Group Managing Director and Chief Executive Officer of Nigerian National Petroleum Company (NNPC) Limited, Mr. Mele Kyari, yesterday apologised to Nigerians for damages caused by the importation of substandard fuel into the country. Kyari assured Nigerians that normalcy would return to petrol stations by next week, saying the national oil company has taken necessary steps to restore supply in the country.
Kyari spoke this in Abuja while addressing the House of Representatives Committee on Downstream, during an investigative hearing on the importation of methanol-blended petrol.
However, in a bid to end the fuel scarcity and clear the long queues at filling station in many parts of the country, petroleum products marketing companies, under the umbrella of Major Oil Marketers Association of Nigeria (MOMAN), have extended their opening hours in their jetties, depots and filling stations to a minimum of 18 hours.
Kyari said with at least 2.1 billion litres of petrol in stock, the fuel queues would end by next week.
The NNPC boss disclosed that given the current situation, five other vessels conveying their next supply had been rejected and were not allowed to sail into the country’s waters because they were coming from the same shipping terminal that sent the four substandard cargos. He stressed that the current challenge was because Nigeria imported all gasoline.
Kyari said, “Not a single litre of petrol is generated in the country, that means 100 per cent of petrol you see in this country is imported. Those imports are done on the basis of existing contractual arrangements that we have. It is 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 its part of our supply mechanism. Even if all our refineries come up today, except Dangote Refinery, we will still be in short supply of premium motor spirit (PMS), because all of our refineries can only make 18 million litres of gasoline. Consumption is certainly above 18million litres.”
Kyari further explained that the four cargoes that in question met all the criteria on arrival and that was why they were allowed to discharge into terminals and convey into ship.
While noting that there was no way, based on the current specifications, that they would know that the PMS contained methanol, as it was not part of their requirements at the load port, Kyari assured that they have been able to trace all the volumes and quarantine them accordingly.
According to him, “By law, NNPC 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 litres of PMS in our custody. The situation you are 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.
“On the basis of those contracts, our suppliers bring products to us and we reconcile with them regularly. Part of those supply arrangements is to give specification to your suppliers. These specifications are bound by regulation and the latest that we are using is the one that is in place since 2006.
“The current specifications we have is what is the subject of all our import arrangement. So all our partners were given those specifications and on the basis of this, those imports were made. Before a vessel leaves the load port, they have to declare that those vessels meet our specification; they will send it to the importer and confirm that it is the specification. On the basis of that, you allow the sail away of the vessel.”
Speaking further, he said, “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 we have 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.
“In case of all the problems we have seen, four of the cargoes that are particularly in question today met all the criteria on arrival and that was why they were allowed to discharge into terminals and conveyed into ship.
“There is simply no way, based on the current specification, that you will know these PMS contains methanol. It is not part of their requirements at the load port. So we did not 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, up to 15 per cent PMS contain 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.”
Kyari lamented that one of the challenges NNPC faced was lack of tracking mechanism to track trucks leaving the depot. He said this had aided smuggling, as some of the fuel was transported to places that might not be in this country.
The GMD disclosed that NNPC had filed litigation against importers of the methanol-blended PMS considering the effect of the withdrawing the products across the country.
He said, “What did we do? We have put all our suppliers who are our contacts or commercial angle on notice that there would be liquidated damages that will come from this. And also it is typical practice that we compile liquidated damages that the direct supplier did not cost, he will transfer that to the next person until it gets to the originating supplier, so it is a back-to-back arrangement.
“That is always done so that once you file, it will get to the last one. I do not know how many people are in the chain because this PMS supply business in one cargo you can have three sellers, you can have two, and you may have only one.”
However, a member of the House committee, Hon. Adediji Olamide, in his submission, said ignorance was not an excuse in law. Olamide said the committee would need a lot of documentation that NNPC.
Earlier in his remarks, Chairman, House Committee on Petroleum Resources Downstream, Hon. Abdullahi Gaya, noted that the investigative hearing was to ensure that the culprits were brought to book as well as make recommendations towards curbing a reoccurrence of the incident.
He stated that the task ahead was challenging, including examining the lessons, proffering solutions and way forward, and rejigging supply and regulating the system to make them more effective and efficient.