Q1 : Corruption, Epileptic Power taint Sector

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The last couple of statements issued by the Nigerian National Petroleum Corporation (NNPC) showed that all is not yet well with the Nigeria’s energy industry. From the discovery of missing millions of petrol litres worth N11 billion allegedly at the depot of the Capital Oil and Gas Limited to the caveat emptor issued by the corporation on imminent explosion and preponderance of adulterated petrol in Nigeria, the NNPC aptly depicted an industry whose negative sides dwarfed its positive in the first quarter. While feats were achieved in teams of return of relative peace in the Niger Delta, the aged issue of gas insufficiency, national grid collapse, remained the headlines for the country’s power sector.

Oil price, production/OPEC’s quota

The relative peace in the Niger Delta has led to slight improvement in crude production for the country. This increased the optimism that Nigeria, which had hirtherto being exempted by the Organisation of Petroleum Exporting Countries (OPEC) from its oil production quota cut for other members, would meet its budgatary production benchmark of 2.2 million barrels per day.

This was, however, shortlived by the shutdown of Bonga oil production platform by Shell Nigeria Exploration and Production Company (SNEPCo) for Turn Around Maintenance (TAM). This coupled with the Forcados, which remains shut, has remained a major challenge for recovery efforts on oil production deficit.

Legalisation of illegal refineries

The major refineries were in and out of service during the first three months. What was striking at the mid-stream sub-sector was the Federal Government’s plan to legalise and regularise operations of illegal refineries in the Niger Delta.

Group Managing Director of the NNPC, Dr. Maikanti Baru, who said this, lauded roles of legislature in oil and gas industry. He identified enacting laws to criminalise pipeline vandalism or sabotage as an area in which he sought closer relations with the legislature, explaining that the activities of the vandals posed a lot of challenges to the industry and that existing legislation on the subject appeared too weak to serve as deterrence.

Adulterated petrol

The NNPC, last Thursday, March declared that adulterated premium motor spirit (PMS) also known as petrol, which could cause explosion and endanger lives of users, was in circulation. The corporation, which said this in a statement, advised consumers of petroleum products across the country to be mindful of the quality of products they buy for use to forestall explosion. Aside from explosion, the product, NNPC added, could also cause knockdown of engines, equipment or any such other ugly incidents, which could lead to loss of lives or injuries.

“The call for caution becomes necessary,” the NNPC said, “following reports that products from vandalised pipelines or outrightly adulterated products are being sold to unsuspecting members of the public, leading to untoward incidents involving petroleum products consumers in parts of the country.”

When in doubt of the quality of a purchase, consumers, the statement issued by Group general Manager, Group Public Affairs Division, Ndu Ughamadu, said, are advised to seek assistance from any offices of the Department of Petroleum Resources, (DPR), NNPC depots or offices nationwide, as products from NNPC depots are subjected to strict quality control to ensure that they are fit for use.

NUPENG strike

The quarter under review started and ended on another old story; threats of strike by the National Union of Petroleum and Natural Gas (NUPENG). The Petroleum Tankers’ Drivers (PTD) arm of NUPENG, last Friday, declared that it would commence a nationwide strike yesterday.

NUPENG’s President, Mr Igwe Achese, announced this in a communique, last Friday, in Lagos, at the end of its Central Working Committee (CWC) meeting held at the union’s secretariat in Yaba. The communique said that the strike would draw the attention of the Federal Government and other stakeholders to some unresolved issues bordering on the welfare of workers, such as bad roads, poor remuneration, insecurity and the alleged excesses of some security agencies.

The communique stated: “The CWC-in-Session considers inhumane the refusal of the National Association of Transport Owners (NARTO) to commence negotiation with the union for the renewal of the expired Collective Bargaining Agreement (CBA) on the working conditions of our tanker driver members in the PTD branch, after several appeals and even an ultimatum.

“The CWC-in-Session, therefore, resolves to give full backing to any industrial action the members in this sector might decide to take with effect from Monday, April 3, 2017. “To avert the pains and discomfort the action might cause, the CWC-in-Session calls on the Federal Government to urgently intervene and apprehend the unfortunate situation, to enable NARTO meet its obligations to tanker drivers.”

N11bn missing petrol

The NNPC and its thruput contractor, Capital Oil and Gas were in the news in the first quarter for a reason that was not new to Nigerians – allegation of corruption and disappearance of petrol worth N11 billion at the depot of the latter.

Passage of PIB

The controversial Petroleum Industry Bill (PIB) remained unpassed by the National Assembly and the lawmakers have not stopped to pay lips services to its passage. The last that was heard on efforts to pass the bill came from Chairman, Senate committee on Petroleum Ndustry, Upstream, Tayo Alasoadura, who at the Nigeria Oil and Gas (NOG) conference in Abuja early last month, said that the bill would be passed by April or May.

Like oil & gas like power

The power sector adorned the same regalia like oil sector during the quarter under review. It battled old issues such as insufficient gas supply, national grid collapse, high debt profile by military and government’s Ministries, Departments and Agencies (MDAs) and other stories that kept the power generation at around 3,500 Mega Watt (MW). The issues got worse with announcement of major threat to operations and survival of largest power generation company in Nigeria, Egbin Power Plc.

Managing Director of the biggest single power generating stations in Africa, with an installed capacity of 1320 MW consisting of six units of 220MW each, Mr Dallas Peavey, said that the company had multi-million dollars debts to banks, gas producers and Korean Electricity Power Company (KEPCO).

The high debts profile of the company, he said, was worsened due to non-settlement of N100 billion debt, which the Federal Government owes it.“We owe the gas companies and have others like our technical partners (KEPCO) to pay, and importantly our lenders, the banks,” he said. Eventually, these unbearable business operating circumstances and conditions, he declared, would “shut us down any moment if it persists. That is the simple but bitter truth.”


The quarter, which is the first for the year, experienced more negative events than positive. This is not unexpected of a cash-cow sector of a country that is battling to come out of recession. Lessons should be learnt on how to make the remaining quarters of the year to be worthwhile for the industry.

Source: New Telegraph

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