Dirty Fuel importation:MRS, Oando, Duke Oil are culprits-NNPC|MRS chide NNPC
Nigeria National petroleum corporation (NNPC) says MRS, Oando, Dukeoil are responsible for importing Dirty Fuel into the country, although MRS disagree with NNPC position on dirty fuel importation.
Dirty Fuel Importation: According to the Nigerian National Petroleum Corporation (NNPC) on Wednesday, methanol was found in four petrol cargoes imported by MRS, Emadeb/Hyde/AY Maikifi/Brittania-U Consortium, Oando, and Duke Oil,
Mallam Mele Kyari, NNPC’s Group Managing Director, revealed during a press conference that he has since ordered the holding back of any impacted products in transit (both truck & marine).
According to two sources quoted by Reuters on Wednesday, the NNPC has urged oil trading firms to embark on an emergency supply of fuel to replace cargoes that were rejected due to their low quality.
The federal administration, apparently alarmed by the situation, authorized a probe into the contaminated fuel that had damaged the engines of several vehicles on Wednesday. The substance, which caused damage to multiple cars and disrupted the country’s fuel supply chain, was imported from Antwerp, Belgium, according to the NNPC.
Kyari, speaking in Abuja, claimed that most fuel imported into Nigeria does not undergo a methanol content test. The NNPC helmsman insisted that the cargoes’ quality certificates, provided by AmSpec Belgium at the loading port in Belgium, showed that the product met Nigerian specifications.
He further stated that quality inspectors from the NNPC, including GMO, SGS, GeoChem, and G&G, conducted tests prior to discharge, which revealed that the cargo met the country’s standards.
“As a standard practice for all PMS import to Nigeria, the cargoes were equally certified by inspection agent appointed by the Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has met Nigerian specification.
“It is important to note that the usual quality inspection protocol employed in both the load port in Belgium and our discharge ports in Nigeria do not include the test for per cent of methanol content and therefore the additive was not detected by our quality inspectors,” he disclosed.
Kyari said the NNPC had ordered the quarantine of all un-evacuated volumes of the tainted fuel, which had caused a disturbance in the petrol distribution value chain, to prevent further distribution.
He emphasized that the NNPC and other stakeholders were working hard to fix the problems caused by the supply and discharge of methanol blended products in various Nigerian depots.
On January 20, 2022, the NNPC got a report from its quality inspector indicating the presence of “emulsion particles” in petrol cargoes delivered to Nigeria from the European country, according to Kyari.
Furthermore, Kyari said: “In order to prevent the distribution of the petrol, we have ordered the quarantine of all un-evacuated volumes and the holding back of all the affected products in transit (both truck & marine).
“All defaulting suppliers have been put on notice for remedial actions and NNPC will work with the authority to take further necessary actions in line with subsisting regulations.
“NNPC wishes to reassure Nigerians that we are currently sourcing additional cargoes to ensure product sufficiency.”
According to him, the NNPC has ordered that all the affected products in transit (both truck & marine), should be withheld.
However, the NNPC GMD’s explanation contradicted MRS’s earlier press statement, in which the business denied responsibility.
MRS declared in its statement that it will continue to be a responsible corporate citizen and will not participate in the procurement, importation, distribution, or marketing of substandard petroleum products in the country, but stopped short of accusing the NNPC of collusion.
“Due to the current subsidy regime, NNPC is the sole supplier of all PMS in Nigeria. Consequently, the NNPC through their trading arm Duke Oil, supplied a cargo of PMS purchased from international trader Litasco and delivered it with Motor Tanker (MT) Nord Gainer. This vessel discharged in Apapa between the 24th and 30th of January, 2022,” it had claimed.
As one of the recipients, MRS said it received the product in its depot and distributed the product to only eight of its stations in Lagos.
The company described the allegation trending at the time as mischievous, false and untrue.
The NNPC head, on the other hand, insisted that the methanol blended gasoline was imported into the country by suppliers, including MRS, under its Direct-Sales-Direct-Purchase agreement.
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The agreement permits the national oil corporation to distribute monthly crude oil lifts to suppliers on a Free on Board (FOB) basis in exchange for petroleum products meeting Nigerian standard specifications.
Subject to the basic terms and conditions as recommended, the petroleum products delivered are usually similar in value to the crude oil received from NNPC.
He said while Emadeb/Hyde/AY Maikifi/Brittania-U Consortium brought in the fuel through a vessel identified as MT Tom Hilde, Oando allegedly brought in the product through a vessel named MT Elka Apollon, while Duke Oil came through MT Nord Gainer vessel.
However, according to the NNPC, MRS, which imported the methanol blended gasoline via the MT Bow Pioneer, was one of the companies that supplied it.
Due to fuel shortages caused by the removal of tainted gasoline from the market, fuel lines had formed in Lagos and the Federal Capital Territory (FCT), Abuja. The NNPC, on the other hand, was claimed to be looking for thousands of tonnes of goods to help alleviate the situation, according to the report.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) stated it discovered fuel in the supply chain with methanol levels exceeding national standards and withdrew it from circulation. Despite the fact that methanol is a common gasoline additive in modest doses, the regulator stated that the supplier of the off-spec gasoline was known but did not name the company.
With daily usage topping 60 million litres, Nigeria is nearly totally reliant on imports to cover its domestic gasoline needs, despite numerous failed attempts to modernize the country’s ageing refineries.
NNPC manages practically all imports through crude-for-fuel contracts with consortia of local and foreign oil companies, known as Direct Sale, Direct Purchase (DSDP).
In exchange for goods, each consortium receives 20,000 barrels per day (BPD) of crude oil, bringing the total to around 320,000 BPD of Nigerian output.
Nigerians believe that inexpensive fuel is one of the few benefits that the government provides to the common Nigerian, as the government sets price caps at the pump through a contentious and uneven subsidy scheme.
Meanwhile, Farouk Ahmed, the NMDPRA’s Chief Executive Officer, claimed on Wednesday that NNPC has received delivery of 300 million litres of petrol to fill the supply gap created in the country by the withdrawal of off-spec gasoline.
Farouk Ahmed said the 300 million litres arrived through six vessels ordered by NNPC when he met with merchants in Lagos to increase distribution and remove substandard fuel from the supply chain. He added that, with the most recent delivery, the country’s fuel queues should be gone by Friday.
Ahmed stated that “Today, I am happy to say that loading has been going on in most of the depots because we have been able to identify, isolate and quarantine the limited amount of gasoline that was affected by the methanol volume that was discovered.
“We have vessels that have arrived in the country recently. At least six arrived in the last few days, ordered by the NNPC, carrying a total volume of close to 300 million litres, just to close the gap created by those vessels we have withdrawn from the system.”
Furthermore, Ahmed stated that there was a 9,000-metric tonne vessel that was being discharged at the Apapa Port to major marketers, including OVH, TotalEnergies, 11 Plc, Conoil, and Ardova Plc.
According to him, as soon as the vessels complete discharging and start pushing products to oil marketers, the fuel queues in Lagos should fully disappear by Friday.
“So, once these vessels complete discharging and start pushing the products to marketers, I believe Lagos will be cleared by Friday,” Ahmed disclosed.
Ahmed added, “We have got that assurance from the marketers. Also, most of these vessels will be providing volumes to most of the key members of DAPPMAN.”
But the NMDPRA boss stated that the country currently had petrol that could last for 20 days, 10 days short of the usual 30-day reserve.
He said, “Our ideal days of sufficiency is 30 but this happened because of the concern that made us withdraw the vessels, which created the gap in our 30 days sufficiency.
“Again, with aggressive importation by the NNPC, this will be closed in a few days, according to the data we got from the NNPC’s import programme.
“Loading is also ongoing in most of the depots that have confirmed spec products; so, there is no need for panic. Hopefully, by tomorrow, Lagos will be cleared.”
The regulatory organization also stated that it was working to solve the issue of inferior gasoline being imported into the country.
Top NNPC executives, representatives of the Major Oil Marketers Association of Nigeria (MOMAN), and members of the Depots and Petroleum Products Marketers Association of Nigeria were among those who attended the meeting (DAPPMAN).
The Federal Government(FG) has launched an investigation
Minister of State for Petroleum Resources, Timipre Sylva, told reporters after the weekly virtual Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari that the government has taken steps to probe the supply and circulation of contaminated petrol in the country. The federal government, according to Timipre Sylva, wants to get to the bottom of the problem and warns against jumping to conclusions.
“I didn’t expect you to draw any conclusions yet,” Sylva said. “There will be a major investigation to unravel everything and then let us really get to the bottom of it before we can come back and tell you what is going to happen to the culprits,” he added.
The minister promised that the government would look into compensating anyone who had been harmed by the faulty fuel.
“We know that some people’s vehicles must have also been damaged, that is also going to be taken into consideration in dealing with the situation,” he stated
When asked if the topic was handled at the FEC meeting and if the suppliers will face consequences, Sylva replied,
“The issue did not come up in council, but, of course, you will recall I was here yesterday to brief Mr President on the issue. I’m not in a position to disclose the identities of the companies, but there are some issues and we are actively tackling it.
“Nobody has, before now, checked for methanol in our fuel, it’s not very usual and this is the first time this is happening and the NNPC is up to the task.
“I will also convey your question to the NNPC and maybe the Midstream and Downstream Regulatory Authority, but we are actively handling it and I want to assure you that the problem will be a thing of the past very soon.”
According to MRS, Duke Oil supplied a cargo of contaminated gasoline, which it purchased from an international trader, Litasco, and delivered via the Motor Tanker (MT) Nord Gainer, according to a newspaper advertisement published on Wednesday. MRS further revealed that the vessel was emptied between January 24 and 30, 2022 in Apapa, Lagos, with key marketers receiving the following quantities: OVH – 10,000mt; MRS – 5,000mt; NIPCO – 5,958mt; ARDOVA – 6,000mt; and TOTAL – 10,000mt.
Sylva also addressed the council’s acceptance of his ministry’s contract, stating that the FEC approved the contract for the construction of a 17-story local content building in Yenagoa at a cost of N1.817 billion.
Sylva expounds, “You will recall that in 2020, Mr President already commissioned that project. There were some ancillary works that had to be done to connect some of the buildings and that was now presented to the council for the sum of N1.817 billion this now closes out this contract and we have told the contractor. This is the full and final payment for everything.
“So, this is the end of this project and we have completely delivered this to Nigerians.”
For now, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has enlisted the help of the Association of Distributors and Transporters of Petroleum Products (ADITOP) to ensure that petroleum products are distributed without interruption and that the downstream oil and gas industry remains sane.
Mr Chinedu Okoronkwo, President of IPMAN, told journalists yesterday that the strategy will lessen the danger posed by the National Association of Transport Owners (NARTO), which recently threatened to go on strike.
IPMAN, according to Okoronkwo, is not a member of any trade association and will not engage in industrial action to exacerbate Nigerians’ condition. He claimed that members were already severely indebted to banks and couldn’t afford to let their businesses stagnate, adding that many had already shut down operations due to the hard operating environment.
The president stated that IPMAN was prepared to confront the NARTO and Petroleum Tanker Drivers (PTD) for allegedly defrauding merchants.
Okoronkwo disclosed, “They are not registered under oil and gas, but as dry dock. But today they are gradually redefining the operations of marketers who have signed bulk purchase arrangements with the NNPC.
“We have lost over N27 billion over time from illegal fees they collect from marketers. They collect about N45,000 per truck and take in millions that ought to be part of our margins and are building stations and purchasing trucks at the expense of duly licensed marketers.”
Okoronkwo raised concern about the dwindling margins of marketers and the heavy debts hanging on the necks of IPMAN members.
“The products we purchased with N1 million in the past is now about N7 million without additional margin to operators,” he said.
NARTO has threatened to halt petroleum product transport across the country due to the increase in the price of diesel to N430 per litre and other operational difficulties. The organization had previously expressed displeasure with the delay in payment of roughly N45 billion in bridging costs and sought an increase in the transportation allowance integrated into the price of gasoline at the pump.