Furore over petrol bridging claims as smuggling, corruption persist
Nigerians may, in the next year, be made to pay nothing less than N882 billion in an attempt by authorities to make sure prices of Premium Motor Spirit (PMS), also called petrol, are uniform across the country.
Cancelled through the Petroleum Industry Act but reinstated by President Muhammadu Buhari at the detriment of full deregulation of the petroleum downstream sector and national development, Nigerians currently pay N35 on every litre of PMS under a bridging scheme managed by the Nigerian Mid-Stream Downstream Petroleum Regulatory Authority (NMDPRA).
While no one directly pays for the price of cement, coke or engine oil to be uniform across the country, the bridging scheme, on paper, ensures that petrol is sold at a uniform price across the country.
Although data from the Nigerian Bureau of Statistics (NBS) show that prices of PMS are never the same across the country, especially in areas far from the depot where marketers claim bridging, The Guardian learnt that some marketers smuggle the products out of the country, especially through porous borders in the northern region and return to make bridging claims.
This is a direct snag on the Aquila platform designed by the Federal Government to, as a high-tech electronic loading and delivery system, check leakages, entrench transparency and eliminate ‘bridging by air.’
With ‘bridging by air,’ waybills are figuratively designed, the system compromised and marketers paid for products that never existed. The prevailing situation is not anyway different. Under the new template seen by The Guardian, marketers would be paid between N7 to N49 depending on the distance between their loading depots and their destination. Sadly, the over 25 depots listed under the scheme are out of operation except for the ones in Lagos. The implications are that the country’s treasury would keep depleting in an attempt by the federal government to keep petrol prices uniform.
While stakeholders are on the one hand worried over the opacity in managing the fund, insisting that a liberal market would adopt an internal mechanism on price uniformity, Buhari had approved an upward review in the freight rate by N10, meaning that the citizens would pay N25 and the Federal Government would provide the additional N10 on every litre from the already depleted federation account.
Earlier, the NMDPRA had claimed in a statement that N71, 233, 712, 991 bridging claims and another N2,736,179,950.84 freight differentials were paid to marketers as of June 6, 2022. But the Independent Petroleum Marketers Association of Nigeria (IPMAN) denied being paid.
This development is not new. There has been a face-off between the marketers and the downstream regulator on the payment of bridging claims primarily as the cost of diesel went significantly high, overrunning their operational expenses.
The scheme, which has been a critical cause of petrol scarcity since February this year, according to the marketers may create the ‘mother of all fuel queues” in no longer a time.
Although Nigerian National Petroleum Company Limited (NNPC) remained the sole importer of PSM in the country, the state oil company and the regulator, NMDRA have no record of the actual level of PMS consumed by its citizens.
While the Minister of State for Petroleum Resources, Timipre Sylva and NNPC set an agenda on halting the smuggling and accounting for consumption in the country, an estimated 15.64 million litres of petrol are smuggled out of Nigeria daily, Chapel Hill Denham said in a recent report.
This is as oil marketers and depot owners are at loggerheads over allegations of diversion of 16.6 billion litres of fuel to neighbouring countries.
Sources told The Guardian that stakeholders in the industry are worried over the growing figure of petrol demand in the market, especially in the north forcing the Pipelines and Product Marketing Company (PPMC) to insist on reducing output.
For any truck to load PMS out of the depot, a member of PPMC and NMDPRA as well as other stakeholders must ascertain the destination. The Nigerian Customs Services and security operatives must also ensure products do not cross the border. In what stakeholders see as a compromise between oil marketers, the regulator and other agencies manning depots and borders, the dismal accountability and lack of transparency continue despite many attempts and promises made by the government to halt the development.
Being the same reason Nigeria had earlier closed land borders and shut petrol stations close to the border, Sylva had set the war against petrol smuggling as top on his agenda on the assumption of office while the NNPC launched ‘operation white.’ But the prevailing realities mean that marketers are either smarter than the system or smuggling of the products and the financial burden are mere figurative to enrich the powers-that-be.
In Sri Lanka, a similar development, which is manifesting in Nigeria, especially in the energy sector, is already leading to the fall of the nation, a Professor and Entrepreneur, Ndubuisi Ekekwe said.
At a time when leakages and loopholes persisted in the subsidy scheme, Ekekwe, quoting the World Bank, said Nigeria has failed to meet full disclosure rating conditions on debt reporting for three consecutive years, stressing that Nigeria’s total public debt stock stood at N41.60 trillion or $100.07 billion as at March 31, 2022, according to data from the Nigeria Debt Management Office (DMO).
In April, while approving the revised budget of N17,319,704,091,019 trillion for the 2022 fiscal year, the National Assembly approved Buhari’s N4trn fuel subsidy budget. Amidst heavy borrowing, the International Monetary Fund (IMF) had said with fuel subsidy payout averaging N500 billion monthly, Nigeria might spend N6 trillion to subsidise petrol before the end of the year. The level of the bridging payment now coming from the government has increased that payment.
Against promises to keep the pump price at N165 per liter, most marketers now sell petrol between N190 to N250 while black marketers sell at an average of N400 per litre.
President, Petroleum Products Retail Outlets owners Association of Nigeria, Billy Gillis-Harry said that smuggling, product diversion and the financial implications are on the list of issues being discussed across stakeholders’ meetings with NNPC and NMDRA.
His main solution, however, is for government to adopt a solution developed by his association to monitor products from depot to destination. Gillis-Harry is insisting that his members are not involved in smuggling and diversion and are not at loggerheads over bridging issues.
However, only 1,000 of the 11, 000 marketers in the association have adopted the technology, meaning that about 90 per cent of the marketers are not tracked.
“I’m not going to vouch for anybody. One thing I know is that if you are our member, you cannot easily bend the law and do what you want. Because we have monitors and checks and balances where our petroleum products pass through. We are encouraging the federal government to completely stop the proliferation of petroleum products and check to smuggle.
You cannot take products out of this country unless you want to blow up the whole of your tanker. We track and see the products in our control rooms,” he said.
Gillis-Harry said there have been leakages in the sector and that the leakages could only be mitigated by the deployment of the petroleum product passport and the app, which the marketers use.
National President of NARTO, Yusuf Lawal Othman who had told The Guardian that some haulage companies had parked or converted their vehicles over high operating expenses, especially the cost of diesel, said marketers, not transporters collect bridging claims.
While findings by The Guardian showed that most of the transporters under the association are also marketers, leading members of the association such as A.Y Shafa and A. A Rano is marketers, transporters and depot owners.
Transporters lift products across the country and smuggling could only take place through their truck.
But Othman said no member of the association has been reported for smuggling, adding that, “we are going to punish and expose those caught in the act of smuggling. If you are smuggling petroleum products, it must be with truck, our member and must be a driver who is probably our employee, and also a member of the drivers’ union.
“We do not only speak about smuggling, we speak against diversion of petroleum products across the country and our stand is firm. We are against all these acts because they disrupt the system and the economy.”
Othman noted that security forces might need to up their game, noting that products that are loaded must go through certain checks that are assigned to some agencies.
The Guardian reached out to the spokesperson of NMDRA, Apollo Kimchi over the development, but got no response as of press time.
Sylva noted that NNPC was in the right position to speak over the issue, adding that the company was now independent of the government.
On the promises the minister had given regarding smuggling, Media Adviser to Sylva, Horatius Agua said: “He spoke than when NNPC was still under the supervision of the minister. At present, the Corporation has transmuted into a company operating under CAMA law that operates like every other corporate agency in Nigeria – very independent of government.”
The spokesman of NNPC, Muhammad Garba-Deen did not also respond to requests by The Guardian.