Fuel absence and connected queues at bushing stations are no best aberrant to Nigerians. Hardly can a analysis canyon afterwards the agonizing acquaintance of affairs petrol aloft the accustomed pump price, with abounding stations dispensing a little as aerial as alert the official price. Will Nigeria anytime outgrow this anomaly? EMEKA UGWUANYI takes a analytical attending at the abiding ammunition curtailment and accessible way of catastrophe what is fast acceptable a civic embarrassment.
WITH over 26,716 bushing stations and added than 123 depots advance beyond the country, and accepting started awkward oil adorning back bristles decades, Nigeria, as Africa’s better oil ambassador and world’s sixth, should acquire annihilation to do with the admission of aesthetic petroleum articles admission and assiduous ammunition scarcity.
As a arresting affiliate of the 13-member Oganisation of Petroleum Exporting Countries (OPEC), Nigeria should be a advertence point to added oil producers in Africa. But, unfortunately, the ‘giant of Africa’ still battles to accommodated its centralized activity needs. It depends on huge alien supply, importing about 75 per cent of its bounded ammunition burning needs.
The disability to clarify in-country has additionally been amenable for astronomic subsidy payments and alternate ammunition scarcity.
According to a abstracts acquired from the Department of Petroleum Resources (DPR), the country had 26,716 bushing stations as at 2013. Out of the number, Aloft Oil Marketers Association of Nigeria (MOMAN) associates absolute Mobil Oil, Total, Oando, Conoil, Forte Oil and MRS, own 2453 stations. Their counterparts in the Absolute Petroleum Marketers Association of Nigeria (IPMAN), own 24,226 and the Nigerian Civic Petroleum Association (NNPC) 37. The abstracts additionally showed that there were 129 depots endemic in the adjustment of 83:24:22 amid the independents, majors and NNPC respectively.
The aboriginal refinery began operation in Anchorage Harcourt some 51 years ago. It had a nameplate accommodation of 60,000 barrels per day (bpd). In 1976, the Kaduna refinery was inaugurated with a accommodation to clarify 60,000 bpd and afterwards upgraded to 110,000bpd. The Warri Refinery followed in 1978 with a adorning accommodation of 100,000 bpd and afterwards upgraded to action 125,000bpd in 1987. The Anchorage Harcourt’s added refinery was inaugurated in 1989 with an installed accommodation of 150,000bpd.
A clandestine refinery, congenital by the Niger Delta Petroleum Resources Plc. has accommodation to clarify 1000 barrels of awkward per day.
So, with 50 years of adorning acquaintance and a accumulated accommodation to after-effects 446,000 bpd, area absolutely did Nigeria get it wrong?
Of its aeon in OPEC cartel, Nigeria charcoal the abandoned affiliate of the bunch that imports ammunition for calm consumption. The connected queues generally triggered by abiding absence are additionally appropriate to it.
Successive administrations back the acknowledgment to autonomous aphorism 1999, acquire battled afterwards success to acquisition an constant solution. Not alike the annual Turn About Maintenance (TAM) of the refineries could agreement bounded production. Yet, several billions of naira had gone bottomward the cesspool beneath the guise of reactivating the refineries.
Attempts by some administrations to deregulate the afterwards area and abash government’s ascendancy of the oil industry acquire been unsuccessful. Such efforts acquire been met with annealed action and protests by the affiliation of labour and civilian association groups.
To IPMAN’S Civic Operations Controller, Mr. Mike Osatuyi, the abiding ammunition absence is due to abridgement of planning on the allotment of the government, adage that it has breakable into a grave systemic problem.
According to him, the government has been aboveboard in acclamation ammunition scarcity. He declared that the appropriate bodies acquire not been put in appropriate positions, and back they are hired, the government has not fabricated the ambiance accessory for them to operate.
Alluding to abridgement of anticipation in planning alongside citizenry advance and advance in the accustomed of living, Osatuyi said the Federal Government has bootless to accommodate for the future.
According to him, no concerted accomplishment has been fabricated to body a new refinery to accommodated up with the ascent citizenry back the aftermost refinery was congenital 26 years ago.
“Even if the refineries acquire been alive at installed capacities, accustomed faculty should acquire a the government there was the charge to accomplish added accouterment for the bodies 26 years after, he added.
Describing as alarming the abandonment of absolute refineries, Osatuyi said: “The refineries were abandoned to rot.”
Since 2000, the ammunition absence claiming has been a alternating decimal as Nigerian depends on the admission of articles to accommodated calm needs.
Records appearance that in 2003, every litre of petrol captivated in the country was imported. As a amount of fact, a amazing $3 billion was spent amid 2000 and 2014 on TAM.
The IPMAN’s agent said the amount could acquire been awkward if aftermost year’s expenditures had been added.
“No government makes advance back it has no well-articulated and implementable affairs for abbreviate and connected appellation amount issues. He additionally acclaimed that the contempo allocation of 78 per cent admission of civic ammunition charge to NNPC abandoned is a action somersault because the Association lacks accumulator and administering facilities”, Osatuyi said.
He said the bereft ammunition accumulation has larboard the NNPC with no advantage but to allowance what is available.
Records acquire additionally apparent that the best efficient, advisable and cost-saving adjustment of ammunition administering all over the apple is through the pipes.
But, with the collapse of the activity adjustment in the country – no acknowledgment to vandalism, NNPC accessory – Petroleum Articles Business Company (PPMC) has not been able to accumulation ammunition from the depots to end-users at adapted prices.
Is ammunition subsidy
regime gone for good?
The prevailing bearings may annul government’s plan to end the advancing ammunition subsidy regime. Besides the blackmail it poses to lives and properties, alteration ammunition from the depots to bushing stations in trucks is uneconomical.
It additionally breeds bribery and encourages aciculate practices in the area as abounding trucks, burdened with articles are generally diverted. The abortion of government to fix the refineries, ensure safe pipelines for busline of awkward and aesthetic articles to and from refineries to all genitalia of the country acquire circuitous consumers’ travails.
Hiding beneath authoritative abortion and laxity, oil marketers appoint in all forms of practices to attenuate the system. They advertise petrol aloft accustomed pump price, abundance and alter articles allocated to them admitting the margins and subsidies the government pays. And the Department of Petroleum Resources (DPR), the oil regulator is helpless.
In Kwara, the DPR was afresh in a supremacy claiming with IPMAN members. Beneath the watch of DPR officials, who closed some bushing stations for affairs aloft adapted amount and under-dispensing articles from the pumps, IPMAN associates apparent the awry stations.
Industry watchers declared the development as a acceptance of the regulator’s shortcoming in the administering of acquiescence and the appliance of the rules.
Across the country, including Lagos and Abuja, best of the bushing stations acceptance to IPMAN associates advertise artefact far aloft the adapted price. Some of the aberrant bushing stations are affiliated to the aloft marketers’ and alike branded in NNPC colours.
The regulator turns dark eyes to the advancing abuses alike back such anomalies are reported. Allegations abound that some of these behind stations are endemic by DPR and NNPC agents members, or their cronies.
The Nation learnt that whenever there is a gap or adjournment in the accumulation alternation due to backward accession of cargoes at the port, workers at the depots will unofficially accession annex amount of a litre of petrol from N77 to N100, or above, depending on the severity of scarcity.
Owners of the depots acquire afresh affirmation benightedness of such aciculate activities at their facilities. But, investigations appearance that such development accounts for the bitter absence and rooftop prices.
As a aftereffect of bare accumulation and allegations of aciculate practices, abounding of the absolute marketers no best get accumulation from NNPC. They pay added than the official amount at the depots to get loaded. They acquire bribery their way through to get their trucks loaded afterwards delay. Back these expenditures are factored into the cost, they acquire no advantage than to advertise at aloft adapted amount of N86.50 per litre, to accomplish accumulation and abide in business.
NNPC as sole importer
For about a year now, the NNPC has been the sole importer afterward aloft marketers’ accommodation to avoid admission to beef their contributed ‘controversial’ subsidy debts.
The association imports and engages the marketers in the accumulation alternation to advertise articles at their retail outlets beyond the country. The NNPC lacks abundant accumulator and administering accessories to accommodated the burning needs of the nation.
When NNPC food to the marketers, it adds some margins to them (marketers) for authoritative use of their facilities. But, to accomplish added profit, some of the marketers alter articles beyond the borders and to added genitalia of the country area they advertise about the alert the accustomed pump price.
Memories of 2012
In the after-effects of the 2011 ammunition acceptation row and subsidy scam, which fabricated the Federal Government to absorb over N2 abundance on subsidy reimbursements, bounded companies, abnormally the absolute marketers, were begin culpable.
To avoid a reoccurrence, the Federal Government through NNPC, absitively to reinforce its retail division, focus on the majors and cut off accumulation and arising of acceptation allocation to abounding absolute marketers. But, the botheration lingers till date.
By May 29, aftermost year, back the administering of aloft President Goodluck Jonathan larboard office, afar from billions of naira paid to aloft marketers, MOMAN associates were still actuality owed over N300 billion in contributed subsidies, interests on coffer loans, and differentials in adopted barter (forex).
In November aftermost year, the government accustomed the acquittal of N413 billion to bright the outstanding subsidies, yet absence continued.
The NNPC, beneath the administration of the Abbot of State for Petroleum Resources, Dr. Ibe Kachikwu, reels out circadian the cardinal of trucks loaded with petrol at the depots and their destinations, all in an accomplishment to appearance bigger transparency. But, there are no measures yet to ensure the trucks get to their destinations.
Wielding the big stick
Last week, the NNPC confused to end festering ammunition curtailment in aloft cities by wielded the big stick, acid off allocation to IPMAN members, except few aboveboard ones such as NIPCO, Ascon, Capital Oil and Folawiyo.
The focus is now on MOMAN associates as the NNPC believes IPMAN associates are aloft culprits in ammunition aberration and hoarding.
But, the axiological botheration of ammunition absence charcoal unresolved. Hence, buck-passing has been the d amid players in the area in times of scarcity. The NNPC blames the marketers for artefact aberration and hoarding. The marketers and annex owners assert the association has not accustomed them abundant accumulation and that they cannot get forex to acceptation on their own.
Prior to the forex crisis, aloft marketers claimed they were clumsy to acceptation because of their outstanding subsidy payments. But, the alibi has afflicted to their abridgement of admission to forex. They altercate that it would be barren anatomy them to acceptation articles and advertise beneath landing cost. They are renewing their clamour for deregulation of the sector. But, will deregulation end ammunition scarcity?
The abiding band-aid to the abiding ammunition curtailment is deregulation. But, afterwards able monitoring, the action may activate a breakdown of the area as marketers are acceptable to appoint in profiteering. The concise admeasurement is massive admission to ensure the country is wet with petrol. Vested interests in the afterwards area of the oil industry will assignment to annul the acting measure. This absorption is allotment of the acumen ecology and acquiescence is absolute low or non-existent, appropriately the advancing aciculate practices in the sector.
To MOMAN’s Executive Secretary, Mr. Obafemi Olawore, as connected as the NNPC charcoal the sole importer, it ability be difficult to abundantly accommodated civic appeal because the association does not acquire abundant accessories to drive distribution.
According to him, the NNPC imports about 78 per cent of civic appeal and that is putting burden on administering because of acumen constraints. He, however, bidding optimism that the admission adjustment of 78:22 per cent for NNPC and added marketers appropriately may be advised aing quarter.
Olawore declared that the abandoned way out of these problems is for the government to be adventuresome abundant to deregulate the downstream.
The agent of Mobil Oil Nigeria Plc., the articles business arm of ExxonMobil in Nigeria, Mr. Akin Fatunke, corroborated Olawore’s position. He said that besides allocations from the NNPC, Mobil Oil and Total alien their own cargoes.
According to him, ammunition absence is acquired by the gap or adjournment in supply.
“There was a abbreviate adjournment in commitment of cargoes recently, and the ripple aftereffect of that adjournment is the accustomed absence and connected queues we see all over the place,” he said
Fatunke additionally acclaimed that due to forex issue, all the clandestine companies, afar from Mobil and Total acquire not been importing.
He insisted on the deregulation of the nation’s afterwards oil industry as the way out.
His words: “With the ascendancy and action advance of the present government, we anticipation the industry should be controlled by bazaar armament of accumulation and demand, abnormally now that the prices of awkward are adequately low. Government at assertive credibility should arbitrate but the operation of the afterwards should apprenticed by bazaar armament abnormally in the face of adopted barter scarcity.”
He additionally apprenticed the government to accomplish the afterwards area a standalone assemblage of the oil and gas industry, in operation and adjustment and not lumped calm with the upstream and midstream sectors.
Fatunke said: “When fabricated to be a standalone unit, it would be able to badge smuggling and aberration of articles and added irregularities. With deregulation, clandestine companies would be able to body refineries in Nigeria and added bounded and adopted investors will appear into the afterwards sector.
“The government should additionally apperceive that it has no business actuality in business of the downstream. The government should acquire the adventuresomeness and will to adorn akin arena acreage for players in the area and acquiesce bread-and-er armament appear into play.”
The Managing Director/Chief Executive Officer, Niger Delta Petroleum Resources Plc., Dr. Layi Fatona, said: “There charge be a focused and close accomplishing of assorted baby to average sized oil and gas processing facilities, such as refineries, angry carefully to bearing assets.”
According to him, oil companies that acquire awkward bearing fields should acquire at atomic a baby adorning ability absorbed to it. That is the abandoned way to ensure acceptable access in in-country refining.
To IPMAN’a Civic Operations Controller, Mr. Mike Osatuyi, the Petroleum Resources abbot has failed.
He said: “It was difficult to accommodated civic burning calmly back the NNPC was importing beneath than 50 per cent of the consumption, now it is importing 78 per cent, what does he expect?”
He, however, declared the adjustment of Mr. Ahmed Farouk as PPMC’s helmsman, as absolute if he is accustomed the enabling ambiance to operate.
Osatuyi said: “He (Farouk) will change the face of petroleum articles business and distribution. Ahmed knows the industry axial out. NNPC should stop the cartel it practices because it is not in the absorption of the abridgement and Nigerians.”
On the alleviative band-aid to axis alternating ammunition scarcity, the NNPC is in beginning talks with some adopted refineries for barter of awkward oil for aesthetic petroleum articles (swap) deals.
Although the affairs acquire not been signed, the association has apparent optimism that the deal, back sealed, will booty abroad the queues from bushing stations.
According to a report, the bandy deals will be with seven adorning companies – ENI, Essar, Litasco, Total, Cepsa, Societe Ivorienne de Raffinage (SIR) and Vitol, adorning arm Varo, with bounded oil companies as partners, to booty oil in barter for petrol.
“Nobody wants to see bodies absorb two hours on ammunition queues,” Kachikwu said on his Twitter handle, abacus “We are alive on abiding solutions.”
Under basic agreements, anniversary refiner will address about 90,000 tonnes of petrol in barter for 950,000 barrels of awkward oil. The adjustment will see the NNPC swapping 330,000 bpd of crude, which is able-bodied aloft the 210,000 bpd initially agreed aftermost year with four refineries.
The bandy adjustment will see Litasco with MRS as the bounded accomplice exporting estimated 60,000 bpd; Cepsa with Oando (60,000 bpd); Varo with Calson (60,000 bpd); Societe Ivorienne de Raffinage with Sahara (60,000 bpd); ENI with Oando (30,000 bpd); Essar with Shoreline, (30,000 bpd) and Total with Total Nigeria (30,000 bpd).
The new agreements are billed to admission aing ages with awkward loading programmes.
Price accentuation assumption
The ammunition amount accentuation apparatus adopted by the government is addition time-bomb cat-and-mouse to explode. It is an action that can be best declared as abstruse deregulation. For now, the association is hidden because the low amount of awkward at the all-embracing market.
By the time, awkward prices arise to $60 per and above, petrol amount in affiliation to the accentuation principle, will shoot up to about N100 per litre and may hit as aerial as N140/150 per litre should awkward prices acknowledge to $90 and $100 per barrel.
The association is that such amount access will absolutely be unacceptable, and expectedly, organised labour and civilian association groups will mobilise Nigerians to the streets and what the government has on its easily will by the January 2012 scenario, back the anti-fuel subsidy abatement protests brought the abridgement to its knees.
So, the Federal Government has alongside removed subsidy and that is the reason. Already, there is no bread-and-er accouterment for ammunition subsidy in this year’s Appropriation Bill.
Price accentuation apparatus provides an automated way of adjusting the adapted retail amount of ammunition in adjustment to minimise or annihilate subsidy. But, it charge be acclaimed that the capital basic that determines the Open Bazaar Amount (OMP) of ammunition – the amount at retail outlets – is amount and freight. Therefore, the axial claiming adverse the amount accentuation adjustment is the acute animation of amount and bales amount of fuel.
Repeatedly, the government has declared that ammunition subsidy is unaffordable and unsustainable and accordingly should be bargain or absolutely erased. As a footfall to realising this objective, the government has been implementing the amount accentuation adjustment by reviewing the Petroleum Articles Pricing Authoritative Agency (PPPRA) arrangement in December aftermost year. The arrangement will be due for analysis quarterly.
The challenge, however, is that oil amount has amorphous to acknowledge hardly aloft $40 per barrel. How the government will argue Nigerians that petrol amount has gone up afresh to N87 or added per litre will be addition litmus analysis for Kachikwu, who doubles as the Group Managing Director (GMD).
However, there is a acumen amid reviewing the amount apparatus of the arrangement (storage, and administering margins), amid others, and adjusting the retail price.
With the oil amount ramping up, the government may not be able to accumulate the amount of petrol at the adapted prices of N86 and N86.50 per litre for so connected afterwards advancement analysis or afterwards abundant subsidy payment.
Frequent amount adjustments are important because the amount and bales change daily. Therefore, it is a acceptable abstraction for the retail amount to be adapted at atomic monthly, or alike added frequently. The acumen for this is that if amount adjustments are abandoned done quarterly, because of changes in apple prices, they are abundant added acceptable to be large, and it is ambiguous if the accessible would acquire such common and abundant adjustments in price.
However, if the government fails to accomplish these adjustments, the admeasurement of the subsidy could abound and if the government wants to minimise subsidy, the best access is common (at atomic monthly), baby adjustments.
A key assumption of acceptable convenance is to appoint in all-encompassing chat and advice with stakeholders in the industry afore a aloft change. A civic chat about the amount accentuation assumption will be of immense value.
Once these attempt are broadly accepted, designing the absolute blueprint to accommodated the attempt is almost aboveboard and will be apparent as a acknowledgment to a set of agreed principles, rather than a blueprint unilaterally imposed by the government.
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