No Envisaged Shortage of Products

Andrew Yakubu, group managing director, NNPC
Andrew Yakubu, group managing director, NNPC

By Vincent Nzemeke  |

THE Nigerian National Petroleum Corporation, NNPC, in collaboration with its downstream subsidiary, the Pipelines and Products Marketing Company, PPMC, has assured the nation that the on-going maintenance works at the Warri Refinery will not affect the stable supply of petroleum products, especially kerosene.

Tumini Green, acting group general manager, Public Affairs Division, NNPC said the coporation has enough stock of products to keep the country well supplied for the period the refinery will be under repairs. Green in a statement issued June 24th added that the reassurance became imperative to dispel rumours that there would be shortage of products due to the repair works going on in the refinery.  “We wish to state that the corporation has enough petroleum products to keep the entire country wet until the repair of the unit that came down in Warri Refinery is effected. We also wish to clarify that there was no directive from any quarters whatsoever, on the allocation of kerosene to anyone and or a politician illegally, as reported by a section of the print media. Petroleum products are sold in line with laid down sales policies and guidelines to marketers duly registered with the PPMC,” she said.

Throwing more light on the alleged illegal evacuation of kerosene from the Warri Refinery, Green explained that there was nothing illegal about the evacuation of kerosene by vessels which belonged to a marketer registered with the PPMC, which according to her; the marketer was only loading its assigned cargo which the company had paid for since March 2013.

She called on members of the public to discountenance reports of imminent fuel scarcity or underhand dealings in the petroleum products supply system as they are calculated to generate anxiety and disaffection.

No Subsidy Payment Yet


THE federal government is yet to pay oil marketers the subsidy money budgeted for in the 2013 budget. This was revealed on June 5, by the Petroleum Products Pricing Regulatory Agency, PPPRA, during the Senate hearing on subsidy matters. Reginald Stanley, executive secretary, PPPRA, said that the federal government has not paid oil marketers the N971.13 billion budgeted for subsidy in the 2013 budget.

He noted that the delay was due to failure to clear foreign exchange claims by the marketers at the federal ministry of finance. “There has been no payment for any marketer importing petroleum products in 2013. This is caused by delays in the payment of subsidy claims by the Federal Ministry of Finance.”

Stanley also said that though the federal government has spent a total of N3.7 trillion in five years, the agency has succeeded in reducing the number of oil marketers from 142 to 38 as at December 2012. He added that local consumption of premium motor spirit, PMS, has also been brought down from 60.25 million liters per day in 2011 to 40 million litres per day in 2013.

“Between 2006 and August 2011, total government expenditure on petroleum subsidy amounted to N3.7 trillion. Expenditure on subsidies increased from N261 billion in 2006 to N673 billion in 2010, which represents an increase of about 160 per cent. Additionally, there had been unprecedented payments in 2011 that so far amounted to N1.4 trillion due, in part, to two key factors: increase in subsidy per litre as a result of a rising global oil price, and large arrears due to the NNPC for household kerosene imports.”

On some key challenges facing the PPPRA, Stanley said the agency was yet to clarify the status of kerosene as to whether it has been deregulated or not. “There is lack of clarity on PPPRA and DPR roles in regulating the petroleum sector. Besides, there is lack of clarity on the subsidy status of household kerosene. We don’t know whether it has been deregulated or not.”


Planning Against Hard Times

ENERGIA Limited, an indigenous oil firm, has concluded arrangements to partner with four other indigenous oil companies to build a crude oil refinery plant in the country with an initial capacity for between 10,000 and 15,000 barrels of crude oil per day. The four other companies are Midwestern Oil and Gas, Pillar Oil, Chorus Energy and Flatform Petroleum Limited.

Felix Valentine, managing director, Energia, said the firms are already discussing with a consultant on the feasibility and viability of the project. He noted that the decision to set up a refinery in the country is in response to the high rate of illegal bunkering and pipeline vandalism and also to prepare the country for an eventual reduction in crude export brought about by major discoveries around the world and the stoppage of crude import from Nigeria by the United States of America.

According to him, the five firms lost about N11.448 billion in 2012 alone to illegal bunkering, crude oil theft and pipeline vandalism. “Our cluster group lost about N11.448 billion to crude oil theft in 2012 alone and at the rate we are going, this might increase to N15.9 billion in 2013. This got us thinking and we considered building a refinery. Another issue that made us decide to build a refinery is the threat to Nigeria’s crude oil export due to the vagaries in the international oil market, which will very likely pose a serious challenge to the economy. The refinery will help us to prepare for an eventual reduction in the demand for Nigeria’s crude oil and bring about a reduction in crude oil theft,” he said.


No Handover, No Takeover

Chinedu Nebo, minister of power
Chinedu Nebo, minister of power

SUCCESSFUL bidders in the ongoing privatisation in the power sector have expressed eagerness to take over operations from the Power Holding Company of Nigeria, PHCN, Distribution Companies, DISCOs after the successful payment of 25 percent of their bid sum. The Bureau of Public Enterprises, BPE, and the Secretariat of the National Council on Privatisation, NCP, stated that successful bidders will commence full operations only after 75 percent down payment of their investments have been completed.

The NCP, in a statement, said that the core investors are only allowed to take over the companies on completion of 100 percent payment of their bid consideration and that the case the PHCN successor companies will not be different. The council reiterated that successor companies would be formally handed over to the bidders after full payment in a ceremony that will herald the takeover of the power sector by the private sector.

However, the NCP also plans to allow purchasers’ access to the companies in order to prepare for the implementation of their business plans laid out in their proposals submitted to the Bureau of Public Enterprises. The preferred bidders of some DISCOs are eager to proffer solutions to the erratic power supply in the country.

The winner of one of the DISCOs in Lagos revealed in confidence that in the next three to four months, investors will commence complete take over. “We have invested 25 per cent and as businessmen, we need to have a return on investment. We cannot allow our money to be tied down. In the next three to four months, we would have taken over, but labour issues must be settled before we can come in. Don’t forget that there is a difference between hand over and taken over,” the source said.

Compiled by Anayo Ezugwu

— Jun. 17, 2013 @ 01:00 GMT

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