealistic.
Rather he submitted that “there’s more internal diversion than extenal diversion,” adding that those involved in such activities only divert products to the Eastern part of the country and extreme-North where they have laxity.
He also unveiled plans to address PEF related issues in order to ensure wetness of the riverine area of the country.
Kachikwu also assured that DPR has gotten approval to employ 400 personnel in the first instance and addirioonal 400 personnel later in the year as part of efforts geared toward addressing issue of personnel shortfall.
While responding to question on the root cause of the lingering problem, the Minister who admitted that NNPC is carrying huge responsibilities, harped on the need for effective private sector participation, adding that the Corporation is migrating out of over 40 years business model with the ongoing restructuring initiated by the present administration.
KEHINDE AKINTOLA, Abuja
