Kupolokun Forsees More Fuel Crisis Ahead
Why product scarcity persists, by marketers
By Mike Oduniyi in Lagos, Onyebuchi Ezigbo and Juliana Taiwo in Abuja
Amid public outcry of plot to create artificial scarcity, the Group Managing Director of the Nigerian National Petroleum Corpora-tion (NNPC), Engineer Funsho Kuplokun, said yesterday Nigerians should be prepared for further crisis in fuel supply chain in view of the reversal of products prices.
Most petrol stations in the Lagos metropolis for instance, remained closed yesterday, three clear days after Labour suspended the nationwide strike, fuelling speculations that oil marketers were unwilling to carry out the order of the Abuja Federal High Court, which reviewed downwards products prices.
Oil marketing companies, however, attributed the situation to the delay in resumption of fuel loading at the depots.
Speaking at the opening ceremony of the 31st Class of the NNPC Chief Officers Manage-ment Training Course in Abuja, Kupolokun said the downward review in fuel prices via the order of an Abuja Federal High Court last week, would likely result once more in the boycott of product supply by private marketers.
The situation, he lamented, has led to the corporation being left to virtually procure fuel supply alone, thereby incurring a subsidy of between $2 million and $3 million daily.
"This will certainly over-stretch the corporation's financial and product reception capabilities and will return the nation to pre-October, 2003 position when fuel scarcity prevailed because NNPC found itself being a monopoly that is unable to meet the supply needs of the country," said Kupolokun.
"NNPC has obeyed the court order and reverted to status-quo at the petrol depots. But I don't think the situation should remain like this. As we go forward, I think we should be able to convey a meeting of stakeholders to look (at) things and see what can be done," he added.
Kupolokun said he was convinced that the NNPC should no longer continue to engage in unprofitable ventures, and that the idea of operating a subsidy in the downstream sector was not acceptable.
According to him, the nation is left with three options under the prevailing circumstances, one of which is the "do nothing scenario," that would leave things the way they are with government funding the subsidy from the budget and setting back the progress recorded under deregulation policy in the oil sector.
"Even if NNPC is provided with funds to service the subsidy, it just cannot work as NNPC does not possess enough distribution facilities. I don't see Mr. Femi Otedola (Zenon Oil) giving NNPC his facilities, I don't see NIMCO giving NNPC its own facilities, I don't see DAPMA (Depots and Petroleum Products Marketers Association) surrendering their own storage and distribution facilities free of charge", he said adding, "what is going to happen is that all these other facilities are going to be withdrawn leaving NNPC as a sole supplier."
He said no matter how much effort is made, as long as NNPC remains the sole supplier of fuel and also operates as a monopoly without a competitor, there is bound to be problem in product supply.
The NNPC chief executive said the unfortunate outcome of the above scenario would most likely be scarcity caused by product diversions, adulterations, and black-marketeering with prices going up as high as N70 per litre.
He, however, said the only saving grace would be if the prices in the international market begins to come down to a level that will accommodate the current domestic price of petroleum products.
On what was holding the refineries from resuming operations, Kupolokun said both Warri and Kaduna refineries are currently in good shape except for some ancillary areas to be attended to before actual production could commence.
Warri refinery is awaiting the conclusion of repair work on the Chanomi Creek pipeline conveying crude oil to its unit while contract for the supply of 50,000 bpd Arabian crude to Kaduna refinery has been awarded.
Giving a lecture at the event, Chairman of Petroleum Products Pricing Regulatory Agency (PPPRA), Chief Rasheed Gbadamosi, said it would not be wise for NNPC to deploy scarce resources generated from the upstream sector to fund operations in the downstream area.
"Rather the corporation should motivate the setting up of other downstream industrial projects similar to how its counterparts in other countries have done," he said.
The PPPRA chairman noted that last week's face-off with Labour was a harrowing experience which rattled the agency in its determination to ensure that the progress in the implementation of deregulation policy was not reduced to naught.
Labour on Saturday, agreed to suspend the strike and mass protest after three days of action, following the reversal of petrol price by the NNPC and marketers to the pre- February 9, 2004 levels. NNPC reduced the ex-depot price of petrol to N33.50 a litre from N38.50 while marketers dropped the price to N41.50 from N49.90 per litre.
Marketers had since raised petrol price to between N42.70 and N42.90 per litre. Justifying the increase, industry officials said they relied on the agreement with the PPPRA, which put the price band of petrol at between N41 and N43 per litre.
Marketers said fuel loading resumed only yesterday morning at the Apapa depot, in Lagos and that most petrol stations should have stock to sell by today.
NLC deputy president, Dr. Joseph Akinlaja, told THISDAY that following the delay in fuel supply to the outlets, the Labour monitoring groups will carry out the compliance survey tomorrow after which the NLC will be able to decide on the appropriate action.
Meanwhile, the NLC has confirmed the death of Mr. Ambrose Mamah from Enugu State and injury to Mr. Elijah Ani, part of the Okada riders who showed solidarity with the strike, but were victims of police shooting outside the Secretariat.
In a letter to the Inspector General of Police, Mr. Tafa Balogun and signed by the NLC President, Comrade Adams Oshiomhole, organized Labour said while Ani was shot in the leg and was taken away by the police, his relations have not had access to him since the incident and have expressed fears about his continued detention without treatment.
Oshiomhole said NLC was alarmed that the police opened fire on defenceless and innocent citizens, who in no way threatened the breach of the peace. It said it is more alarming that despite the clear directives widely reported on June 8 that police should not use fire arms in managing the protests, they still did. "The killing of Ambrose Mamah by the police in Abuja, even when there were no street demonstrations, constitutes blatant murder that should not go unpunished," it said.
The NLC urged Balogun to urgently set in motion criminal investigations into the shootings that resulted in the death of Mamah and injury to Ani. "The police officers responsible for these crimes should be made to face the law without delay. Any attempts to cover-up these crimes will only further tarnish the image of the Nigeria Police," it said.
Also, the Catholic Archbishop of Lagos, Anthony Olubunmi Cardinal Okogie, called on President Olusegun Obasanjo to allow the subsidy of prices of petroleum products to remain, "if that is the only way to keep the prices paid by the common citizens for the products at their barest minimum."
Speaking at a reception held in his honour by the Catholic Archdiocese of Benin, Okogie maintained said: "It is not fair to continue to heap on the already prostrate and battered citizens of this nation. The people are sick and tired of being called upon to make sacrifices in the name of some mythical economic reforms when they do not see what they are making those sacrifices for.
"The current petroleum products price crisis is one crisis too many, and one altogether unnecessary. How long will it take the people in government in Nigeria to come to grips with the fact that Nigerians are suffering? Are the leaders of this country blind; can't they see the suffering that is daily staring the people in the face? Maybe they are to be reminded that, though they might have climbed to the peak of Mount Olympus today, nothing says that they will remain there forever; others have been there before."
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