Why fixing supply chain challenges is critical to downstream sector

Stakeholders in Nigeria’s petroleum industry have called on the Federal Government to fix the supply chain challenges in the downstream sector to allow the segment to operate efficiently.

With upcoming refineries and petrochemical plants in the country, the stakeholders noted it may become elusive to achieve cost efficiency and offer consumer value for money while improving profitability.

National President of NARTO, Yusuf Othman told The Guardian that poor infrastructure in the segment has heightened the cost of doing business in the face of the high cost of spare parts and naira devaluation.

Decrying that the Federal Government has failed to improve transportation equalisation or bridging cost despite prevailing challenges, Othman said: “It is very difficult for us to operate.

“The worst is the condition of roads in the country. Before now, you can optimize road trips by doing three trips in a month, you hardly do one now because you spent about 10 days to go to Lagos, it takes another two to five days to load, then another 10 days to come back.”

“We have spoken to those that matter and will continue. The option is to go on strike but as investors, going on strike is not what we love to consider. It is not in our DNA. We want to optimize our investment. It’s not good for us to proceed on strike. It does not help the economy, it doesn’t even help the populace.

“That is why we have to personally get contractors to fix sections of the roads. We are currently fixing some parts of the road by ourselves around Lambata-Lapai in Niger state.

Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Clement Isong said the poor state of roads, elongates delivery times impacting delivery planning and increasing the cost of doing business as the marketers have to stock up higher volumes at retail outlets to prevent outages

“It contributes to road crashes and losses attributable thereto and for inflammable products the collateral risks are very high. Where the road actually collapses, fuel outages and the negative effect on the economy is inevitable,” he said.

The president, Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Dr. Prince Billy Harry, said the government has no option other than to make the pipeline work or continue to bear the cost of fuel scarcity.

With the emerging network of rail lines, Harry told The Guardian that efficient cargo lines and connections of the rail network to key depots have become inevitable.

He feared that the breakdown of the road network could drastically create shortages across retail outlets and create demand and supply in balance.

“The road network is an impediment. The roads are bad. As I speak to you, our products are stocked on the road across the country, mostly around Okene, Okpella, Ibadan and Ilorin.

“Most of the vehicles were supposed to complete their journeys in one day but they are there for 10 days. Right now, there’s no hope for any solution.

“In terms of the losses, for no cause of yours, every day that the truck stays on the road, you record losses. These losses run into billions and impede the economy. This is worsening energy security in the country and affecting the ease of doing business. For each truck to stay on the road for over 10 days, you will be losing about N50 million,” he decried.

Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Abubakar Shettima said with depots not operational in the northern region, fixing pipelines and ensuring good road infrastructure remained critical to smooth supply of petroleum products.