Understanding NNPC’s Efforts To End Fuel Scarcity

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By Mark Chieshe

Beyond the current reality of fuel scarcity and its undeniable inconvenience to a lot of Nigerians, the Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu under the leadership of the President is working really hard to once and for all end the problem and put it behind us. He is doing so with the support of heads of key business units like Mrs. Esther Nnamdi-Ogbue, the Managing Director of NNPC Retail, whose task is to ensure that Nigerians anywhere in the country are able to get petroleum products at the official rates.
While the current instance of fuel scarcity has understandably drawn flaks from Nigerians, it will be uncharitable to use it as a single point to judge the performance of Kachikwu and his team. This is because the problem was caused largely by factors outside the Minister’s immediate control, the most critical of which is the inability of major oil marketers to source foreign exchange to facilitate speedy imports of petroleum products.
It will be recalled that Kachikwu on assumption of duties worked hard to secure the approval of the President for the lump-sum payment of about N600bn outstanding to major oil marketers. This was a major move to enable them meet their own share of petroleum products imports critical to meeting the domestic demand which is estimated at about 40 million liters per day. In the import quota, Major Oil Marketers are to import 55% while NNPC handles the remaining 45%.
However, due to the massive drop in the country’s foreign exchange earnings and fast depleting reserves of the Central Bank, the apex bank was not able to attend to the forex requirements of the major oil marketers. This caused a long supply gap of petroleum products since a lot of them cut their imports it was mostly NNPC that was able to import products into the country. And of course, the quantities being imported by NNPC were grossly inadequate to meet total domestic demand. The NNPC did not have the required funds neither did it possess the capacity in terms of logistics to meet the shortfall. The result was the long fuel queues at filling stations and non-availability of products which nearly brought the country to its knees.
The response of Kachikwu towards addressing this forex scarcity problem has been innovative, creative and simply brilliant and in spite of what many Nigerians may think, he deserves commendation. Given the peculiar circumstance, things could have gotten worse. For the first time in this country, Kachikwu was able to leverage on his goodwill and industry knowledge to convince the upstream companies to provide some FX buffer over the next one year for those who are bringing in products. He tied Total Upstream to Total Downstream, Mobil Upstream to Mobil Downstream, Agip ENI to Oando, Shell to Conoil and things like that. This innovative approach to solving the tricky problem at such a delicate time put over 200 million dollars of forex available for fuel imports.
Second, Kachikwu used subtle pressure to get some allocation from the CBN which has also helped greatly to ease off pressure. This was on the strength of the argument that NNPC provides the bulk of the foreign exchange so it should be given preference to enable it stabilise the situation.
Third, to boost local refining capacity, Kachikwu was able to convince the President to give NNPC access to more crude outside the 445,000 barrels from national production for local refining at the local refineries.
These measures have significantly impacted on the situation. The queues are fast thinning out in key cities across the country.
On the long term front, Kachikwu has also set out to fix the pipelines to ensure effective distribution of petroleum products across the length and breadth of the country. Especially in the hinterland where fuel is still being sold in filling stations at black market rates.
According to him: “We’ve thrown our creative options on the pipelines, by pointing a set of trial, by contracting contractors to get into the pipelines, and show us that they can deliver if we give them the contract. What that has done is that, for the first time in eight years, we’ve been able to capture back system 2B all the way to Ilorin. For the first time in over six years, we were able to pump crude from Escravos into Warri and we were able to pump oil from Brass into Port Harcourt. And we were able to pump from Warri right into Kaduna, with a few skirmishes here and there. This is the first time in over 10 years that we’ve been able to accomplish this”.
Furthermore, to curb storage and logistics challenges, NNPC is working on a joint partnership with technically and financially capable investors to ensure that petroleum products transportation and storage facilities are efficiently operated on an open-access common-carrier user-tariff basis.

The plan is to nominate some depots as strategic reserves while a strategic reserve vessel is expected to be delivered within the next three months.
With the likelihood that the supply problem would remain fixed and the pipelines would be fully rehabilitated to ensure efficient distribution of fuel products across the country, the business unit of the NNPC will play a very critical role in ensuring that petroleum products are available to Nigerians at official approved prices wherever they are in the country. Even now, the 37 retail outlets and about 500 affiliate stations are playing a significant role in ensuring that Nigerians get fuel products. Most of them operate on a 24-hour basis, have many filling points and Nigerians generally trust that they do not tamper with their meters and sell at official prices unlike those ran by some unscrupulous oil marketers.
The managing director of the retail unit, Nnamdi Ogbue has already inherited a well thought out plan, a product of the series of the Kachikwu-led reforms to build at least three mega filling stations in each senatorial area in the country which she is set to implement.
On the whole things are looking good on account of the strategic work that is being done by Kachikwu and his team. Kachikwu has brought on board the performance drive and work culture of the private sector to the NNPC. His strong desire and haste to deliver on the set targets is evident in the heightened activity level that is evident in the management hierarchy of the NNPC. He keeps a very tight work schedule that is alien to the public service. He gets to the office early and is almost always the last to leave. Each day is filled with brainstorming sessions and meetings on smart ways to make progress, fix pressing challenges, track and monitor progress on key projects. Having set the tone as the head, those who report to him have taken this cue and is reflected in the changing working in all the units and departments of the NNPC. And there is sufficient physical evidence to give people confidence that they can only get better with time. While Nigerians have a right to be angry at the inconvenience of the moment, we should not be so angry as to lose sight of the good work that the Kachikwu-led team is making towards bringing to a sustainable end the persistent problem of fuel scarcity. It will not be fair to reduce the only basis for assessment to the fuel scarcity which he has done a good job of managing through innovative thinking and strategic thinking. What he needs is the support of Nigerians and faith that he has the vision, the energy and drive to make Nigeria a net exporter of petroleum products.

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