Category: Energy

Experts at the just-concluded Society of Petroleum Engineers (SPE) Nigeria Annual International Conference and Exhibition in Lagos said the global energy mix would remain amid greater dominance by hydrocarbon energy sources. They argued that for African oil-producing countries, the energy transition should be better viewed as providing clean energy and not as abandoning some energy sources, MUYIWA LUCAS reports.

The National Aeronautics and Space Administration (NASA), a civilian agency of the United States Government that specialises in space exploration, is worried. Its worry stems from the changing climatic development the earth faces which poses a threat to human existence.

According to the body, in 2020 the planet’s average temperature was 1.02°C warmer than the baseline from 1950–1980 mean.This has led to global warming, whose effect has included but not limited to the polar ice caps melting and sea levels rising.The ripple effect of this has berthed other climate changes like desertification and an increase in extreme weather events such as hurricanes, floods and fires.

The industrial revolution has not been spared as a major cause of the development given that it is associated with the energy sector whose activities in drilling, exploration, production releases gas, carbon dioxide, among other substances into the atmosphere.

However, to achieve this goal, a key factor remains energy transition, that is, the shift from an energy mix based on fossil fuels to one that produces very limited, if not zero, carbon emissions, based on renewable energy sources.

According to Wikipedia, the energy transition is the ongoing process of replacing fossil fuels with low carbon energy sources. More generally, an energy transition is a significant structural change in an energy system regarding supply and consumption. A huge contribution to decarbonisation comes from the electrification of consumption, replacing fossil fuel-generated electricity with energy generated from renewable sources, which also makes other sectors like transport cleaner; the digitalisation of networks also contributes by improving energy efficiency.

It is, therefore, instructive that the urgency to achieve energy transition is accelerating the changes in the energy sector. For instance, between 2010 and 2019, the costs of renewable technologies fell by 80 per cent in the case of solar photo voltaics and 60 per cent for onshore wind power.

Such is the concern for the environment and the energy sector that stakeholders in the country’s energy sector converged in Lagos at a three-day conference – Nigeria Annual International Conference and Exhibition (NAICE) organised by the Society of Petroleum Engineers (SPE) Nigeria Council. The conference had as its theme: “Global Transition to Renewable and Sustainable Energy and the Future of Upstream Oil and Gas in Africa.”

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, an engineer, said the commitments from the Paris Agreement of 2015 and the recently concluded 26th Conference of the Parties (COP26) in Glasgow, in which Africa actively participated, places demand on all to keep global temperature rise to within 1.5 °C – 2.0 °C of pre-sindustrial levels.

Komolafe explained that the implications of this for upstream oil and gas industry in Africa are far-reaching. “The need to decarbonise our oil and gas production facilities not only requires commitments but entails that we have the right discourse on policy direction to guarantee energy security throughout the journey to our net-zero target,” he said, adding that the event offered another opportunity for stakeholders to make invaluable contributions to the quest for cleaner energy and net-zero carbon regime. And as the process garner momentum, Komolafe reiterated the need for oil and gas producers in Africa to embrace the reality of energy transition and take strategic position to leverage the opportunities presented by the unfolding era, which he said has become more pressing.

The NUPRC boss however noted that recent events around the globe indicate that fossil fuels will continue to be a core part of the global energy mix well into the future, even beyond the 2050 targets for achieving net-zero that has been set by most countries.

While acknowledging that the future of upstream oil and gas in Africa is promising, especially as several African countries including Nigeria, Algeria, Mozambique, Egypt, Libya, among others, are blessed with huge gas reserves, estimated at over 620 trillion cubic feet of natural gas reserves and 125.3 billion barrels of crude oil, Komolafe warned that there is a need for the appropriate legislative framework and a change in policy direction if these countries are to benefit from the resources for maximum economic recovery and energy sustenance.

“Accordingly, the recently enacted Petroleum Industry Act (PIA), 2021 in Nigeria has generous fiscal provisions aimed towards attracting investment not just for oil development but for harnessing of the rich gas potentials of the nation which is among the highest in the world. As we drive for investment in cleaner hydrocarbon development, without prejudice to maximum economic recovery strategies for development of oil resources, the Commission empowered by the PIA has placed its focus on four cardinal areas for sustainable gas development and utilisation as follows: Gas reserves growth, Optimised gas production, Domestic gas utilisation; Gas flare elimination.

“We expect other African countries to adopt suitable anchor points and roadmaps similar to those presented in the foregoing in order to achieve the right energy mix while decarbonising our oil and gas development,” he submitted.

Similarly, the Minister of State for Petroleum Resources, Timipre Sylva, called for the deployment of technologies to make fossil fuel cleaner in the face of global energy transition.

For him, however, energy transition is better viewed as providing clean energy and not as abandoning some energy sources. According to him, the ongoing global energy is a huge challenge to the reliability and sustainability of renewable energy supplies as alternatives to fossil fuels.

He warned that the anticipated economic growth and rising global population, especially in Asia and Africa, will significantly push energy demand upward to a level that renewable energy sources only cannot meet by 2050.

“All these imply that the global energy mix will remain with us, amidst greater dominance by hydrocarbon energy sources, at least in the foreseeable future. It also indicates that energy transition will remain a gradual process, as against a rapid and radical shift as some have presented it. It is, therefore, necessary that more effort should be put on the use of available technologies like the Carbon Capture Utilisation and Storage (CCUS), to make fossil fuels cleaner. This will encourage a win-win situation in terms of CO2 emission reduction and meeting global energy demand,” Sylva said.

According to him, many countries have already come to the realisation that the adoption and deployment of the CCUS technologies in large scale will play a critical role in supporting energy transitions globally, noting that investment into the CCUS technologies was a very appropriate step at this stage of addressing climate change concerns.

The Minister, who noted that Africa was bedevilled with energy poverty, advised African countries to adopt adaptive strategies taking into account the different socio-economic, political and developmental peculiarities of individual nations.

“Africa’s energy poverty would have to be addressed by responsibly developing and utilising Africa’s abundant natural resource – fossil fuels, from where the renewable energy would be funded amidst a gradual energy transition. Nigeria, as the oil and gas industry leader in Africa, is committed to pursuing the energy transition to promote economic growth,” he said.

Sylva informed that the country was gradually investing in renewable energies, primarily solar, to reduce carbon emissions, whilst continuing to exploit hydrocarbon resources, especially natural gas – recognised as the energy transition fuel for Nigeria.

The SPE International President, Mr Kamel Ben-Naceur, blamed the  global energy crisis on the sharp decline in investment in the upstream petroleum sector in pursuit of energy transition.

Ben-Naceur said with the return to normalcy after the COVID-19 pandemic and the ongoing tension in Eastern Europe had driven the price of petroleum products very high leading to inflation in many countries.

He said projections had shown that oil and gas would continue to be a significant part of the energy mix in the foreseeable future hence there was need to increase investment in the industry

The Director, New Energy, Seplat Energy, Mr. Effiong Okon, who represented the firm’s Managing Director, Roger Brown, at one of the panel sessions, agreed that for a successful energy transition in Africa, it is very important to support the goals of the Paris Agreement and align with society’s objective to get the world to net zero carbon emissions by 2050, if not before, adding that lower-emission hydrocarbons, particularly gas, have a role to play during energy transition by replacing diesel generators and biomass.

“Though hydrocarbon export will continue to be a mainstay of the Nigerian economy and will fund Nigeria’s growth as well as its energy transition, the Oil & Gas industry has a role to play as a responsible steward of Nigeria’s oil and gas assets, including those that might be divested,” he said.

According to him, in the longer term, the reality and threat of climate change requires the decarbonisation of energy systems in Nigeria, but sustainability and transparency must be at the heart of business operations and decision making.

On ‘just transition’ Okon noted that there is the need to balance decarbonisation with development, adding that: “Global warming and climate volatility are existential threats to humanity and nature. The world needs to accelerate efforts to achieve net-zero and mitigate warming effects. Africa’s climate, agriculture and people will suffer most in the coming decades. The problem has been caused by emissions from developed-world countries that have enjoyed their ‘carbon privilege’ and built strong economies on fossil fuels.

“However, we need to consider the reality in the continent. Poverty, hunger, unemployment, population growth abound here. Africa contributes just 3.3 percentage of global emissions. Most Africans (600 million) lack access to reliable energy, which hampers development. Use of inefficient and costly diesel/petrol generators saps financial resources, drains foreign exchange and creates pollution.

“Biomass use for cooking causes deforestation, health problems and nearly 0.5 million premature deaths in Sub-Saharan Africa every year. The developed-world’s drive to impose decarbonisation on Africa will constrain development,” he added.

Making the case for gas, the Seplat Director said the developed-world pressures to abandon fossil fuels are being pushed back by recognition of the need to drive development with reliable energy.

COP27, he explained, would focus on how best to achieve this balance for the benefit of tomorrow’s 2.5 billion Africans, of whom 500 million will be Nigerian, adding that given current low emission levels, Africa can achieve a disproportionate improvement in living stands through a globally small increase in emissions from cleaner gas for power and cooking.

He called on players in the continent to leverage oil and gas revenues to cash flow transition, but also tap international transition funding where available, hence the need for good corporate governance.

The Seplat Energy executive therefore urged industry operators to focus on quick wins first, which are: decarbonising the upstream and focus on producing ‘advantaged’ low-carbon barrels with low Scope ½; end routine flaring and redeploy gas to power operations and local communities; and deploy renewables to power operations where possible, and share with local communities.

“We need to develop gas as transition fuel (Gas-to-power to replace diesel, move along value chain into power, e.g. business parks, large buildings; hybrid gas-to-power / solar offerings; and bottled gas products for domestic use. In addition, we can expand into renewables (hydro, wind, geothermal, blue/green hydrogen; and develop and monetise carbon capture and storage,” Okon submitted..

One month into the promise of an improved power supply, the frequency of national grid collapse may be the biggest albatross to the promise of an improved power supply across the country. MUYIWA LUCAS writes.

Last week’s national grid collapse marked the sixth occurrence this year alone. The latest grid collapse, coming exactly five weeks after that of June 13, sent electricity power to a paltry 40 megawatts (MW).

According to the distribution load profile, electricity from the generation companies was abysmally low at 40MW on the day it collapsed against 3,000MW generated barely 24 hours before the occurrence. This development brought zero megawatt allocation to the 10 electricity distribution companies, except 40MW to Abuja and 10MW to Ibadan Discos respectively at 12:23 pm when the incident occurred.

The Transmission Company of Nigeria (TCN), responding to the development, blamed it on the “sudden drop in system frequency from 49.94Hz to 47.36Hz, which created system instability.” The TCN is the operator of the national grid.

The General Manager, Public Affairs of the TCN, Ndidi Mbah, basing his statement on reports obtained from the National Control Centre (NCC), explained that the grid collapse was precipitated by the tripping of a Unit (with a load of 106 MW) in one of the generating stations due to “Exhaust over Temperature”.

He further said that the incident pulled out other grid-connected Units in the plant, resulted in aggregated generation loss of 457MW. In its wake, a train of events ensued – culminating in the collapse of the national grid.

“As obtainable in all systems, when a component of the electric power system is defective, the entire configuration is vitiated. However, inspite of setbacks encountered at the initial stage, grid restoration had almost been completed as at 11:00pm when this report was filed,” Mbah noted in the issued statement.

Although he assured of TCN’s commitment to leveraging the concerted interventions instituted thus far to enhance power supply reliability so that the issue of system collapse will soon become a thing of the past, the frequency of grid collapse, stakeholders contend, may constitute a clog in the wheel of progress to the improved power supply promised by the Nigerian Electricity Regulatory Commission (NERC).

Recall that the Chairman, NERC, Sanusi Garba, recently assured Nigerians will begin to enjoy improved power supply from July 1 following renewed efforts by industry stakeholders. He had assured electricity consumers during a media parley in Lagos, of a guaranteed generation, transmission and distribution of an average of 5,000MW of electricity daily from July 1, 2022.

Garba’s assurance was based on the promises of other stakeholders he received. “We have had discussions with the gas suppliers within our regulatory space. We have them on board to ensure that once we made the commercial requirements, gas was going to flow.

“Now, for transmission, we have heard of figures well in excess of 5,000MW and clearly TCN will be able to deliver that. I recall clearly in March last year we had 5,400MW. So, it means it is quite possible based on signed commitments.

“All the stakeholders across the value chain had obligations and there would be consequences if they failed to deliver. So, in a situation where Gencos are able to deliver 5,000MW but TCN is unable to do so, they’ll pay the penalty to the generation company and so on.

“And whenever the power is available and DisCos do not take the power; then they will pay liquidated damages that will compensate other market participants.

“We might not have 24/7 power supply from July 1 but Nigerians will see the trajectory because the target is to have an average of 5,000MW daily for transmission and distribution.”

He added that NERC had facilitated a contractual agreement between the Gencos, TCN and the 11 DisCos that would guarantee the generation, transmission and distribution of an average of 5,000MW of electricity daily to customers effective July 1.

Divergent views have continued to trail the “new” Nigerian National Petroleum Company (NNPCL) Limited, following its unveiling by President Muhammadu Buhari on Tuesday. The transition from Nigerian National Petroleum Corporation to NNPC Limited is in accordance with the Petroleum Industry Act (PIA) 2021. In accordance with the Act, NNPC Limited will run a commercial and profit-focused organisation under the Company and Allied Matters Act (CAMA). What hope for the new firm? MUYIWA LUCAS asks.

 

What will change?

Stakeholders are concerned that the new NNPC may not just be a window dressing considering that the old NNPC underperformed over the years because of the structure of its operations and because it was an appendage of the Ministry of Petroleum Resources.

However, the Managing Director, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, is convinced that what will likely change now is that this new NNPC will not be an appendage of the ministry as it is likely to be insulated from political interference and interference from the bureaucracy.

 “We are having a company now that we can properly ascertain its value like its assets value, the opportunities and every other thing. Once we are able to put the value on the table it will be easy to attract investments.  Going forward, what we  expect to see is a dilution of ownership so that we don’t have a company that is just 100 per cent owned by the government,” Yusuf said.

 He explained that from the period of this PIA, all the effort the NNPC Managing Director, Mele Kyari has made about transforming the company, speaks a lot of  what he believes and has a vision to transform this company and to ensure that it is decoupled from politics, politicians and  bureaucracy. He however, noted that this cannot happen immediately, explaining that what is now on ground is “a work-in-progress” to the beginning of a transition to a company that will be more private sector driven.

Concerns

While some are convinced that the new arrangement will spin more investment for the firm, others maintained that it is not cherry news yet as the arrangement in the firm has not changed from when it was government run, meaning it remains a mere change of nomenclature.

For instance, Secretary General, Conference of Nigeria Political Parties (CNPP), Willy Ezugwu, in a statement he signed on behalf of the party, said that the unveiling of the new NNPC Limited amounts to “rebranding and reinforcing corruption.”

It said: “It is difficult to understand the reason for presenting the NNPC Limited as a commercially driven company. It is instructive to note that before now, the NNPC has a history of non-remittance of revenue to the Federation Account and there have been allegations that the management has been engaged in backdoor crude swap as part of the subsidy scam in the corporation over the years.”

The CNPP queried that the transmutation of the old NNPC to its new status means that the firm has been freed from the Treasury Single Account (TSA) policy among others and wondered what would happen to the unremitted funds in its kitty.

 “Since the NNPC is no longer Nigerian National Petroleum Corporation but Nigerian National Petroleum Company Limited and the same Mallam Mele Kyari is now transforming from Group Managing Director (GMD) of the old corrupt NNPC to the Group Chief Executive Officer (GCEO) in a government controlled company, it amounts to rebranding corruption and reinforcing it,” the CNPP said.

 It further argued that “If Mr. President wants the new NNPC to work, he must sack all the management of the old NNPC, order a thorough investigation into all the unresolved allegations against the Group Managing Director of the old NNPC and his management team, then appoint fresh hands and relaunch the NNPC Limited. Without this, all efforts at incorporating an NNPC Limited without first cleaning up the old NNPC amounts to rebranding and reinforcing corruption by Mr. President without realising the impact of the action on the anti-corruption posture of his administration in the eyes of the international community,” the CNPP stated.

 But Yusuf disagreed. “It’s a transition; the new NNPC is in transition phase and you cannot from the beginning sack everybody, especially the key drivers of the firm and put new persons. Who are you going to appoint? Is it not the same government? But for you to get it to a place where you will dilute ownership you will get the value; get more investors; get it listed in the stock exchanges locally, domestically,” he said.

According to him, once the new NNPC is able to get to this stage, the balance of power will begin to change in the co-operation. But for now, it has to be well packaged to ascertain the value and those who will invest will have to sit as a going concern.

 “This is what will attract the investors and the more you have investors the more you are able to dilute ownership, then you can now begin to alter the structure of management; the structure of the board will also have to change, but this is just the start of it its work in progress,” Yusuf, who is also an economist, said, adding that the effort should be commended because it is a major step towards a major transition of a very important organisation which promises a more profitable venture if we get it right.

He assured that the type of revenue that will be derived from the new NNPC- if it is gotten right, will almost equal to all the taxes the country is getting currently.

Can the new NNPC lead the change?

 The Minister of State for Petroleum Resources, Timipre Sylva, said that with the signing of the PIA, which assures international and local oil companies of adequate protection for their investments, the nation’s petroleum industry is no longer rudderless, revealing that while the PIA was yet to be signed, the country had lost about $50 billion worth of investments. In fact, between 2015 and 2019, KPMG states that “only four percent of the $70 billion investment inflows into Africa’s oil and gas industry came to Nigeria even though the country is the continent’s biggest producer and the largest reserves,” Sylva noted.

Kyari is hopeful that the NNPC Limited is positioned to lead Africa’s gradual transition to new energy by deepening natural gas production to create low carbon activities and positively change the story of energy poverty at home and around the world.

Yusuf agreed that the transmutation is a positive development for the country. This, he said, is because it will unlock the oil and gas sector to a lot of investment opportunities in the oil and gas sector especially now that the company will be independent and operate in line with the companies and allied matters Act, which will empower it to seek investment and investors both within  and outside the country.

 The former Lagos Chamber of Commerce and Industry Director-General is hopeful that the new NNPC will function like its counterpart in Saudi Arabia and Brazil. “Saudi Aramco today is the most valuable company in the world; it is a national oil company. So if Saudi Aramco can be the most valuable company with a value of $2.4 trillion, then why not in Nigeria because here is a company that has a lot of assets- very valuable asset,” Yusuf explained. Saudi Aramco is the privately run Saudi Arabian oil firm founded in 1933. Saudi Aramco, as of 2021, is one of the largest companies in the world by revenue which is put at $359.2 billion, employing about 66,800 people as at 2020. Yusuf agreed that the new development will also ensure better professionalism in the firm, while the country’s oil sector and general economy will be the better for it.

A Professor Emeritus in Petroleum Economics and Executive Director, Emmanuel Egbogah Foundation, Prof. Wumi Iledare, in a statement also agreed that the newly unveiled NNPC Limited needs new manpower development and deployment strategy that is completely different from the old practice to achieve stakeholders’ expectations. He also said the opportunities for the company was huge in terms of creating value for stakeholders with the amount of gas and oil resources at its disposal

Professional competence devoid of political expediency is required to maximise stakeholders value!

“The other challenge is how NNPC Ltd. will consciously come to terms with the fact that the agency role can no longer be in its radar. Development was a new beginning for the Nigeria oil and gas industry in many ways.

 He, however, noted that the new dawn in the oil and gas space in Nigeria and the NNPC Limited in particular, comes with challenges and  opportunities in this Petroleum Industry Act (PIA) 2021 era.

“First, NNPC Ltd. is a commercial entity now with mission and vision to maximise stakeholders’ economic value, just as Shell, TotalEnergies and Chevron do.

 “Unlike the old NNPC, which basically tends to maximise public policy in-kind value, PIA 2021 expects less agency roles for NNPC Ltd. if not even zero agency roles,” Iledare said.

Audit

 A major factor that has remained shrouded in secrecy is the staff strength of the NNPC under the old regime. According to a report by Platforms Africa, an online publication, an erstwhile Chief Operating Officer, NNPC Ventures, Dr. Babatunde Adeniran, in 2018 put the staff strength of the old NNPC at over 79,000 across its subsidiaries in the country and across the World. The official number of staff on the payroll of NNPC has, prior to this, not been made public till date.

Iledare said the NNPC Ltd. must be aware that the expectations of stakeholders now was for the company to be obedient to the laws of Nigeria as Shell, TotalEnergies, Mobil and Energia do to maximise value.

He said: “The opportunities are huge in terms of creating value for stakeholders with the amount of gas and oil resources at its disposal. The human resources are huge as well, but governance mentality has to change to harvest these resources effectively, efficiently, equitably with optimal professional ethics.”

 Yusuf revealed that under Kyari’s leadership, the old NNPC began to publish its account regularly- a sharp contrast from what used to obtain. “This is good for transparency, so I think it is a journey we need to encourage, we don’t have to pull it down should encourage him and the process.  Luckily we are going into political transition because we need to remove and get away those parasites that are living on this kind of parastatal; we should get more value from it for the country just as we are getting value from NLNG. The difference between NLNG and this one is private sector driven and there is a dilution of shares- with the government having only 49 percent. So let us push this to that point there we will ascertain the value where we ensure the firm is doing well then we begin to offload the shares and completely remove the hand of government in the direct management. But in order to ensure that we actually get value, we need to encourage the process and the team now,” he submitted.

Over time, petrol scarcity has become a tool to demand and implement increase in fuel price in the country. Would an enabling environment, capable of creating a free market in which demand and supply determine fuel pump price, resolve this issue, if the implementation of the Petroleum Industry Act (PIA) 2021 not been suspended? MUYIWA LUCAS takes a cursory look at the strategy.

For the second time this year, the country has been thrown into chaotic situations arising from scarcity of premium motor spirit (PMS). On each occasion, the effect was that the pump price of the commodity skyrocketed, though unofficially.

At the Nigerian National Petroleum Company (NNPC) retail outlets (filling stations) visited by The Nation, a litre of petrol sold at N175 as against the N160-N165 per litre benchmark. At other filling stations in Lagos and its environs, the commodity sold for between N180 and N190 per litre.

In Abuja and other states, marketers of the product increased the pump price, selling above the N165 a litre. This is in defiance to government’s directive on fuel pricing. Typical of such developments, the black market thrives as motorists continue to pay as much as N350 per litre to source fuel from the black market.

At some filling stations visited, including some NNPC franchisee stations across the state, the new price has been displayed on their pumps – an obvious indication to the public that they are not perpetrating any form of illegality with the increase. The unilateral increase by marketers at this period remains shocking to the public considering that government has not pronounced such price increase.

Even the regulator, the Nigerian Midstream Downstream Petroleum Regulatory Agency (NMDPRA), headed by Farouk Ahmed, feigned ignorance of such increase, insisting that prices were still the same.

The Executive Director, Distribution Systems, Storage and Retailing Infrastructure, NMDPRA, Mr. Ogbugo Kalu, at a briefing, said the Authority was ever ready to enforce the price on independent marketers who were planning to increase the pump price to N180 per litre.

“PMS is a regulated product. The price is fixed and the ex-depot price is known. The pump price remains at N165. So we continue to urge Nigerians to keep within these operating rules,” he said.

The President, Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Okoronkwo, blamed the high cost of logistics and the war in Ukraine for the development.

In his reaction to the sale of petrol above government-approved price at some private depots and independent marketers’ filling stations, the National Operations Controller, IPMAN, Mike Osatuyi, said that such development was expected because some depots would have incurred extra costs to procure the product in their depot.

“Why won’t the private depot sell beyond the official price? It is even God that knows how they get it (petrol) in the first place. So maybe they have incurred some extra cost in getting the product. It will shock you to know that some of my members don’t get the fuel supply for less than N180 per litre, so how much do you expect them to sell it? Anyway, if they able to fast-track the supplies, maybe by end of this month normalcy will return,” Osatuyi said.

 

    Sustainability

The issue of price remains a major source of concern. With the naira hitting an all-time low against other international currencies, the cost of doing business has risen astronomically. This has affected the cost of running depots and other ancillary services associated in the value chain of petrol supply and distribution, including its storage.

For instance, the Depot and Petroleum Products Marketers’ Association of Nigeria (DAPPMAN) said it had become unsustainable to keep petrol at N165 per litre.

Sources close to independent marketers and their retail outlets blame the increase in pump price at their stations to the hike in ex-depot price at the private depot from where they get their supplies. It was gathered that most private depots recently raised the cost of petrol from the approved N142-N145 per litre to between N162-N170/litre. This, it is believed, accounted for why some filling stations owned by independent marketers sold fuel at N175-N190 per litre, as against the pump price of NN162-N165 per litre.

According to DAPPMAN, the  costs of operating their fuel depots have gone up astronomically. It added that the petrol they supplied was sourced solely from Nigerian National Petroleum Company (NNPC) Limited’s marketing subsidiary, Petroleum Products Marketing Company Limited (PPMC), for sale to the public at the regulated price of N165 per litre. It said the purchase was made by depot operators with funds sourced with high bank interest charges, alongside increased costs of hiring vessels, with which they deliver fuel cargoes to their depots.

It also blamed the ongoing Russian/Ukraine War on the high cost of operating in the sector, explaining that the international prices of these items had risen astronomically and had more than doubled their old rates since the beginning of the war, thereby causing extreme increases in local prices.

“Depot Owners and the government have continued to struggle over time to sustain supply of PMS at the current pump price of N165 per litre despite the huge subsidy cost to government and abysmal margins to the Depot owners. Added to this is the scarcity of bunkers (ship’s fuel). We also experienced astronomical increases in the cost of diesel used to power equipment and machinery in our various depots and our retail outlets,” the statement said, adding that if not for the suspension of the implementation of the Petroleum Industry Act (PIA) 2021, an ideal enabling environment would have created a free market in which demand and supply would affect fuel pump price.

  Claims Vs Reality

Typical of the NNPC at times like this, the firm during the week insisted that it has over two billion litres of PMS that would last for the next 34 days in the country, adding that there was enough stock to meet the nation’s demand. It also assured that in the next “three days, the Authority would focus its energy in making sure that the marine stock would be translated into inland stock to get petroleum products across the country”.

The Group Executive Director, NNPC, Adeyemi Adetunji, assured that NNPC was working with the entire operators and stakeholders in the downstream sector to ensure that petroleum products get to distribution channels and filling stations across the country. “With all the apparatuses put in place, we can assure that the fuel queues will disappear in the next few days. Nigerians will continue to enjoy the free flow of petroleum products,” he added.

The Managing Director, Petroleum Pipeline Marketing Company (PPMC), Isiaku Abdullahi,  said there were about three vessels in the Apapa jetty waiting to offload more than 60 million metric tonnes, adding that in due course, the potential and imagined fuel crisis in Lagos would be over.

“Within a very short while, we will see the fuel queues pale out. So that is what our focus in the Authority and for the next few days we urge every operator and indeed even assure the public that whatever glitches and supply gaps that have been observed will disappear shortly,” he assured.

But what the NNPC, as the sole importer of petrol has not made public is the reason for the supply stoppage it embarked on leading to the scarcity.  At the onset of the scarcity, marketers had blamed the NNPC for stopping supply of the product to them.

IPMAN’s Chairman, Lagos Satellite Depot, Mr. Akin Akinrinade, lamented the shortage of petrol in their depot, saying that since last December, not a litre of petrol had been lifted at the NNPC satellite depots at Ejigbo. The situation has put independent marketers at the mercy of private depots, whom he accused of hiking their ex-depot prices to a level no longer sustainable to sell fuel at N165 per litre.

Akinrinade said based on current economic realities, the sustainable pump price for petrol should be at N180 per litre.

NNPC’s silence on the issue has been deafening. Efforts to get the company to respond were futile as its spokesman, Garba Deen Muhammed, did not respond to enquiries.

Muhammed has always maintained deafening silence. He did  not pick calls made to his mobile phone nor respond to text messages.