Low Supply From NNPC Depot Heightens Fuel Scarcity - THE ENCOUNTER NEWS


Wednesday, June 22, 2022

Low Supply From NNPC Depot Heightens Fuel Scarcity

LAGOS - The long fuel queues which reemerged in many parts of Lagos and neighbouring Ogun and Oyo states, and intensified in the federal capital territory, Abuja, and other parts of the country intensified yesterday, leaving passengers stranded across the states.


This is as fuel marketers continued to lift the product from private depots as depot operators said there was a shortage in supply from the supplier of last resort, which is the Nigerian National Petroleum Company (NNPC) Limited.

LEADERSHIP reports that the NNPC’s Atlas Cove facility, which supplies petrol to a number of depots, including Ibadan, Ilorin, Ejigbo and Mosinmi, has been down, forcing the country to rely on a number of private depots. Presently, marketers depend on private depots along Apapa, Abule-Ado and the Lekki Free Trade zones in Lagos.

Some people in the know have hinted that the continuous lack of supply from NNPC depot indicates a gradual winding down of the NNPC operations as a government agency ahead of its unveiling as a limited liability company next month.

Group managing director of the NNPC, Mele Kyari, had announced to business leaders across the company’s value chain that the company would begin operations as a limited liability company on July 1.

A close source told LEADERSHIP on condition of anonymity that it means the NNPC Ltd will begin to operate like any private company out to make profit. How can it continue to offer subsidies if it must make profit? the source queried.

The  few filling stations still dispensing the product sold higher than the approved N165 per litre, at between N180 and N210.

However, the federal government has warned marketers not to sell petrol above official N165 per litre as stipulated in the petroleum product pricing template.

The government also advised Nigerians against panic buying of PMS, disclosing that the country currently had over two billion litres of PMS in various depots.

This was made known by the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the NNPC Ltd and the Pipelines and Product Marketing Company after their visit to jetties in Apapa, Lagos, yesterday.

The depots visited by the top officials of the agencies were NIPCO Depot and TotalEnergies Depot.

Executive director, Distribution Systems, Storage and Retail Infrastructure, NMDPRA, Mr. Ugbugo Ukoha, said petrol was a regulated product and urged marketers to comply with the pricing template.

Ukoha said the conflict between Russia and Ukraine had led to an increment in the cost of Automotive Gas Oil (diesel) which was a critical product used in transporting of petroleum products from the depots to the retail outlets.

He said: “So, when we observed that this poses a big challenge in the movement of other products, we made the representation to the minister of state for petroleum and Mr President graciously approved that the freight rate for trucks be increased.

“There’s a N10 addition which we will apply to the different routes to enable trucks to move to docks easily with less burden.

“With these kinds of efforts from the government, we can only continue to appeal to operators within this industry to play by the rules. PMS is a regulated product and the prices are fixed. The ex-depot price is known. The pump price remains N165 and the authority is ever ready to enforce those rules.So, we will continue to urge Nigerians to keep within these operating rules. ”

Ukoha said the focus of the stakeholders in the next few days would be to close the supply gaps and resolve the ongoing scarcity of petrol as soon as possible.

Similarly, group executive director, Downstream, NNPC Ltd. Mr. Adetunji Adeyemi, said the purpose of the visit to the depots was to get first-hand information on the challenges responsible for the current scarcity.

Adeyemi said despite the challenges globally in terms of the supply chain, NNPC had continued to provide petroleum products, specifically PMS, to Nigerians.

“Today we have about two billion litres of PMS in-country which is about 34 days sufficiency. So, there is sufficient petrol in the country.

“We are working with the entire stakeholders and players in the downstream sector to ensure that this product gets to the distribution channels and also the stations.

“We want Nigerians to continue to enjoy free flow of petroleum products,” he said.

Managing director, PPMC, Mr. Isiyaku Abdullahi, said the company had been supporting transporters and marketers with diesel in the form of palliatives to ensure the smooth distribution of PMS to ameliorate the suffering of Nigerians.

Abdullahi said three vessels carrying about 60 metric tonnes of PMS were currently discharging at the Apapa jetty which would be further transported to Lagos and other parts of the country to restore normalcy.

On their parts, Mr Suresh Kumar, managing director, NIPCO, and Mr Ernest Umunna, site manager, TotalEnergies, assured Nigerians of product availability in their depots.

They also promised to carry out 24-hour trucking-out operations to ensure that the scarcity in Lagos was resolved within the next few days.

Meanwhile, member companies of the Depot and Petroleum Products Marketers’ Association of Nigeria (DAPPMAN) have complained that the cost of petroleum products purchase and handling had escalated and was eroding their profit margin.

Though the association empathised with the public, it, however, blamed the suspension of the Petroleum Industry Act implementation for creating hiccups in the system.

In a statement released yesterday in Lagos by Olufemi Adebayo Adewole, executive secretary, DAPPMAN, the Association lamented the current setback in the distribution and supply of petrol at the various stations dispensing at N165 per litre.

According to Adewole, the on-going Russia-Ukraine War has had an adverse impact on the international prices of fuel and food supply, resulting in a corresponding increase in local prices of goods and services.

The above situation, DAPPMAN noted, has had its adverse effects on the operating cost of managing the various petroleum products depots in Nigeria.

“You would note that the petrol we supply is sourced solely from NNPC Limited’s marketing subsidiary, Petroleum Products Marketing Company Limited (PPMC), for our onward sale to the public at the regulated price of N165 per litre.

“This purchase from the PPMC is achieved through funds sourced with high bank interest charges, alongside increased costs of hiring vessels utilized in the delivery of fuel cargoes to our depots.

” This is coupled with the intense scarcity of bunker fuel for running these vessels with increase in the cost of diesel used in powering equipment and machineries in our depots and retail outlets.” added the statement.

Offering further explanation, Adewole said that over time, depot owners and the government had struggled to sustain supply of petrol at the current pump price of N165 per litre despite the huge subsidy cost to government and abysmal or no profit margins to the depot owners.

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