Bad fuel: Fuel Scarcity will Ultimately Disappear Next week, says Mele Kyari, NNPC, CEO.Adunni Adetola
Chief Executive Officer of Nigerian National Petroleum Corporation, NNPC Limited, Mr. Mele Kyari said that the lingering fuel crisis and its attendant queues at the filling stations will ultimately disappear next week.
Kyari said that there was already a receipt of 2.1 billion liters which would be distributed to normalize the situation.
Kyari offered the hope at a meeting with the House of Representatives Committee on Petroleum investigating the circumstances surrounding the importation of adulterated fuel into the country.
He said: “This National Assembly created the NNPC limited. By God’s grace, I am the CEO of that company. This company will serve the Nigerian people.
“By law, it is required to ensure energy security. Therefore, it is our responsibility to ensure that we provide energy security for this country. This company must operate within the laws of this country and this is what we have always done, and this is what we will continue to do.
“For this current situation, I assure you that we have taken every necessary step to restore supply into this country. We have placed orders significant enough for us to cross into March, with at least 2.1 billion liters of PMS in our custody.
“The situation you’re seeing today, I can assure you that by next week, it will vanish. All things being equal because of distribution issues that we may not have control over including the movement of trucks, otherwise we have robust supply arrangement to make sure that we exit this issue.”
No single liter of PMS is processed locally
Giving a background process of fuel importation in the country, Kyari regretted that all the fuel consumed in Nigeria was imported.
He explained that the situation will persist for a long time to time unless the refineries were upgraded.
“Why do we have this challenge? First of all, we import all the gasoline we use in this country. Every petroleum product we use in this country is not locally processed except a few quantities. Some of them, I can also share with you are coming from sources that may not be illegitimate.
Not a single liter of PMS is generated in the country. That means 100 percent of PMS you see in this country is imported. Those imports are done on the basis of existing contractual arrangements that we have. It’s called the direct sale direct purchase process, which is simply with the best of practice to enable our suppliers supply products to us on agreed terms and conditions.
We have been doing this since I came on board and it’s part of our supply mechanism.
“Even if all our refineries come up today, except dangote refinery, we will still be in short supply of PMS, because all of our refineries can only make 18 million liters of gasoline. Consumption is certainly above 18 million liters”, he said.
Evacuation of toxic fuel
The CEO also explained to the Committee that the specification of the imported was established in consonance with the current regulatory mechanism.
“Evacuation from depots, we know all the trucks that leave our depots, but we do not know where they end up. This is reality. There is no tracking mechanism to enable this. We also know that some of these products find their way in places that may not be in this country. I don’t have statistics to back this up, but I’m sure smuggling takes place.
“On the basis of those contracts our suppliers bring products to us and reconcile with them regularly. Part of those supply arrangements, is to give specification to your suppliers. This specification are bound by regulation and the latest that we are using is the one that is in place since 2006. The current specification we have is what is the subject of all our import arrangement. So, all our partners were given those specification and on the basis of this, those imports were made.
“Before a vessel leaves the load port, they have to declare that those vessel meet our specification. They will send it to COMD, the importer and confirm that this is the specification to do, this product that we are bringing to you meets this specification. On the basis of that, you allow the sail away of the vessel.
“Now once it comes to the country, two things happen. We have NNPC surveyors who are now also required to validate that this product that have come meets the Nigerian specification. Also, we have the regulatory authority who has to conduct an independent assessment to confirm that this product meets the specification that is in consonance with the existing regulation in the country.
Why we allowed cargeos to discharge product
“In case of all the problems we have seen, four of the cargoes that are particularly in question today met all this criteria on arrival and that’s why they were allowed to discharge into terminals and conveyed into ship. There’s simply no way based on the current specification that you will know this PMS contains methanol. It is not part of their requirements at the load port. So we didn’t ask them to declare whether it contains methanol because it is not part of our specification.
“Let me make it clear that methanol is not contamination. It is a regular addictive to PMS. In China, upto 15 percent PMS contains methanol. On its own, it is not a contamination. The key issue is handling methanol. If we, knew we will not accept this. Anytime methanol comes in contact with water, it emulsifies. It turns into a different chemical.”
While highlighting a few challenges, Kyari said that NNPC limited rejected 5 vessels billed to come to Nigeria with the product from the same terminal abroad.
“We have a number of challenges. On depots in the country today, once you evacuate products from the land, you pack it with water because of our peculiar environment. I need to disclose to you that people pack it with water because once you leave PMS in the land, some people will tamper with it. No one does that except NNPC. You can cross check this. Every depot has a way of managing this water that comes into the facility. Every filling station in this country have a challenge of managing water.
“We didn’t know until our inspecting agents on 20th of January to be precise called our attention to the fact that it has seen emulsification in some of the depots and this maybe a cause of concern. That is how we went ahead to check all the deliveries in our hands from all the four vessels that came that have already discharged and to confirm that all of them contain methanol.
“We quarantined all the volumes wherever they are in depots and transit. We were able to track them. We were able to trace all of them and quarantine them.
“Not only that we are also expecting several other supplies to come from other sources, we checked their origin and confirmed that five other vessels are coming from the same shipping terminal that loaded this and we rejected all of them. They did not sail into our waters”, he said.
Earlier in his welcome address, the chairman, Committee on Petroleum Resources Downstream, Hon. Abdullahi Mahmud Gaya said the investigative hearing was called by the House at plenary to identify the possible culprits, bring them to justice and forestall future occurrences.
“The essence of today’s gathering is to elucidate the current fuel scarcity which has a negative impact on the people. As we are all aware, fuel queues has recently caused gridlock in most of our major cities affecting traffic movements. Some fuel stations are locked while the few that are open have long queues of motorist waiting to buy fuel.
“This situation is not different in the capital city, Abuja, and our major cities where the majority of filling stations are shut and motorists spent hours in the sun struggling to buy from few that are open.
“It is a fact that these problem is as a result of the importation of adulterated Premium motor spirit (PMS) which is confirmed to have high percentage of methanol.
“Even though methanol is a regular additive in petrol but it is usually blended to acceptable quantity. The recent supply are in excess of this additive of which its resultant consequences is injurious to our fragile economy and the generality of our citizens.
“The House of Representatives at plenary expressed much concern over the development and mandate the committee to conduct investigative hearing on the matter.
“I therefore call on the Group Managing Director, NNPC Ltd to respond on the resolution of the House, viz investigate the release of adulterated Premium Motor Spirit across the country with a view to ensuring that culprits are brought to book as well as make recommendations towards curbing a reoccurrence of such incident.”
The chairman added that the Committee will still interface with the four companies identified as the suppliers of the bad fuel in due course.