The Nation Newspaper

Category: Energy

  • Energy: A rough ride to efficiency

    Energy: A rough ride to efficiency

    The global price for crude oil to a large extent, gave great hope of revenue for the country. But the inability to meet its production quota, huge subsidy regime, may have well checkmated the gains Nigeria should have derived from the impressive pricing of crude. The commercialisation of the Nigerian National Petroleum Corporation, fuel scarcity, collapse of the national grip for a record seven times, signing of a gas pipeline to link Africa to Europe amongst others, shaped the sector this year, MUYIWA LUCAS reports.

    The country’s oil sector still remains the highest revenue contributor to the economy, accounting for about 90 percent of the annual revenue accruing to the federal government. It was therefore not surprising that the National Assembly jerked up the oil price benchmark for the 2022  budget to $62 per barrel from the initial $57 per barrel set by President Muhammadu Buhari. The lawmakers, in their wisdom, increased the benchmark for the commodity to allow for higher revenue to cater for the N17.126 trillion budget approved for the year.

    With international crude oil price hitting as high as $122 per barrel, and consistently maintaining a steady run of an average of $90 per barrel throughout this year, expected it should be joyful news for the country’s revenue inflow.

    Unfortunately, this year witnessed what may perhaps be the highest petrol subsidy payment by the government. As at early September, subsidy payment had been estimated to hit N6.3 trillion by year end. This is way there has been a renewed but subtle call for the abolishment of subsidy payment by the federal government.

    Besides, while the global oil price started the year on a high note of $80 per barrel raising the country’s hope of a bountiful revenue inflow when compared with the $62 per barrel budget benchmark, Nigeria’s inability to meet her production schedule played a major role in keeping this hope in abeyance.

    For many, the inability of the country to meet her Organisation of Petroleum Exporting Countries (OPEC) and its alliances, known as OPEC+, monthly oil production allocations did not come as a surprise. For about five years now, the country has not been able to meet her OPEC+ allocations, a situation that became very embarrassing in August this year dropping to an all time low of under a million barrels a day production.

    For instance, the country’s dwindling average oil output, including condensate, dropped Year-on-Year (YoY), by 7.4 per cent to 1.37 million barrels per day, mb/d in the first 10 months this year, from 1.48 mb/d in the corresponding period of 2021. However, on Month-on-Month (MoM), the average oil output increased by 7.8 per cent to 1.23 mb/d in October 2022, from 1.14 mb/d, recorded in the preceding month of September 2022.

    Also, Nigeria dropped from being the highest producer on the continent to become the fourth biggest oil producer as Angola, Libya and Algeria produced more crude oil than Nigeria in September, when the country’s oil output dipped below one million barrels per day for two months straight. In October, Nigeria’s oil production stood at 1.024 million bpd.

    This is why stakeholders are worried that for a country that has failed to meet its production quota in over five months the development does not augur well especially as the country struggles with revenue challenges and its huge deficit in the next fiscal year.

    Several factors are said to be militating against the ability to meet the production target. One of such is the huge cost of restarting fields and pipeline vandalism in the country. For years, losses in production have also been recorded reasons ranging from leak repairs, tank top issues, a fire incident and declaration of a force majeure. The issue of divestment by the IOCs remains a sore point against the march to meeting production capacity, with some of the multinational oil companies discreetly withdrawing their investment in the industry.

    But the revival of crude oil exports at the Forcados Oil Terminal by Shell Petroleum Development Company Limited (SPDC) last month has brought back hope for the addition of 400,000 bpd of crude oil to Nigeria’s daily output. Located at the western Niger Delta, the Forcados Oil Terminal, which has a nameplate capacity to export 400,000 bpd of crude oil per day, receives crude oil from the Forcados Oil Pipeline System, the second largest pipeline network in the oil-producing region, after the Bonny Oil Pipeline System in the eastern Niger Delta. Some international oil companies (IOCs) and Nigerian independents operating in the western Niger Delta pump oil to the Forcados Oil Terminal for exports.

    The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, is also optimistic that the country expected to add 500,000 bpd to its output by the end of last month, mainly by restarting activities on the Shell Plc-operated Forcados export terminal and Trans-Niger pipeline (TNP). The TNP with a capacity of about 180,000 bpd and the Aiteo-operated Nembe Creek Trunkline (NCTL) are the two major pipelines in the eastern Niger Delta that transport Bonny Light crude oil to the Bonny Export Terminal.

    New NNPC

    On July 1, 2022, NNPC Limited legally transformed into a company whose operations and activities are regulated by the Companies and Allied Matters Act (CAMA), following the Petroleum Industry Act (PIA) 2021. The new firm was officially unveiled on July 19 by President Muhammadu Buhari, officially transforming the oil firm from a state-run oil corporation to a commercial venture.

    Buhari assured that the transformation would strengthen the capacity and market relevance of Nigeria’s oil industry. “This is a landmark event for the Nigerian oil industry. Our country places a high premium on creating the right atmosphere that supports investment and growth to boost our economy and continues to play an important role in sustaining global energy requirements. We are transforming our petroleum industry to strengthen its capacity and market relevance for the present and future global energy priorities,” he said.

    The President noted that the provision of PIA 2021 has given the Nigerian petroleum iundustry a new impetus with the improved fiscal framework, transparent governance, enhanced regulation and the creation of a commercially-driven and independent national oil company that will operate without relying on government funding and free from institutional regulations such as the treasury single account (TSA), public requirement and fiscal responsibility act (FRA). He further assured that the NNPC Limited would now operate as a commercial oil company and deliver value to over 200 million shareholders (Nigerians) with integrity and excellence.

    NMGP

    The NNPCL and the Office National des Hydrocarbures et des Mines of Morocco, on September 15th, signed the Memorandum of Understanding (MoU) for the commencement of construction of the 5,600km Nigeria-Morocco gas pipeline (NMGP). The NMGP is a 5,600km gas pipeline project, traversing 13 African countries, which, when completed will provide gas from Nigeria to the West African countries up to the Kingdom of Morocco and subsequently to Europe.

    Upon completion, the project will supply about three billion standard cubic feet of gas per day along the West African coast from Nigeria, Benin, Togo, Ghana, Cote d’’ Ivoire, Liberia, Sierra Leone, Guinea, Guinea Bissau, Gambia, Senegal and Mauritania to Morocco. The Group Chief Executive Officer of NNPCL, Mele Kyari signed on behalf of the country; while Director-General of Morocco’s National Office for Hydrocarbons and Mines, Dr. Amina Benkhadra, signed on behalf of her country. The ECOWAS Commissioner for Infrastructure, Energy and Digitalisation, Mr. Sediko Douka, signed on behalf of the sub-regional organisation.

    The pipeline will originate from Brass Island (Nigeria) and terminate at North of Morocco, where it will be connected to the existing Maghreb European Pipeline that originates from Algeria (via Morocco), all the way to Spain. The NMGP project is an initiative of the Federal Government and the Kingdom of Morocco which was muted during the visit of King Mohammed VI of Morocco to Nigeria in December 2016. It is aimed at monetising Nigeria’s abundant natural gas resources, thereby generating additional revenue for the country, diversifying Nigeria’s gas export routes and eliminating gas flaring across the country.

    Scarcity

    Scarcity of Premium Motor Spirit (PMS) otherwise known as petrol is a sore point in the energy sector in 2022. The situation has led to an unofficial increase in the pump price of the commodity, one in which government and Nigerians seem to have come to terms with. Yet, the situation remains unabated even as stakeholders rout for deregulation and level playing ground for all players in the industry.

    Several reasons have been adduced for the development. For instance, at the onset of the present scarcity in Lagos, some marketers pointed accusing fingers at the NNPC Limited saying there was shortage in the supply chain of the commodity. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), blames the scarcity in Abuja and other surrounding states on the inability of fuel trucks to have access to Lokoja roads due to flooding.  A statement from the agency had explained that the Lokoja flooding had affected the distribution of petroleum products to the Federal Capital Territory, Abuja, and environs as water has submerged a greater part of  Lokoja city and grounded all vehicular movements, adding that as part of measures to mitigate the situation, “trucking via alternative routes is currently ongoing.”

    At some point this year, a litre of petrol sold for between N190 and N250 per litre in Lagos. Interestingly, even the NNPC stations in Lagos sell for N169 and N179 per litre in Ogun state. But as far as the federal government is concerned, the commodity price per litre remains N162 and N165 per litre. Government has failed to issue a statement on this price situation.

    Marketers have since maintained that it is impossible to sell fuel at the old rate in view of the soaring foreign exchange rate and the present realities. This is why the IPMAN President, Alhaji Debo Ahmed, has insisted that the Federal Government must review the price rate if scarcity is to be a thing of the past and also for the market to be stable.

    “The exchange rate is always catapulting. With the present situation, they have to modernize (review) that NNPC rate because dollar has gone up. The cost of Dollar is going up everyday it becomes so difficult to maintain the rate,” he said, adding that marketers were selling the product above the official pump price because they buy it above the ex-depot rate from the private depots. Ex depot price of petrol per litre sells for about N220 per litre from the private depots.

    “We are buying products from the private depots that is why we are selling at that rate. The template of the NNPC is still the same thing but we get the product from the private depots. So, these private depots use the template they like. Their prices are from N190 per litre to N250,” he argued.

    The Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Clement Isong, revealed that the cost of hiring daughter vessel for the operation of discharging fuel from the high sea to the depot has been discouraging due to the high cost.

    According to Isong, hiring a daughter vessel to bring the product from onshore to offshore currently cost $45, 000 per day as against the previous $20, 000 per day it used to cost because of the high cost of diesel. This is aside other charges paid including the Nigeria Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA) among other charges.

    “The challenge is the exchange rate and the scarcity of the dollar. It is very difficult to get the dollars. A daughter vessel is hired for 10 days to discharge the content from the mother vessel; this means that it has shot up from $200, 000 to $450, 000. Then marketers and depot owners also pay Nigeria Port Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA) charges in dollars. Yet, the dollar is scarce and difficult to get,” Isong explained.

    This situation, he further explained, accounts for why many marketers and depot owners refused to go and lift petrol from the mother vessel and when some of them lift, then they have to factor in the cost of the dollar and other logistics cost at their depot because no business like to operate at a loss.

    “The problem is really the scarcity of dollar. The higher the dollar rate, the higher the cost of operation. Unfortunately, you also have these charges to pay to government agencies like NIMASA and NPA in dollars.

    “There is a bottleneck at that point. It is true NNPC has brought the vessels onshore, but it is the bottleneck in bringing the products offshore into the private depots that is an issue because of dollars. The depots are charging to recover their cost. Many people are already closing shops.

    “Even we as MOMAN cannot go and pick the product because we cannot hire vessel at that price because we have our limits. That’s the challenge. Every time the dollar rises, it impacts many things,” Isong submitted.

    The National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi, argued that marketers are finding it very difficult getting the product owing to the shortage in supply. Those that have to sell, he explained, have had to go the ‘extra mile’ to get supply to their filling stations.

    “NNPCL is the sole importer of petrol, so if they cannot make the product available, then how do we get petrol to lift and sell to the public?” Osatuyi asked rhetorically.

    The development has renewed calls for marketers like MOMAN, IPMAN among others, to be allowed to access foreign exchange at the government official price to enable them also import the commodity.

    Stakeholders argued that with the commercialisation of the NNPCL, the firm has become a competitor with other operators in the sector and as such should not be given any undue market advantage by the government. They contend that the NNPCL commercialisation ought to have changed the era of preferential treatment it got when it was a state-owned entity, hence, there should be a level playing ground for all operators to compete in the market.

    Earlier in the week, the Oil marketers and petroleum depot operators, under the aegis of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) also challenged the preferential treatment that the NNPC Limited is perceived to receive regarding access to foreign exchange (FX) at the official rate.

    Chairman of DAPPMAN and Chief Executive Officer of North-west Petroleum and Gas Company, Mrs. Winifred Akpani, called on the federal government and the Central Bank of Nigeria (CBN) to ensure a level-playing field for all players in the area of FX access to enable them boost capacity and continue to make petrol available to Nigerians.

    Grid collapse/Transmission

    On September 25, the national grid collapsed for the seventh time this year when power generation on the system crashed from over 3,700MW to as low as 38MW.

    According to data from the National Bureau of Statistics (NBS) which reviewed performance for “Electricity Report Q1-Q2 2022,” power supply fell from 5,956 (Gwh) to 5,227 (Gwh) between the first quarter and second quarter of 2022. This showed a decline of 12.23 per cent on a quarter-on-quarter basis. The report stated, “Electricity supply in Q1 2022 stood at 5,956 (Gwh) and 5,227 (Gwh) in Q2 2022, showing a decline of 12.23 per cent on a quarter-on-quarter basis. “Nevertheless, on a year-on-year basis, electricity supply declined compared to 6,172.19 (Gwh) and 5,882.57 (Gwh) reported in Q1 2021 and Q2 2021 respectively.” Nigeria boast of about 5,000 megawatts of supply daily.

    Despite the reduced supply of power, revenue generation by the Discos stood at N204.74 billion in Q1, 2022 and N188.41 billion in Q2 2022, although it showed a fall on a quarter-on-quarter basis by 7.97 per cent. The report added that on a year-on-year basis, revenue collected rose by 11.42 per cent and 1.71 per cent, respectively, from N183.74 billion in Q1, 2021 and N185.24 billion in Q2, 2021.

    The NBS data further showed that the total number of electricity customers rose in Q1, 2022 standing at 10.63 million and 10.81 million in Q2, 2022, showing a rise of 1.67 per cent on a quarter-on-quarter basis. But on a year-on-year basis, customers’ number in Q1 2022 declined by 1.36 per cent from Q1 2021 (10.78 million), and also fell in Q2, 2022 by 2.27 per cent from Q2 2021 (11.06million), the report said. In addition, metered customers stood at 4.79 million in Q1 2022 and 4.96 million in Q2 2022, indicating a 3.53 per cent increase on a quarter-on-quarter basis.

  • Oil & Gas: A mixed grill for oil and gas sector

    Oil & Gas: A mixed grill for oil and gas sector

    Low revenue amidst mounting debts proved to be a tough crack for the Nigerian economy,  Assistant Editor, Nduka Chiejina writes

    Nigeria’s oil and gas sector could not record the significant take-off that stakeholders envisaged it to  spur because of policy summersault.

    Ordinarily, the enactment of the new law would have automatically meant the take-off of its enforcement. However, since playing by the new legislation would also mean the complete deregulation of the sector, analysts and players in the industry expected a phase out of  the age-long Petroleum Subsidy Support scheme.

    While its removal was tantamount to testing the troubled waters as the Federal Government was yet to meet the conditions the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) put before it, President Muhammadu Buhari announced the suspension of its implementation on  January 25, 2022. As humane as the action seemed to the common man  in the country, it was nauseating to industry  operators. The suspension of the enforcement of the law was as good as not having it. Indeed, it was a monumental setback and a mockery of the nation’s seriousness.

    Although Buhari postponed the Premium Motor Spirit (PMS) petrol subsidy removal to ward off uprising, the highly subsidised product was hardly available for the targeted beneficiaries – the masses.

    The sole importer of the product, the defunct Nigerian National Petroleum Corporation (NNPC), kept sealed lips over the cause of the unending scarcity of the petrol in the wake of the year. But somewhere in February, when it was no longer news that there was toxic petrol in the market, its sole supplier admitted that higher methanol contaminated PMS in circulation. It took several weeks to withdraw the toxic fuel from the market after it damaged  vehicles and equipment. The citizenry whom the NNPC owes explanation were yet to know the financial implication of the mistake.

    Besides, the Automotive Gas Oil also known as diesel, with which Nigerians fuel most of their heavy equipment recorded unimaginable price increase in the year under review. As at the last count, the National Bureau of Statistics revealed that it had risen by 215.30 per cent in one year for November 2022. The rise became a major concern to both suppliers and consumers as major oil marketers along the line cited the cost of AGO as excuse for refusal to prune their petrol ex-depot prices.

    Devastating as the dearth of petrol was to the citizenry, it came with the puzzle of how many litres does the country actually consume daily.

    The Group Chief Executive Officer of the NNPCL, Malam Mele Kyari kept flouting the claim of over 60 million litres daily consumption until the Comptroller General of the Nigeria Customs Service (NCS), Retired Col. Hameed Ali, picked it to pieces that it was practically impossible to convey 60million litres of PMS from the depots to the retail outlets in the country on daily basis. Although Kyari still retained the 60million litres daily consumption record, he refused to explain how truck out volume equalled consumed volume in the year under review.

    The energy transition which commenced the previous years entered upon on new road in the year 2022. Having withdrawn investments from the oil and gas sector, multinational companies and countries stifled it of funds. The international oil firms left the operation of the industry in the hands of indigenous ones. Besides, at a point some local firms as OVH Energy (Oando) sold its downstream assets to the NNPCL.

    The decision of abandonment, which the late Organisation of Petroleum Exporting Countries (OPEC), Dr. Mohammad Sanusi Barkindo, described as hasty, was to later affect the world negatively due to the Russia and Ukraine war. Not only was Nigeria alongside the international community short of petroleum product, the Liquidfield Petroleum Gas (LPG) was also scarce. There was consequently a reduce to hazadous energy.

    Nigerians would remember 2022 as the year the super power was forcing the 2050 net zero carbon on them. Till the day he breathed his last, Barkindo was an advocate of a fair and  just energy transition, urging the world to consider the peculiar financial situations of third world oil and gas countries. Nigeria, according to its Minister of State for Petroleum Resources, Chief Timipre Sylva, cannot abandon its hydrocarbon. According to him, the oil producing countries were holding some  conversations around moving away from fossil fuels to an energy mix dominated by low carbon sources of energy, renewables.

    His words: “For us in Nigeria, fossil fuel will always have a share in our energy mix for the foreseeable future, and we will not at this time abandon our fossil fuels. We have however, adopted our vast gas resources across the country as transition fuel.”

    But adjusting the plan for energy transition to Nigeria’s capability, President Buhari in 2023 named year 2060 as the country’s own net zero carbon year.

    The nagging issue of how to secure an alternative  to the PMS that was becoming unaffordable resonated in 2022. Sylva, who had been an advocate of the Compressed Naturally Gas (CNG) and LPG development, jetted out of the country to woo Original Equipment Manufacturers into Nigeria. He convened a meeting between them and members of the Major Oil Marketers Association of Nigeria (MOMAN) and the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) on January 24. His intention was to provide an avenue for a partnership between the OEM and the marketers for the deployment of the equipment.  The ideal plan was for the marketers to provide their premises while the OEM offered their equipment and the Federal Government was to complement it with a two per cent  interest loan. The implementation of the plan that was to take off in March. But the plan seemed to have died on arrival as no one made any reference to it after the meeting.

    Following the partial activation of the PIA, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian Upstream Petroleum Regulatory Commission (NURPC) that took off in the previous year, started churning out their regulations. While the authority was held down with challenges of rescuing itself from the power of the NNPCL, it ought to regulate to become a true umpire that could reliably state the volume of product importation and consumption, it was still the other way round as the NNPCL was leading the commission by the nose.

    On the other hand, 2022 would be remembered as the year that the NNPC denied Seplat the opportunity of taking over the assets of the ExxonMobil to the helplessness of the NURPC. Industry players may not forget the drama of President Buhari approval for the Seplat to take over the asset and the contrasting announcement from the commission. The signal of an uncoordinated government that characterised it marked a watershed in the 2022 teaser frame of the industry.

    To its credit, however, the NURPC succeeded in concluding the 2020 Marginal oil field bid round in 2022. Through the exercise, it raked in N200billion and $7million revenue into the Federation Account.

    Unprecedent and probably the unimaginable news of discovering of an illegal pipeline through which criminals had siphoned the Nigeria’s crude oil broke in 2022. The news which was an outcome of the uncontrollable crude oil theft in the country left some many industry players speechless. This was so because Nigeria was already bleeding from the agony of high syndicate of oil criminals in the Niger Delta that reduced the production volume to about 1.1million barrels per day. Besides, it culminated in the shutting in over 50 oil wells.

    In 2022, the crude oil find in the Kolmani a location between Bauchi and Gombe State became a reality. Thus, President Buhari flagged off the commercial production of crude oil from the $3billion project with Oil Prospecting Licence 809 and 810 in the Gongola Basin and Benue Trough.

    In terms of human resource, the country lost an asset of immeasurable value in the person of Barkindo in the year under review. As a collosus in the industry, who headed the NNPC and the OPEC, the gap he created would remain unmatched for years.

  • ‘How investment in Trans-Morocco can generate prosperity’

    ‘How investment in Trans-Morocco can generate prosperity’

    The Group Managing Director of the Nigeria National Petroleum Company Limited, Mele Kyari, has said Nigeria’s investment in Trans-Morroco pipelines will create prosperity for the country and other co-investing countries. According to him, plans had been concluded to fix the Trans-Morocco Pipelines from Nigeria across 11 countries to Morocco for onward transmission to the rest of the world.

    The NNPCL boss stated this while speaking at the 11th Nigerian Content Forum in Uyo, Akwa Ibom State capital which ended yesterday. The theme of this year’s Forum was “Deepening the Nigerian Content Opportunities in the Decades of the Gas.”

    Kyari lamented that despite sitting on billions of gas resources, the country lacked the capacity to develop it to maximum utilisation to feed the Liquefied Natural Gas ( LNG) and other gas plants in the country.

    “Gas resources provide the opportunity to power the global economy in a sustainable manner because gas is the enabler of energy transition. That is why we are focusing with our partners on making sure we create the necessary infrastructure to bring gas on the surface, process it and convert to the value it can give. Therefore, in deepening gas utilisation, we decided to focus on in-country utilization, and that’s critical to us,” he said

    Read Also: Fuel Scarcity: Give us petrol at official ex-depot price, lPMAN tasks NNPC

    In his keynote address, the Executive Secretary of Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote, said the launching of 10-year Strategy Roadmap in November 2017 was aimed at increasing Nigerian content in the oil and gas industry to 70 per cent by 2027.

    Highlighting the journey since the launch of the Strategic roadmap, Wabote said the NCDMB was proud of the achievements recorded in the last five years despite the general and specific challenges faced across the oil and gas industry locally and globally.

    “We are proud of the achievements realized in the last 5 years despite the general and specific challenges faced across the oil and gas industry locally and globally.”

    In his remarks, Gov. Udom Emmanuel of Akwa Ibom State said the theme of the conference was apt because it drew attention to gas utilisation, while fostering the growth of Nigerian Content Implementation within the energy industry.

    Emmanuel, who was represented by the Deputy Governor, Mr Moses Ekpo, said since there had been a global shift from fossil fuel to renewable energies, industry players in the country had to continually engage in discussions to ensure that the country is ready for this transition.

     

  • NNPC/CNL $1billion pact raises investment hope

    NNPC/CNL $1billion pact raises investment hope

    The investment that has eluded the Nigerian oil and gas industry for years, thereby affecting crude oil production, may have started trickling in again, as Chevron Nigeria Limited (“CNL”) and the Nigerian National Petroleum Company Limited (NNPCL) joint venture have confirmed that $1.4 billion has been secured to finance some of their projects.

    This amount is to be used by the NNPC/CNL JV to fund infill drilling programme or projects for the fiscal years 2023-2026. The financing arrangement was executed on last month.

    The project includes the drilling of 37 wells in the offshore and onshore Escravos area. It will also help to monetise reserves and increase production by arresting decline and supporting domestic gas supply.

    The project is in alignment with the NNPC/CNL JV’s lower carbon ambitions and helps support a lower carbon future through increased gas resources for commercialisation.

    The NNPC/CNL JV recognises the strategic imperative to supplement funding of the NNPC/CNL JV operations to enable high impact projects that can deliver near term production.

    According to a statement signed by E.O. Brikinn, General Manager, Policy, Government and Public Affairs, Chevron Nigeria Limited, the NNPC/CNL JV is one of the largest producers and investors in Nigeria. CNL has operated in Nigeria for more than 60 years and we are committed to supporting the country in developing its energy resources for the benefit of its people.

    “CNL puts people at the centre of the energy conversation because it understands that the well-being of people everywhere depends on energy – energy that is affordable, reliable, and ever cleaner to enable human progress.”

    The absence of long-term investment in the oil and gas sector as well as insecurity should be blamed for Nigeria’s current low crude oil production. This development was responsible for the inability of Nigeria to meet the Organisation of the Petroleum Exporting Countries (OPEC) quota in recent times.

    Read Also: Fuel Scarcity: Give us petrol at official ex-depot price, lPMAN tasks NNPC

    Although Nigeria’s OPEC production quota is pegged at 1.8 million bpd, but in the last few years, the country has struggled between 1.3 and 1.4 million bpd. The rate at which International Oil Companies (IOCs) and other investors were withdrawing investments in hydrocarbon exploitation had further contributed significantly to Nigeria’s underperformance.

    The rate at which investments were taken away was too fast. Lack of investment in the oil and gas sector contributed to Nigeria’s inability to meet OPEC quota. We are not able to get the needed investments to develop the sector and that affected the country.

    Security challenges are another major factor that contributed to the lack of significant growth of the sector in the country just as the drive towards renewable energy by climate enthusiasts had discouraged funding for the sector.

    Some industry operators have described this development as a positive one for the industry and economy of the country. According to some of the industry stakeholders, this would stimulate some level of employment which will have a multiplier effect on the economy.

    It is also a sign of confidence in the Nigerian environment by Chevron, a situation, he said, may encourage other international oil companies IOCs to also begin to consider investing in their assets.

     

  • Tackling perennial petrol scarcity

    Tackling perennial petrol scarcity

    Several reasons have been adduced for the lingering fuel scarcity facing the country. While fire brigade approaches are usually deployed to douse the effect, stakeholders are warning that except the fundamentals are tackled, there will always be a reoccurrence of the situation. MUYIWA LUCAS reports.

    Scarcity of Premium Motor Spirit (PMS) has remained a recurring decimal in the country. In the last two months, the south west region of the country has been battling this scourge, which is now a daily part of their lives. This similar situation has lingered in Abuja and its neighbouring states even for a longer time.

    The irony of the situation is usually that agencies and regulatory bodies mostly give divergent reasons for such incidents and invariably find a way around resolving the scarcity-albeit, for a short while before it resurfaces.

    In such instances, stakeholders, including marketers, enjoy huge profit margin on products as they are able to make quick money arising from the extra charges they impose on the product. For instance, in the current scarcity being experienced in Lagos, some petrol retail outlets sold the commodity for as high as N250 per litre against the government regulated price of between N162 and N165 range officially approved by the Federal Government.

    The current scarcity being experienced can be traced to 2021 after the government announced its plan to remove fuel subsidies. Since then, it has been one scarcity after another. Some stakeholders are of the view that these scarcities are usually phantom and a ploy by marketers and other stakeholders to induce change in pump price per litre of petrol. Given what played out in 2021, when pump price of petrol rose to N169 and N175 per litre at the pumps, such thinking may not be wrong. Ironically, uptil this time, government has not officially pronounced an increase in the commodity’s price from the N162-N165 per litre range, but marketers like the Nigerian National Petroleum Company Limited (NNPCL) sell at N169 per litre on the average.

    The Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, characteristic of him, gave renewed hopes to Nigerians that fuel queues will soon disappear. This has been his assurance since October…yet the queues have persisted.

    Reason

    Presently, reasons such as cost of hiring daughter vessel to discharge petrol from the high sea to the depots; soaring foreign exchange rate; inability of marketers to source forex at government official rate for their operations; non functional NNPCL depots; vandalism of depots and pipelines amongst others, are some of the reasons adduced for the current scarcity

    Unfolding

    However, on Wednesday, a new perspective to this scarcity saga emerged, indicating that the reasons for scarcity and hike in price of the product go beyond the claims being put forward.

    The Chairman, Lagos Satellite Depot Branch of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Akin Akinrinade, however revealed that the nation has been fed with different stories bordering around mother and daughter vessels and associated cost and the dwindling value of the Naira in the black market as being responsible for the current scarcity and sudden hike in the price of the product. He said in spite of this “Mother and Daughter” vessel story, a multi-price layer of petrol stares the nation in the face. This therefore, puts a question mark to the veracity of the earlier claims.

    For instance, while addressing the media in Lagos earlier this week, Akinrinade, flanked by other executive members of the association, regretted that given the pact it has with the NNPC, it is the responsibility of the company to deliver petrol in depots at government approved price for its members. However, since the NNPCL has not kept this pact, IPMAN members are now being forced to buy the product from private depots at higher ex depot price. He added that consultations are ongoing for the association to take a position if the NNPC does not make an arrangement for IPMAN members to load petrol at government price of N148.17 per litre within the next seven days.

    Read Also: Petrol crisis must end tomorrow, says DSS

    “How do you explain the fact that major marketers and the NNPC retail outlets sell at petrol at N170/litre and N169/litre at their stations, respectively, and still make profit? They get their supplies from the same Mother Vessels brought into the Nigerian waters by NNPC Limited. Do they not use Daughter Vessel? Why is it impossible for the private depots to sell to IPMAN members at regulated price since they get their supplies from the same source as major marketers? Nobody seems to be interrogating this obvious anomaly,” he said.

    Akinrinade was categorical that his members have gotten to a point where they may boycott the depots until the NNPC thinks it fit to arrange depots for us to load petrol at government approved price.

    Buttressing the position of the association, the Secretary, Lagos Satellite Depot Branch, IPMAN, Akeem Balogun, regretted that the authorities do not see IPMAN members as serious stakeholders in the petroleum distribution network, irrespective of the fact that the association controls over 70 percent of the outlets that serve the majority of Nigerians, hence the neglect.

    “We are the pawn on the chessboard of NNPC. The authorities should tell Nigerians, how it is possible for the major marketers to sell petrol at a pump price of N170/litre and the private depot- who are middlemen, sell to IPMAN members at N217/litre ex-depot, when it is the NNPC that supplies both of them major marketers and private depots at same price of N113 per litre,” Balogun said.

    From what is playing out, Balogun further argued, the only ineluctable conclusion is that the private depot owners, in connivance with the authorities in charge of distribution of petrol, are playing games with our collective destinies. According to him, the simple fact that petrol is being subsidised by the Federal Government, makes whoever has custody of it to do in trust for Nigerians and not to take advantage to profiteer from it because Nigerians own the fund being used to subsidise the product.

    Akinrinade disclosed that the country has found itself in this dire situation because the NNPC depots across the country are not working. These non-functional depots, he said, have left IPMAN members orphaned since the beginning of the year. He regrets that while arrangements were made for major marketers to load at their various depots and at times at the private depots, no such arrangement was made for IPMAN members.

    “IPMAN members control more than 80 percent of the filling stations across Nigeria. Any distribution arrangement that excludes IPMAN members is bound to fail. The only immediate solution to the current quagmire is to bring IPMAN back into distribution system. A through-put arrangement with some private depots to warehouse petrol for loading by IPMAN members at government regulated price. It is pertinent to let Nigerians know that IPMAN members are the first victims of this discriminating distribution system of NNPC and until this warped arrangement is corrected, the scarcity may persist,” he warned, adding that the authorities in-charge, rather than positively address the situation and proffer solutions, have been full of excuses and no effort has been made at ameliorating the suffering of Nigerians who have had to go through excruciating pain to fuel their vehicles because some people refuse to perform their duties as expected of them.

     

  • Dan-Ekeh’s place in Nigeria’s energy diversification

    Dan-Ekeh’s place in Nigeria’s energy diversification

    Experts have established that Nigeria’s energy future is not just about production capacity, reserves and infrastructure. They have identified other important factors such as hydrocarbons’ monetisation, alignment with national priorities and energy’s translation into sustainable economic value.

    Nigeria holds Africa’s largest proven gas reserves, estimated at over 209 trillion cubic feet, yet gas contributes far less to national revenue than crude oil. According to industry data, gas accounts for under 15 percent of Nigeria’s hydrocarbon earnings, despite its central role in power generation, fertiliser production, petrochemicals and industrial manufacturing. This imbalance has reinforced expert concerns that value creation, not resource abundance, is Nigeria’s core energy challenge.

    Designing how energy moves from the ground to the market is central to hydrocarbons’ monetisation. This field is not just for any rookie in the sector. It is one for well-grounded professionals such as Ezechukwu Dan-Ekeh, the Principal Sales Engineer and Trading Desk Manager at Aradel Energy.

    For Dan-Ekeh, gas commercialisation is not just policy; it demands structured frameworks, long-term counterparties, regulatory alignment, and governance strong enough to support scale. At Aradel, he has shaped a strategy that integrates crude trading execution with gas monetisation, advancing Nigeria’s energy diversification.

    “Resources only become assets when they are commercialised properly,” Dan-Ekeh said. “Gas, in particular, demands intentional design. Without structure, it remains underutilised. With structure, it becomes a platform for long-term growth.”

    Dan-Ekeh’s role spans both crude and gas markets, placing him at the intersection of short-term execution and long-term strategic planning. At Aradel, he negotiated and operationalised long-term hydrocarbon offtake arrangements with leading international counterparties, including Shell, BP, and Vitol. These agreements secured stable revenue streams and enhanced the company’s global reputation.

    Such stability is especially critical in Nigeria, where oil and gas revenues historically account for over 50 percent of government income and about 90 percent of foreign exchange earnings. Long-term offtake structures reduce exposure to price volatility, which has repeatedly strained fiscal planning and macroeconomic stability during oil price downturns.

    “These relationships are built on consistency and trust,” he added. “They require clear contract structures, disciplined execution, and the ability to meet obligations across market cycles. When that foundation is in place, it creates stability not just for the company, but for the wider ecosystem it operates in.”

    Dan-Ekeh has overseen large-scale, recurring crude trading, aligning production schedules, logistics, pricing, and counterparty requirements. The trading desk acts as a feedback loop between market realities and corporate decisions.

    “A well-run trading desk translates market signals into strategy,” he said. “It informs how we think about risk, investment, and diversification.”

    Gas commercialisation, Dan-Ekeh said, is as crucial to Nigeria’s long-term energy strategy. At Aradel, he developed a framework to convert a by-product into a core revenue stream. The framework integrates technical feasibility, pricing logic, regulatory approvals, and customer demand into a single commercial model. It also supports initiatives to reduce routine flaring by converting gas into a commercially viable supply.

    Nigeria remains one of the world’s top gas-flaring countries, losing an estimated $2–3 billion annually in potential revenue while exacerbating environmental and public health risks. Commercial frameworks that turn flared gas into usable supply directly address both economic waste and emissions reduction, aligning corporate performance with national and global climate commitments.

    Dan-Ekeh said: “Gas commercialisation is where discipline meets policy. It supports industrial development, environmental goals, and energy security. But it only works with a robust commercial model.”

    This approach aligns with Nigeria’s broader diversification agenda, which positions gas as a transition fuel to support power generation, industrial growth, and export opportunities. Gas-fired plants account for roughly 70 percent of Nigeria’s installed power capacity, yet supply constraints have left average electricity availability below 5,000 megawatts for a population exceeding 220 million. Effective gas monetisation is therefore directly linked to productivity, job creation, and economic competitiveness.

    By embedding commercialisation into corporate strategy, Aradel has contributed to that agenda while strengthening its market position.

    A defining feature of Dan-Ekeh’s work is the emphasis on governance. In a sector where scale magnifies risk, he has focused on strengthening controls for hydrocarbon accounting, royalty calculations, and regulatory reporting.

    “Commercial success without governance is fragile. Every contract, every delivery, every transaction must stand up to scrutiny. That’s what protects value over time,” he said.

    Governance failures in Nigeria’s extractive sector have historically resulted in revenue leakages, disputed royalties, and investor mistrust. Strengthening commercial controls not only safeguards company value but also supports national transparency initiatives and improves confidence among lenders and development partners.

    Dan-Ekeh has contributed to ensuring that revenue streams are both efficient and in compliance with legal requirements by incorporating governance into commercial workflows. This strategy has improved confidence among partners and stakeholders and increased interaction with authorities.

    “In regulated environments, trust is cumulative,” he said, adding: “You earn it by being consistent, transparent, and accountable.”

    Operating at the intersection of markets, regulation, and strategy requires a particular leadership mindset. Dan-Ekeh described his approach as one centered on clarity and alignment.

    “Trading and commercialisation involve fast decisions, but those decisions must be anchored in clear frameworks. My role is to ensure that teams understand not just what we are doing, but why we are doing it,” he said.

    His leadership has been recognised internally through the CEO’s Award for Exceptional Performance, granted in acknowledgement of specific contributions such as delivering new monetisation pathways, structuring international deals, and improving commercial processes at Aradel.

    “The recognition mattered because it reflected team impact. Commercial outcomes are collective. They depend on alignment across technical, legal, finance, and operations.”

    Dan-Ekeh believes Nigeria’s upstream sector is at a turning point, where success will increasingly depend on commercial sophistication rather than resource abundance alone.

    “The future belongs to operators who can monetize responsibly. That means long-term thinking, strong governance, and a willingness to invest in systems and relationships,” Dan-Ekeh said.

    He urged commercial leaders to treat gas not as a residual product but as a strategic asset that requires dedicated attention. He also emphasizes the importance of aligning corporate strategy with national objectives.

    “When commercial strategies support broader economic goals, everyone benefits. That alignment creates resilience,” he said.

    Unlike major discoveries, commercial architecture work is quiet but lasting. Through trading execution, gas monetisation and governance-focused design, Dan-Ekeh has helped position Aradel Energy within Nigeria’s evolving energy sector. His work illustrates a central truth of the sector: value is not created solely at the wellhead. It is created where strategy, markets, and governance converge, turning resources into engines of long-term growth.

    “Energy is about choices. How we commercialise today determines what becomes possible tomorrow,” Dan-Ekeh said.

  • The oil production challenge

    The oil production challenge

    Twice within space of two months, the Organisation of Petroleum Exporting Countries+ (OPEC+) has revised downward, its oil demand growth projections for 2023. While Nigeria should have risen to the occasion to take advantage of the situation, the country has further fallen in the pecking order as leader of African oil producing countries. How can the country take over and benefit from the revenue rush accruing from a booming oil market? MUYIWA LUCAS asks.

    THE global oil market has witnessed a mixture of highs and lows. Hopes were raised early on in the year of a huge boom in the sector that was predicted to continue the trend early into 2023. And for oil producing countries, it was good news especially in the face of the rising crude price. It was therefore not surprising that the Organisation of Petroleum Exporting Countries (OPEC+) alliance at its last February meeting via video conference, unanimously approved a 400, 000 barrels per day (bpd) monthly production hike for its members for the month of March.

    The decision was based on the predictions of analysts and industry stakeholders who had hoped that given the bullish surge of oil price in the recent past which culminated Into hitting the production output quota would be increased significantly. For instance, Goldman Sachs had expressed the view that OPEC+ would announce a larger production increase for March than the usual 400,000 bpd, considering the oil price rally to S90 and the potential for renewed discontent from major oil importers at these high price levels. Subsequent months enjoyed such raise until the effect of the Russia/ Ukraine war which began on February 24, began to creep in.

    This began a new chapter in the production outlook envisioned by the OPEC+. To safe guard the industry the oil alliance had to announce a two million barrel per day cut in production output and subsequently a reduction across board.

    It is believed that OPEC’s interventions would make a positive impact, as the global oil market would continue to record instability in 2023 and beyond, thereby impacting negatively the economy of nations, including Nigeria.

    In its October 2022 Monthly Oil Market Report, (MOMR), released by the OPEC, the body painted a picture of an uncertain oil market when it stated: “For 2023, world oil demand growth is revised down to stand at about 2.3 mb/d. “Uncertainty about the geopolitical situation remains high, and there is potential for further US shale liquid production,” the report hinted.

    Strategic

    Stakeholders and analyst in the oil sector are convinced that OPEC+ decision to cut the volume of production output is not without strong consideration for the market, price and the ability of its members to meet any huge output in-crease.

    An economist and oil market analyst, Mayowa Sodipo, contended that over the period the body has increased output quota, members have found it difficult meeting the target set for them. According to him, many oil producing nations within the OPEC+ group are struggling to pump to their quotas, thereby causing dislocations in the production chain.

    Besides, with the inability to meet these allocated quotas, an increasingly huge gap between production increase on paper and actual growth in output now exist, which has made the market tighter than stakeholders had anticipated a few months ago.

    Challenge

    For Nigeria, the challenge before her is meeting the 1.8m bpd quota allotted to her. The country’s dwindling average oil output, including condensate, dropped Year-on-Year (YoY). by 7.4 per cent to 1.37 mil-lion barrels per day. mb/d in the first 10 months this year. from 1.48 mb/d in the corresponding period of 2021. This showed a shortfall of 317,940 barrels when compared to the 1.69 mb/d which the 2023 budget was based on at S70 per bar-rel. However, on Month-on-Month (MoM), the average oil output in-creased by 7.8 per cent to 1.23 mb/ d in October 2022, from 1.14 mb/d, recorded in the preceding month of September 2022.

    A fortnight ago, Nigeria dropped from being the highest producer on the continent to become the fourth biggest oil producer as Angola. Libya and Algeria produced more crude oil than Nigeria in September as the country’s oil output dipped below one million barrels per clay for two months straight. In October, Algeria produced 1.060 mbpd, Angola produced 1.051 mbpd, Libya’s output was 1.163 million while Nigeria’s oil production stood at 1.024 million bpd.

    This is why stakeholders are worried that for a country that has failed to meet its production quota in over five months the development does not augur well especially as the country struggles with revenue challenges and its huge deficit in the next fiscal year.

    Several factors are said to be mitigating against the ability to meet the production target. One of such is the huge cost of-restarting fields and pipeline vandalism in the country. Sodipo noted that the level of vandalism is very high such that oil firms like Agip, Shell and some other companies have suffered serious damages to their facilities, thereby limiting their ability to contribute to production as a result of the shutdowns that usually followed such attacks.

    “Unfortunately, when you experience a shutdown in your operation, restarting them is not straight forward, as restarting a facility cost money,” he explained.

    Last year, for instance, a combined shortage of 1.62 million barrels was recorded at Qua lboe terminal, with 200.000 barrels due to production shut-in arising from flare management and low well head pressure. Another 530,000 barrels were lost to shut-ins following tank top concerns. 650.000 barrels as a result of production cut-back as directed by the then Department of Petroleum Resources (DPR) as well as a loss of 240.000 barrels due to a gas leak on one of the assets.

    For years, losses from the Forcados facility, which shed 200,000 barrels. 84.000 barrels, 30. 000 barrels and 80,000 barrels respectively on different days, with reasons ranging from leak repairs. tank top issues, a fire incident and declaration of a force majeure.

    Still, Forcados had continued its shut-ins, shedding an additional 405,000 barrels of crude oil at the Uzere/Afisere/Kokori axis following a shutdown as a result of pro-tests by community workers as well as a loss of 80, 000 barrels due to a fire incident.

    In the same vein, Anyala Madu shed 105,000 barrels, Bonny suffered total shut-ins of 335,000 barrels, Ugo Ocha lost 30,000, Okono’s shutdown led to loss of 96.000 barrels, while Sea Eagle lost 750.000 barrels.

    Yet. stakeholders like Kayode Oyedele, an public analyst, warned that if the trend of declaration of force majure by some of the Inter-national Oil Companies (loCs) persists this year as experienced previously, then the 1.8mbpd allocation by OPEC+ to the country may be unattainable.

    The issue of divestment by the 10Cs remains a sore point against the march to meeting production capacity, with some of the multinational oil companies discreetly withdrawing their investment in the industry.

    Reviving hope?

    But the revival of crude oil ex-ports at the Forcados Oil Terminal by Shell Petroleum Development Company Limited (SPDC) last month has brought back hope for the addition of 400,000 bpd of crude oil to Nigeria’s daily output.

    Located at the western Niger Delta. the Forcados Oil Terminal, which has a nameplate capacity to export 400.000 bpd of crude oil per day. receives crude oil from the Forcados Oil Pipeline System, the second largest pipeline network in the oil-producing region, after the Bonny Oil Pipeline System in the eastern Niger Delta. Some inter-national oil companies (IOCs) and Nigerian independents operating in the western Niger Delta pump oil to the Forcados Oil Terminal for exports. However, with the closure of the export terminal for re-pairs. about 20 oil fields were been shut in.

    The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, is also optimistic that the country expected to add 500.000 bpd to its output by the end of last month, mainly by restarting activities on the Shell Plc-operated Forcados export terminal and Trans-Niger pipeline (TNP).

    The TNP with a capacity of about 180,000 bpd and the Aiteo-operated Nembe Creek Trunkline (NCTL) are the two major pipelines in the eastern Niger Delta that transport Bonny Export Terminal.

    What next

    For now, stakeholders are hopeful that with a further improvement to the prevention of damages to the oil facilities, including drastic reduction in oil theft, the country will in no time regain its lost position.

  • IPCO, NGML, LFZDC in multi-million dollars gas pact

    IPCO, NGML, LFZDC in multi-million dollars gas pact

    NIGERIAN Government gas utilisation policy has received a boost as the NIPCO Gas Limited (Consortium) signed a tripartite agreement with the NNPC Gas Marketing Limited (NGML) and Lekki Free Zone Development Company (LFZDC) to build pipeline infrastructure and supply gas to industries in the Lekki area of Lagos.

    The gas pipeline, which is expected to be completed in six months, is planned to supply gas to industries in and around the Lekki Free Zone and feed a 24 Mega Watts (MW) power plant in that axis.

    Speaking at the signing ceremony in Lagos, the Managing Director, NIPCO Gas, Nagendra Verma said the pact would aid smooth distribution of gas to Lekki area of Lagos State. “Our intention is to supply gas, which is economical, cheaper and environmental friendly. It also enhances efficiency of equipment and will ultimately boost the economy of this country. We are developing gas infrastructure to meet the power requirement of the industries,” he said.

    Managing Director, LFZDC, Dai Shunfa, said: “We have been crying for gas all these years. We negotiate the agreement with NIPCO and NGML and it has become reality today. I believe this is a win-win situation for the parties. This will be a key facility for us. It means we have to bring more end users for NGML consortium, expressing hope that the laying of the pipe-line will be facilitated.

    “We have our power plant now, which is 24MW, we are using CNG and LNG, which is not sufficient for us. What we need is a pipeline gas and that was why we engaged this consortium to connect the gas to Lekki Free Zone, not only to connect the power plant. With this infrastructure we can attract more investors who will use the gas.”

    Managing Director, NGML, Justin Ezeala, said: “Our partner (NIPCO) is a reliable firm and an industry leader in pipeline laying. We have worked with them for years and we discovered that, among our partners, they are the most consistent to market.

  • Fuel scarcity blues

    Fuel scarcity blues

    Premium Motor Spirit (PMS) scarcity otherwise known as petrol, has been a major concern this year. The situation has led to an unofficial increase in the pump price of the commodity, one in which government and Nigerians seem to have come to terms with. Yet, the situation remains unabated even as stakeholders call for deregulation and level playing ground for all players in the industry. MUYIWA LUCAS reports.

    Nigerians and scarcity of Premium Motor Spirit (PMS) or petrol are no longer strange bedfellows. This is because shortage in supply or availability of this commodity is a regular occurrence which the people, sadly, have become used to.

    While the current scarcity that has hit Lagos and its environs may just have been for about three weeks, residents of Abuja and some northern states have had to bear the brunt of shortage of the product for over three months now.

    Why scarcity?

    Several reasons have been adduced for the development. For instance, at the onset of the present scarcity in Lagos, some marketers pointed accusing fingers at the Nigeria National Petroleum Company (NNPC) Limited saying there was shortage in the supply chain of the commodity.

    Last month, for the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the scarcity in Abuja and other surrounding states is as a result of the inability of fuel trucks to have access to Lokoja roads due to flooding.  A statement from the agency had explained that the Lokoja flooding had affected the distribution of petroleum products to the Federal Capital Territory, Abuja, and environs as water has submerged a greater part of  Lokoja city and grounded all vehicular movements, adding that as part of measures to mitigate the situation, “trucking via alternative routes is currently ongoing.”

    However, since then and upto the time of going to press, Abuja residents are still battling with queues at the filling stations- just like other parts of the country.

    Rising price

    For now, a litre of petrol sells for between N190 and N210 per litre in Lagos. Interestingly, even the NNPC stations in Lagos sell for N169 and N179 per litre in Ogun State. But as far as the Federal Government is concerned, the commodity sells for N162 and N165 per litre having not uttered a word on this.

    Marketers have since maintained that it is impossible to sell fuel at the old rate in view of the soaring foreign exchange rate and the present  realities. This is why the  IPMAN President, Alhaji Debo Ahmed, has insisted that the Federal Government must review the price rate is scarcity is to be a thing of the past and also for the market to be stable.

    “The exchange rate is always catapulting. With the present situation, they have to modernise (review) that NNPC rate because dollar has gone up. The cost of Dollar is going up everyday it becomes so difficult to maintain the rate,” he said, adding that marketers were selling the product above the official pump price because they buy it above the ex-depot rate from the private depots. Presently, ex depot price of petrol per litre sells for about N185 to N190 per litre from the private depots. He insisted that it is impossible for them to sell the same product below what they buy it.

    His words: “It is the product we are buying from the private depots, that is why we are selling at that rate. The template which is the NNPC is still the same thing but we get the product from the private depots. So, these private depots use the template they like. Their prices are from N185 to N190 per litre,” he argued.

    Opening up

    But weeks after, emerging facts have revealed to the contrary that the continued scarcity of petrol stems from the inability of marketers and some depot owners to pay for the services of “Daughter vessels” required to evacuate imported petrol from the “Mother vessel” from its offshore position. Mother vessels are tanker ship that brings the product into the country but berths in the high sea, while Daughter vessels are those used in conveying the product from the point of berthing on the high sea to the port before it is emptied into depot tanks.

    The Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Clement Isong, revealed that although there are vessels laden with petrol imported by the Nigeria National Petroleum Company Limited (NNPCL) on the high sea waiting to discharge, the cost of hiring daughter vessel for the operation has been discouraging due to the high cost.

    According to Isong, hiring a daughter vessel to bring the product from onshore to offshore currently costs $45, 000 per day as against the previous $20, 000 per day it used to cost because of the high cost of diesel. This is aside other charges paid including the Nigeria Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA) among other charges.

    “The challenge is the exchange rate and the scarcity of the dollar. It is very difficult to get the dollars. A daughter vessel is hired for 10 days to discharge the content from the mother vessel; this means that it has shot up from $200, 000 to $450, 000. Then marketers and depot owners also pay Nigeria Port Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA) charges in dollars. Yet, the dollar is scarce and difficult to get,” Isong explained.

    This situation, he further explained, accounts for why many marketers and depot owners will refuse to go and lift petrol from the mother vessel and when some of them lift, then they have to factor in the cost of the dollar and other logistics cost at their depot because no business like to operate at a loss.

    “The problem is really the scarcity of dollar. The higher the dollar rate, the higher the cost of operation. Unfortunately, you also have these charges to pay to government agencies like NIMASA and NPA in dollars.

    “There is a bottleneck at that point. It is true NNPC has brought the vessels onshore, but it is the bottleneck in bringing the products offshore into the private depots that is an issue because of dollars. The depots are charging to recover their cost. Many people are already closing shops.

    “Even we as MOMAN cannot go and pick the product because we cannot hire vessel at that price because we have our limits. That’s the challenge. Every time the dollar rises, it impacts many things,” Isong submitted.

    The National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi,  said that marketers are finding it very difficult getting the product owing to the shortage in supply. Those that have to sell, he explained, have had to go the ‘extra mile’ to get supply to their filling stations.

    “NNPCL is the sole importer of petrol, so if they cannot make the product available, then how do we get petrol to lift and sell to the public?” Osatuyi asked rhetorically.

    Undue advantage

    The development has renewed calls for marketers like MOMAN, IPMAN among others, to be allowed to access foreign exchange at the government official price to enable them also import the commodity.

    Stakeholders argued that with the commercialisation of the NNPCL, the firm has become a competitor with other operators in the sector and as such should not be given any undue market advantage by the government. They contend that the NNPCL commercialisation ought to have changed the era of preferential treatment it got when it was a state-owned entity, hence, there should be a level playing ground for all operators to compete in the market.

    Earlier in the week, the Oil marketers and petroleum depot operators, under the aegis of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) also challenged the preferential treatment that the NNPC Limited is perceived to receive regarding access to foreign exchange (FX) at the official rate.

    Chairman of DAPPMAN and Chief Executive Officer of North-west Petroleum and Gas Company, Mrs. Winifred Akpani, called on the Federal Government and the Central Bank of Nigeria (CBN) to ensure a level-playing field for all players in the area of FX access to enable them boost capacity and continue to make petrol available to Nigerians.

    Akpani stated that accessing FX at the official CBN rate was a serious challenge for marketers and was responsible for the price differential in petrol distribution in the country. She specifically decried the alleged absence of a level-playing field that guaranteed access to dollars for all marketers at official rates, saying having NNPC as the sole importer of petrol is not sustainable, considering the huge consumption of the product.

    The DAPPMAN chairperson stated that strategic decisions must be made in the industry to ensure Nigeria took full advantage of the expected growth in oil products demand across Africa. She maintained that accessing FX through the CBN window would enhance their capacity, facilitate seamless supply of petrol, and birth a regime of sustainability in terms of storage, distribution and supply across the nation.

    “DAPPMAN hereby calls on the government to establish a level playing field in the sector by giving petroleum marketers access to forex at the CBN exchange rate for their operations. The NNPC, which historically served as the supplier of last resort, is now the major oil downstream company in Nigeria with the acquisition of OVH and has full access to dollars at CBN’s official rates. The NNPC also has access to products through swap arrangements,” Akpani said.

    Akpani emphasised that accessing FX at the official rate would boost fuel supply across the country, adding that the burden of sourcing FX through the parallel market for transactions domiciled in Nigeria has left petroleum marketers in dire straits.

    She said, “Accessing dollars for our operations has been an insurmountable hurdle for petroleum marketers. The difference between CBN exchange rate and the parallel market exchange rate continues to get wider by the day.”

    Akpani noted that in addition to core operational expenses denominated in dollars, petroleum marketers also contended with sourcing funds from the parallel market to pay fees, levies, and some unauthorised levies also charged in dollars.

    Charges

    According to the DAPPMAN chairman, to charter a vessel to convey 20,000 metric tons of petrol within Nigeria for 10 days, with freight charges denominated in dollar, amounted to about N220 million at official forex rate of N440, while it costs N440 million for petroleum marketers who source forex from the parallel market at N880.

    This implies an additional cost of N11 per litre for this transaction due to the forex official and parallel market differential. For the same transaction, jetty fees, also charged in dollar, amounts to N15.4 million at official forex rates and N30.8 million for petroleum marketers, who source from the parallel market. In addition, jetty berth is charged in dollars and comes to N2.2 million at official forex rate and N4.4 million at parallel market rate. While port dues, charged in dollars by the NPA and NIMASA come to N71.51 million at official forex rate and N142.796 million for marketers who source forex from the parallel market.

    But this may remain a tall dream as the NNPC remains way above competition. The NNPC for instance, sells the nation’s crude oil and therefore earns forex making her independent of relying on the Central Bank of Nigeria (CBN) or any commercial bank from dollars. Besides, it is easier for the NNPC to import petrol because such importation is not paid for as it is done on swap, that is “crude for fuel” basis.

    Infrastructure challenge

    The shortage of fuel has also been blamed on the unserviceable state of the pipeline network, bad state of the roads. IPMAN’s Public Relations Officer, Chinedu Ukadike, blamed it on logistics and bad state of roads in the country. He explained that most inland depots were without the product, saying it was taking longer days for trucks to move from the south to the northern parts of the country.

    “The problem is logistic in nature and also the effect of long hauls because most of the depots are without the product. The roads are also very bad and from Lagos to Suleja or Kaduna it takes about four days now rather than the normal 48 hours if the roads were in good condition.

    There is also the challenge in Apapa. The way to go is to get the pipelines working,” he submitted.

    But the scarcity may further get to other parts of the country sooner. This is because of the disruption in supply chain. For instance, The Nation’s findings revealed that the entire pipeline system from Atlas Cove through Satellite, Ejigbo Mosimi, Ibadan, and Ilorin has been closed because of stealing from the pipelines. By implication, these depots in Mosinmi, Ejigbo, Ibadan Ilorin are all not working and not pumping petrol because there are too many holes on that pipeline done by vandals and petrol thieves. This leaves the supply chain with no alternative than the roads which are also in deplorable state.

  • Renewable energy: start-ups receive $80,000 funding

    Renewable energy: start-ups receive $80,000 funding

    All On through its venture-building platform, the All On Hub, in partnership with the Nigeria Climate Innovation Centre (NCIC), has announced the winners of the 2022 edition of the Annual Incubation program for early-stage renewable energy entrepreneurs.

    They are: Retile, Let It Cold, Energy Assured, Nutrideen Agriculture Concepts, Danwawo Group, Swift Tranzact, Solaris Greentech Hub and Powerbox Energy Systems.

    The incubation programme, which started training new cohorts last May, aims at contributing to the reduction of Nigeria’s energy-access gap by building a pipeline of early-stage renewable energy enterprises with the potential to scale. This year, the programme received 290 applications from which 18 ventures were shortlisted and completed the 6-month incubation program conducted by the NCIC.

    In her address, All On CEO Caroline Eboumbou congratulated the participants and commended them for their dedication to supporting the clean energy transition with their bold ideas.

    She said: “the shared vision of All On and NCIC has been to groom early-stage clean energy entrepreneurs, providing them with the key ingredients to enable their dreams of impacting unserved communities a reality”. She charged the entrepreneurs not to relent and reaffirmed All On’s commitment to their continued development in the future.

    The CEO of NCIC Mr. Bankole Oloruntoba reiterated the organization’s commitment to the growth of renewable energy start-ups in Nigeria. He reflected on the journey of the EIP noting that over 50 ideation-stage businesses had gone through the program.

    He thanked All On for its partnership which over the last three years had provided funding and capacity-building support to the renewable energy start-ups. Bankole charged the entrepreneurs to remain focused and maximize the resources available to them through the NCIC network to accelerate the growth of their businesses, drawing inspiration from notable alumni from the previous cohorts.