February 13, (THEWILL) – Nigerians are dripping wet with anger and frustration over the recent importation of adulterated premium motor spirit (PMS), popularly called petrol. This has sparked widespread outrage across the country, with many of those whose vehicles were affected threatening legal action. As expected, the outcry was directed against the Nigerian National Petroleum Corporation Limited (NNPC), the sole importer of the product who admitted that an adulterated petrol was in circulation.
In a statement by the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the agency informed the general public that “limited quantity of Premium Motor Spirit (PMS), commonly known as Petrol, with methanol quantities above Nigeria’s specification was discovered in the supply chain.”
“Methanol is a regular additive in Petrol and usually blended in an acceptable quantity.
“To ensure vehicular and equipment safety, the limited quantity of the impacted product has been isolated and withdrawn from the market, including the loaded trucks in transit.
“Our technical team, in conjunction with NNPC Ltd and other industry stakeholders, will continue to monitor and ensure quality petroleum products are adequately supplied and distributed nationwide.
“The source supplier has been identified and further commercial and appropriate actions shall be taken by the Authority and NNPC Ltd.”
The NNPC later shifted the blame to private organisations said to have imported the product. The source suppliers were identified as MRS, Emadeb/Hyde/AY Maikifi/Brittania-U Consortium, Oando and Duke Oil.
But the management of MRS Oil Nigeria Plc, one of the alleged defaulting parties, quickly denied involvement in the obnoxious deal.
The oil marketing company, in a statement, said, “It has come to the knowledge of MRS Oil Nigeria Plc (MRS or the company) that ‘MRS’ has been quoted, used speculatively on various social media platforms and in other national dailies as being solely responsible for the importation and distribution of substandard and contaminated Premium Motor Spirits (PMS) in the country.
“We want to reassure the public and all relevant authorities, that ‘MRS’ is a responsible corporate citizen and will not be involved in the purchase, importation, distribution or marketing of substandard petroleum products in Nigeria.
“It is therefore necessary that any news medium, reporting this false information which has resulted in the defamation of the company’s brand and image, must immediately refrain from doing so and endeavour to check the facts before printing unauthenticated information and statements, which would affect the goodwill of the company and the investing public.”
The oil marketing firm however stated that it, alongside other four companies, received the product in its depot and distributed the product to only 8 of its stations in Lagos.
“Following delivery into the tank, it was observed that the product appeared hazy and dark; Management immediately directed that further sale(s) should be stopped and the product isolated. Urgent steps were taken to analyze the product to determine the basis for its contamination,
“The product analysis revealed that the PMS discharged by MT Nord Ganier had 20% methanol, which is an illegal substance in Nigeria. As a Company, we are aware that alcohol/ethanol is not permitted to be mixed in PMS specification. We immediately informed NNPC, NMDPRA and MOMAN and it was confirmed that other Members had similar experiences.
“As at the time of this Press Release, “MRS” had a total of 350,000 litres in tank at the 8 stations; we await approval from NNPC and NMDPRA for the return of the product.”
‘You are Wrong’
The NNPC management countered MRS’s position.
Explaining how the substandard fuel was imported into the country, the NNPC which manages fuel imports through the government’s Direct-Sale-Direct-Purchase vendors, said that the bad fuel came from Antwerp in Belgium. It listed the vendors as MRS, Oando, Duke Oil and Emadeb/Hyde/AY Maikifi/Brittania-U Consortium. This development came after the federal government had said it would carry out a major investigation to know the circumstances surrounding the importation of adulterated fuel into the country.
The NNPC Group Managing Director, Mr Mele Kyari, who made the disclosure in a media chat said that quality inspectors initially failed to detect the high level of methanol at the point of arrival in Nigeria because officials do not usually check for methanol.
“On 20th January 2022, NNPC received a report from our quality inspector on the presence of emulsion particles in PMS cargoes shipped to Nigeria from Antwerp-Belgium,” he said.
“Cargoes quality certificates issued at load port (Antwerp-Belgium) by AmSpec Belgium indicate that the gasoline complied with Nigerian Specification. The NNPC quality inspectors including GMO, SGS, GeoChem and G&G conducted tests before discharge and also showed that the gasoline met Nigerian specification.
“As a standard practice for all PMS imports to Nigeria, the said cargoes were equally certified by inspection agents appointed by the Midstream and Downstream Petroleum Regulatory Authority (NMDRA). 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 Percent methanol content & therefore the additive was not detected by our quality inspectors” Kyari disclosed.
He said in order to prevent the distribution of the petrol, the company promptly ordered the separation 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 Ltd is working with the Nigerian Midstream and Downstream Regulatory Authority to take further necessary actions in line with subsisting regulations,” he added.
Business As Usual
Nigeria is not strange to sub-standard petrol. Over the years, stakeholders and international observers have maintained that Africa’s largest economy is the dumping ground for poor quality petrol for which the government and the people pay deadly prices. It contributes to killing the economy while subjecting the citizens to a limited standard of living.
In an article published in The Guardian in July, 2020, entitled “Petrol sold to Nigeria from Europe ‘dirtier’ than black market ‘bush’ fuel”, the London-based newspaper revealed that samples from illegal refineries in Niger delta were found to be of a higher quality than imported petrol. It maintained that Nigeria is having dirty fuel dumped on it that cannot be sold to other countries with higher and better implemented standards.
“Shell, Exxon, Chevron and other major oil companies extract and export up to 2m barrels a day of high quality, low sulphur “Bonny Light” crude from the Niger delta. But very little of this oil is refined in the country because its four state-owned refineries are dysfunctional or have closed.
“Instead, international dealers export to Nigeria around 900,000 tonnes a year of low-grade, ‘dirty’ fuel, made in Dutch, Belgian and other European refineries …
“The extreme toxicity of the ‘official’ fuel exported from Europe surprised researchers who took samples of diesel sold in government-licensed filling stations in Port Harcourt and Lagos. They found that on average the fuel exceeded EU pollution limits by as much as 204 times, and by 43 times the level for gasoline.
“Laboratory analysis also showed that the black market fuel was highly polluting but of a higher quality than the imported diesel and gasoline. The average ‘unofficial’ diesel tested exceeded the level of EU sulphur standards 152 times, and 40 times the level for gasoline.”
“Our research suggests that Nigeria is having dirty fuel dumped on it that cannot be sold to other countries with higher and better implemented standards.
“With more than 11m, mostly old, cars imported from Europe and Japan on the roads, and hundreds of thousands of inefficient generators used by households and businesses for electricity, Nigeria ranks fourth in the world for deaths caused by air pollution. It has been estimated that 114,000 people die prematurely from air pollution each year.”
It would be recalled that several international organisations, including Public Eye, a Swiss-based firm, had revealed that low-quality fuels that permit on average 200 times the sulphur content of Europe’s standards were allowed into countries like Nigeria. The United Nations Environmental Programme (UNEP), ARA and health campaigners have also been prodding Nigeria to ban fuels declared illegal in Europe and the United States.
In a similar article published in Quartz Africa in December 2016, the online Afro-centric platform recalled that after years of inadvertently serving as dumping grounds for dirty diesel fuels deemed too toxic for Europe, Nigeria among some West African countries had decided to raise their fuel quality standards.
The move was in response to the findings of a three-year long investigation by Public Eye, a Swiss NGO which found that Swiss companies often took crude oil from African countries, but sent fuel with high sulphur levels—which can’t be legally sold in Europe—back to Africa.
“The companies that did this broke no rules, and the fuel they sold in Africa was within legal limits, given the low fuel quality standards on the continent. But Public Eye, in its report, said the companies ‘ruthlessly exploit weak regulatory standards’ and make the local urban populations pay with their health”.
Economic Hemorrhage
The NNPC activities have remained the most notoriously opaque government business. The situation has worsened under the administration of President Muhammadu Buhari since May 2015 when he was first inaugurated. Policy inconsistencies and doubtful regulations linked to oil production, export, fuel importation, subsidy, management and maintenance of moribund refineries and ‘outrageous’ remuneration of the workers have remained among the most worrying.
Briefing journalists on the 2022 budget in Abuja in January, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said that the federal government would remove fuel subsidy and replace it with a monthly N5,000 transport grant to poor Nigerians. The transport grant, she explained, will target about 30 to 40 million Nigerians who make up the poorest population of the country. And available resources after the removal of fuel subsidy will determine the number of beneficiaries.
But the Chairman of the Senate Committee on Finance, Adeola Olamilekan, disclosed that there was no provision for N5,000 monthly allowance for 40 million Nigerians in the 2022 budget, adding that there was still a provision for subsidy in the 2022 budget submitted by the Executive to the National Assembly.
“The Minister of Finance, Budget and National Planning was quoted as saying that 40 million Nigerians will be paid N5,000 as transportation allowance, in lieu of the fuel subsidy.
“There are still a lot of issues to be deliberated upon and looked into if eventually, this will come to pass and how do we raise this money to pay these 40 million Nigerians.
“We don’t have anywhere in the budget where 40 million Nigerians will collect N5000 monthly as transportation allowance totalling N2.4 trillion.”
In March 2021, it was reported that Nigeria spent N103 billion monthly on petrol subsidy based on the pricing template released by the now defunct Petroleum Products Pricing Regulatory Agency (PPPRA), despite government denials that what it paid was “price under-recovery”.
In its Foreign Trade Report, the National Bureau of Statistics (NBS) revealed that Nigeria imported petrol worth N2.52 trillion between January and September 2021. This represents an increase of 55.6 percent from the N1.62 trillion spent within the same period in 2020. The development came amid the Federal Government’s plan to remove subsidies from petrol by the end of the first quarter of 2022.
But the Federal Government later back-pedalled, saying that fuel subsidy would be in place for the next 18 months from January 2022. For years, the government denied it paid a subsidy on petrol, yet it was shown that it did so through the NNPC, which described the cost as “under recovery”.
On the average, the fuel subsidy costs about N250 billion a month. According to the chief executive and officials of the NNPC Limited, this may rise to N1.5 trillion in 2022, factoring in high world oil prices. Additional N3 trillion planned to be spent on fuel subsidies in the year will raise the fiscal deficit to N9 trillion or 4.9 percent of GDP, based on government’s estimates.
As Brent crude oil prices averaged about US$71/barrel in 2021, subsidy payments of N270 billion on average for 2022 are considered surprisingly large even as Brent crude oil price breached US$90 per barrel in January 2022. “You can see that Nigeria is exporting sweet crude but importing bitter, bad petrol”, said John Kalakie, an oil and gas analyst.
Import/Consumption Haze
Of equal concern is the volume of petrol that Nigerians are said to consume. The amount of petrol Nigerians consume daily has been a subject of conjectures in recent years, as figures released by different agencies often conflict.
Before Major General Muhammadu Buhari (retd), became president Nigeria’s petrol consumption was estimated at between 35 million to 40 million litres daily. The company’s transaction records in early 2018 showed the extent its operations work in this situation but are transparent.
In a February 8, 2018 statement, the NNPC said the country’s daily petrol consumption was around 35 million litres. But this has increased exponentially over the years. The rise in the quantity of fuel consumed in the country has also meant an increase in what NNPC called under-recovery – a euphemism of petrol subsidy.
According to the NNPC books, the subsidy was not recorded in January. In February, the NNPC paid N25.37 billion as subsidy. In March, it paid N60.39 billion while it paid N61.97 billion in April as subsidy. In May, it paid N126.29 billion as subsidy. In June the subsidy rose to N164.34 billion. In July, the subsidy paid by the corporation amounted to N103.29 billion. The corporation paid N541.66 billion as subsidy in the six months of that year.
The Group Managing Director of the NNPC, Mr Mele Kyari, had blamed the rising figures in fuel consumption in the country on smuggling of products to neighbouring countries.
Deepening Costs
London-based Lawyer and Political Economist, Olu Fasan, wonders why the Nigerian government should be complaining of smuggling while allowing the dumping of sub-standard petrol in the country without considering the huge cost to the health of the citizens.
“There is a huge human cost. Nigeria ranks fourth in the world for deaths caused by air pollution. With over 11 million cars and with the prevalence of vehicle emissions caused by dirty or contaminated fuel, you can imagine the impact on the quality of lives in Nigeria.
“The government often complains about how smuggling and dumping are damaging domestic industries, why is it tolerating the dumping of contaminated fuel which damages human lives and the economic well-being of the citizens?” Fasan said in a note to THEWILL.
“Despite being import-dependent, Nigeria doesn’t care about the quality of fuel it imports. More than four times, the government has said it would end importation of dirty fuel, but has failed to do so.
“Of course, because the government doesn’t care about the quality of the fuels it imports, dirty fuel is being dumped on Nigeria. Research shows that dirty fuel that can’t be sold to countries with robust and better implemented standards is being deliberately dumped on Nigeria. That, of course, won’t happen if the Nigerian regulatory authority is doing its job.
“All this has wider implications. First, because high-sulphured fuel damages vehicles, the contaminated fuel would have damaged several cars. Would the government compensate those whose cars are damaged? The government should,” the visiting Fellow at the London School of Economics said.
Dr Nnaemeka Obiaraeri, Managing Director/CEO, Taurus Oil and Gas Limited, agrees that those found wanting in the obnoxious deal should be indicted, but the NNPC as sole importer of petroleum products, should take responsibility for the mishandling of fuel importation into the country.
Unconfirmed reports indicate that the NNPC would spend about N201 billion to clean up the 170.25 million litres of the bad petrol allowed into the country.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
