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NNPC’s Crazy Fuel Import Bills And Matters Miscellaneous

March 28, 2011

From obvious indications, President Goodluck Jonathan has been imprisoned by the false intention of making fuel available to the Nigerian consumers for short- term political gains no matter at what cost to the nation both in terms of profitability and other socio-economic considerations.

From obvious indications, President Goodluck Jonathan has been imprisoned by the false intention of making fuel available to the Nigerian consumers for short- term political gains no matter at what cost to the nation both in terms of profitability and other socio-economic considerations.



The Central Bank Monetary Policy Committee, recently expressed concern that $1.34 billion was spent on importation of refined petroleum products just for three months between January and March 2011, though they sounded more political than genuinely concerned economic experts.

According to the bank, “$5.145 billion was supplied to the foreign exchange market from January through March 16, 2011 and of the amount supplied, $1.34 billion was spent on importing refined petroleum products alone, which has adverse implications both for the reserves position and government finances as a result of the huge subsidy implications”.

In this country, we have very short memory span and that's what the not-very-honest people in NNPC, DPR and the Presidency have been exploiting.
We are all aware that the NNPC still takes over 350,000 barrels of crude oil everyday which they are expected to sell and use the proceed to import the required daily volume of product for our domestic consumption.  Let’s not forget that this concept of swap came as a result of the deliberate disablement of the nation’s existing three and half refineries.
 Since it was adjudged that about 350,000 barrels of crude oil could be sold to pay for refined products for our daily domestic consumption and then the balance for whatever expenses expected to be incurred in the transaction, why is the nation still paying hundreds of billions of Naira monthly outside the crude escrow account to subsidise import of fuel products?

This is something that should be a source of serious concern to all Nigerians especially those outside the political circles.

And if the nation is spending that much on importing petroleum products, what is then the essence of keeping the name-plate refineries and maintaining the staff? All the plants should be closed down so that we can concentrate on importation and batter trade. Yeye country!

 The idea of closing down or rather off-streaming all the three and half refineries obviously makes some real sense. Let’s look at the logic: The staff of these non-performing refineries are being paid and highly too for doing nothing as even the NNPC itself has severally acknowledged that the nation depends on over 90 percent or even more on importation to meet its domestic fuels needs.

And by the time you factor-in the amount the nation through the NNPC is spending as workers’ salaries and other expenses for all the refineries, then the staggering amount the CBN is shouting over as expenditure on fuel imports would be mere ‘chicken change’.

When oil marketers from the private sector held the nation to ransom sometime ago, a deliberate “silent” policy was taken by the federal government to increase NNPC/PPMC’s importation schedule. Prior to this, major and independent marketers accounted for 60 per cent of imports while NNPC/PPMC accounted for the difference. This was altered to 70:30 in favour of NNPC/PPMC, forgetting that the creation of a monopoly would create more avenues for fraud and corruption.

As at today, NNPC/PPMC is technically the sole importer of kerosene which it currently sells to other marketers and middlemen at N41 per litre and they have taken advantage of the supply gap by retailing the product at the pump at N120 a litre and more across the country. Yet politicians in the PDP would want Nigerians to believe that President Jonathan has addressed the fuel availability problems. People deceive their people (PDP)
No wonder the corporation has refused to present its budget for scrutiny by the National Assembly and it’s also currently on collision course with the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) sales- purchase account.

We should not forget that the NNPC/PPMC as an importer is also entitled to make subsidy claims. And it’s not without a reason that the corporation as a government parastatal agrees to be owed for much longer periods than private operators. Lengthy delays will enable it make unaccountable, irreconcilable deductions directly from crude oil receivables. And this has been the problem between the corporation and RMAFC.

In the words of an analyst, “That an Armada of ships can be brought in all at the same time and left on the high seas to amass demurrage bills for upwards of 40 to 50 days is a pointer to the  quality of people running NNPC and PPMC. That NNPC has to resort to the leasing of private depots rather than make sure that its refineries, pipelines and depots function efficiently, says a lot about where its preferences lie.” God help Nigeria! Amen.

It would be recalled that concerned Nigerian oil industry experts raised an alarm sometime ago that the Nigerian National Petroleum Corporation (NNPC) and the Ministry of Petroleum Resources used inconsistent and highly subjective methods to arrive at the crude-oil-for-refined-product deal with Trafigura, an Amsterdam- based trading or more aptly buying and selling company. The allegation was then dismissed as a smear campaign by competitors that lost out in the swap deal. But now, the CBN alarm is again touching on the very serious element of fraud and corruption in the transaction.

Under the transaction, Trafigura is expected to lift Nigerian crude oil and in return, supply her with just three refined petroleum products: Premium Motor Spirit (PMS) commonly called petrol, Diesel (AGO) and kerosene dual purpose Kerosene (DPK).

We should not forget that this N450 billion oil counter trade  was first dangled under the former minister of Petroleum in the Yar’adua administration, Rilwanu Lukman but was knocked –off by queries raised by the then President and some of his advisers over the costing methods and how the by-products were to be accounted for.

The question now is: Who smuggled the same template of the N450 billion oil counter trade with Trafigura through the back door in the night to President Jonathan who has secretly signed the deal? And how do we reconcile the NNPC’s $1.34 billion quarterly import bill with this Trafigura’s running contract? The more you look, the less you see.

Nobody needs any preaching to believe now that the federal government has completely lost hope in the functionality and viability of the nation’s existing refineries. And every day, the President is helped to believe that it’s easier and better to depend on importation rather than make the refineries work or establish new ones. Up Naija!

IFEANYI IZEZE IS AN ABUJA-BASED CONSULTANT ON STRATEGY AND COMMUNICATION ([email protected])


 

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