Tuesday, April 05, 2016

Nigeria's Persistent Fuel Crisis: Who wanna be a Magician?

The guy is not a magician. He was being honest. He met 4 trillion of debt, mostly owed to cronies that supplied nothing and unverifiable but still legal debt cos NNPC staff were getting settled. The place is literally full of demons. From security guard to GGM, settlement is the culture of NNPC. The alternative was to ignore this and throw caution to the winds..but in the tight knit petroleum industry, it wouldn't matter. NNPC could not default on its "obligations" no matter how poorly contracted. In certain parts of NNPC, it requires 42 different officers/managers to approve an invoice. Just imagine that. Each an opportunity to "collect". 

In the Mean time, the entire asset of the organization was comatose. 30 of 33 depots/pump stations have not received product for years some since the time of Abacha and there was no plan to use them. Only about 720km of 5120km PPMC pipelines was even serviceable. 

(Side note: Even if refineries can work by miracle wand, they supply just half of Nigeria's needs meaning 900,000bbl is required to be supplied to them instead of their designed 450k bbl/day. It will mean that all federation crude will purely go to domestic consumption at under par prices.  This is a technical problem which a senate hearing cannot solve but have real consequences for the revenues of our 37 parasitic federating units. 😅)

Warri-Escravos pipeline that supplied crude to Warri and onward to Kaduna refinery have not been used in 5 years while PPPFM a crony company close to Diezani ripped Nigeria off on shipping contracts to deliver crude to Warri when it was not even producing.  So they deliver, evacuate and charged us for nothing for 3.5 years! PDP continued to import and abandon pipeline because the alternative was more expensive and they can make quick bucks. Imagine using ships to transport crude instead of pipeline. Using coastal jetties and trucking instead of depots connected with pipelines to the hinterlands. Addiction to Importing instead of refining when oil price were at its highest and we could afford to fix our refineries. Instead PDP racked up subsidy bills and allowed cronies to deliver phantom PMS for which they got paid for doing nothing. Others got dubious crude swap contracts that saw expensive crude being exchanged for a basket of products of dubious formula .

In short, All the operational choices were more expensive and equally unreliable. If an importing entity don't secure a ship for an international import cargo of petrol in minutes on a typical day, it takes another 2-3 weeks to get another one of similar spec as the market moves 2-3 weeks in advance and "subjects" get lifted as quickly as they appear (midstream terms - pardon me) . So one mistake or indecision and the entire country is screwed..even one by a starting junior officer acting for a boss on vacation. A simple decision on vessel programming suddenly determines if the entire country is thrown into panic buying and economy goes comatose because they (PDP) took the easy money route to plan our energy economy.  This is the country Obasanjo and PDP gave us..It started under him and he created the monster - to sponsor elections and win by all means. Lets be honest. 

Now the kicker..

And those guys have the money which translates into power to sabotage noble efforts to even fix this mess whose scope and magnitude you can't even begin to imagine. 

In reality, this long problem have an not so easy fix (thanks to union). Break up NNPC, spin off the business units and assets to private sector investors, et al. But even that requires time. Cleaning up the books and assets!

Another not so easy fix for the queues was to throw open the sea borders and allow anyone bring in fuel and sell at any price they wish. Similar to Kenya where they don't produce a drop of crude yet have no single line for petrol. Let's even make it temporary and remove duties to lower end user price . Make it the only product you can import for 18 months without duties until the refineries start working? But that was not an easy pill for Aso Rock Villa. The mentality of Petrol being the rights of Nigerians even if they have to die in scarcity and want persists. 

Now are you the magician? Solve this problem!


this is www.busanga.com