February 27, (THEWILL) – Happenings in the Nigerian business and social circles for over two weeks now show that the off-spec premium motor spirit (PMS), popularly called petrol, imported by Nigeria National Petroleum Corporation Limited (NNPC’s) Direct-Sale-Direct-Purchase (DSDP) contractors, was made possible by greed and negligence on the part of those involved in the deal.
On Monday, February 7, it was discovered that some quantity of methanol-blended petrol, outside the specified standard, was in the country.
According to NNPC, the bad product was imported by four oil marketers through four PMS cargoes under the NNPC’s DSDP arrangement – put in place to ensure sustained supply of petroleum products in the country.
The DSDP is an arrangement that allows the NNPC to deliver monthly crude oil lifting on Free on Board (FOB) basis to suppliers who in return deliver petroleum products of Nigerian standard specification to the corporation, on Delivered at Place (DAP) basis, at designated safe port(s) in Nigeria.
According to the NNPC, the four companies that supplied the methanol blended petrol are MRS, which made the importation through a vessel named MT Bow Pioneer, Emadeb/Hyde/AY Maikifi/Brittania-U Consortium through a vessel identified as MT Tom Hilde, Oando through a vessel named MT Elka Apollon, and Duke Oil.
The MRS later disclosed that the petrol it received from LITASCO, the Swiss trading arm of Russia’s Lukoil, was unusable.
THEWILL gathered that the product was purchased from International Trader, LITASCO and delivered through the LITASCO loading port terminal in Antwerp, Belgium.
THEWILL findings also revealed that LITASCO has been the major supplier of PMS to Nigerian oil trading firms and that the low quality petrol, which has become a “way of life” in the country has its source from LITASCO, the Swiss based trading arm of Russian energy giant, Lukoil.
Although the NNPC has been able to stop the sale of the dirty petrol to Nigerians and considerably eased the hassle of buying petrol at filling stations in the major cities across the country, many vehicle owners are still reeling from losses incurred as a result of the off-spec petrol.
The NNPC had picked 16 consortia under the DSDP contract to receive crude oil, refine it and in turn, import petroleum products into Nigeria to meet the demand for PMS, jet fuel and diesel.
To comply with local content standards, Nigerian companies were given contracts alongside international companies under the DSDP arrangement to allow the Nigerian companies gain experience and acquire the required expertise to run their own entities.
THEWILL checks however further revealed the loophole in the entire arrangement from the source through delivery with some traders confirming the unscrupulous practice where excess quantities of methanol, which costs way less is blended into the PMS to increase profit for the supplier and thus reduce the quality of the petrol.
PMS imported into the country, according to our checks, is expected to be unleaded with specific gravity 60°/60F standing a limit of 0.757-0,77 max; distillation range (oC) was expected at a limit of 35-205; 10 percent evaporated (OC) is capped at 70 max; 50 per cent evaporated was 125 max; 100 percent evaporated (OC) was expected at 180 max; FBP evaporated (OC) was limited to 205 max while residue per cent volume was capped at two max.
Additionally, the odour was put at merchantable, colour put as orange like and total Sulphur was capped by the Standards Organisation of Nigeria in 2017 at 150PPM. Other properties included copper corrosion, ratio: T36°C of 68 max; existent gum (mg/100ml) of four max; oxidation stability (min.) was put at 360 minutes; knock rating (RON) at 90 minutes and RVP (Vapour pressure) (psi) at 90 max.
The NNPC confirmed that the four PMS cargoes imported by four consortia of the DSDP were off-spec. They were all bought from LITASCO.
A former Nigerian oil trader told THEWILL that the blame should go to those who should conduct the necessary inspections at various points – pre-shipment, trans-shipment and landing/offloading.
“I am familiar with the business; there are checks and balances because the supplier must be sure he meets the specs of the buyer, and the buyer should be satisfied that what he is receiving is what he ordered and paid for.
“At the point of transshipment (when you reload from the mother vessel to a smaller one), there are systems in place to ensure that no adulteration or deviation occurs.
“In this case, heads must roll because the NNPC trusted the contractors and believed they would do what is right.
“Where NNPC staff who are supposed to conduct or certify the product are found to have compromised, they should be made to face the music because you cannot run such a sensitive business and give room for NNPC or the government to be embarrassed”, he said.
The ex-trader also said that Russia, like China, does not have the kind of business integrity that exists in the West where compromise is forbidden.
Clearly, greed and the ineptitude of officials in the regulatory agencies facilitated the clearance of the cargoes into the country.
While most nations’ pre-shipment/pre-discharge standard test parameters include the oxygenate, methanol, the Nigerian regulatory authority has not adopted this standard.
Insiders who spoke to THEWILL affirm that two factors – greed and negligence, were largely responsible for the anomaly.
“Methanol is way cheaper. The more the methanol in the petrol the cheaper it is for the supplier/producer; so producers deliberately add methanol above the required measure to save on cost,” a trader, who described this as ‘Satanic greed’ told THEWILL.
The trader further explained that methanol is about 50 per cent cheaper than the PMS. So they blend it in a way that gives them room to enlarge their coasts in profiteering. With poor inspection processes at the required stages, it becomes obvious that Nigerians are paying for the off-spec PMS that greed and negligence made possible.
When LITASCO was contacted by telephone for comment, an official at the Switzerland Office asked us to send our inquiry via email.
“Thank you for submitting your request. We will be processing your inquiry and will get back to you within one month,” LITASCO said in a reply to THEWILL’s email.
Mr Paul Osu, spokesman for Nigerian Upstream Regulatory Commission, former Department of Petroleum Resources (DPR), said that the responsibility for product matters lies specifically with the Nigerian Midstream Downstream Regulatory Authority in line with the Petroleum Industry Act 2021.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority had said in a statement 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.”
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.
