NNPC, DPR and PPPRA: Who is Telling the Truth?
Recent developments suggest Nigeria cannot give a good account of how much petrol it currently consumes in a day. Between key agencies that should know the right figures, none seems to accept each other’s records, reports Chineme Okafor
Among the trio of Nigerian National Petroleum Corporation (NNPC), Department of Petroleum Resources (DPR) and Petroleum Products Pricing Regulatory Agency (PPPRA) – key agencies that should provide authoritative statistics about operations in Nigeria’s petroleum sector - none of them seems to be able to tell for sure the current volume of petrol Nigeria use every day.
From 60 or 70 million litres daily consumption figure, to 30 and then 45 million litres, which the three agencies appear to have respectively put out, it has now become difficult to determine who could be right about the country’s current daily fuel consumption figures.
Straight off, these are no doubt, features of the opacity that has come to define the business of petrol importation and distribution in Nigeria in the last decades. And, amongst its impact, it suggests that there could be massive financial fraud currently perpetrated in the downstream petroleum sector, in addition to the lack of accurate data to base national petrol consumption plan on.
Controversy
For some weeks now, the Federation Accounts Allocation Committee (FAAC) has not been able to conclusively hold its meetings, because of claims by the Nigerian Governors Forum (NGF) that the NNPC was shortchanging the federation with exorbitant financial claims as subsidy over volumes of petrol it imports into the country.
The governors had called for an audit of NNPC’s petrol importation, claiming daily petrol consumption figures reported by the NNPC were overblown by the corporation so it could keep more money away from FAAC.
Following the disagreement between the governors under the aegis of the Nigerian Governors’ Forum (NGF), which accused the NNPC of reporting excessive petrol consumption figure to facilitate deduction of undue petrol cost (under-recovery) from domestic crude cost, the NGF requested the DPR, which is the sector regulator to provide details of the country’s petrol consumption figures, and figures from it were different from that of the NNPC.
In its presentation, the DPR had told the NGF that petrol under-recovery was derived from consumption or evacuation whereas NNPC claimed that PMS cost under-recovery was derived from actual import volumes.
Based on this, the NNPC was reportedly unhappy that the DPR provided information that contradicted its position on fuel consumption to a third party without confirming with it.
A governor, who was privy to some of the exchanges between NNPC, DPR, Minister for Finance, Kemi Adeosun, as well as the presidency on the issue, told THISDAY that like the DPR, the governors had evidence to prove that NNPC was under-reporting.
In the letter dated July 5th letter by NNPC’s Group Managing Director, Dr. Maikanti Baru, to Adeosun, which the governor allowed THISDAY to sight, the corporation said: “The minister is kindly invited to note that PMS cost under-recovery is derived from actual import volumes and not on consumption or evacuations as presented to the NGF by the Department of Petroleum Resources.
“We would like to bring to the attention of the minister, the assertion of the NGF that the NNPC is reporting excessive PMS consumption figures to facilitate deduction of undue PMS cost under-recovery from domestic crude cost.
“The position was further exacerbated by the DPR’s claim that there was never a time where PMS Truck Out (Evacuation) reached 60 million litres per day and that evacuation was the basis in which PMS daily average consumption is made.
“Additionally, the PPPRA evacuation data since January 2016 indicated average volume of 50 million litres per day.”
Explanation
In the letter, which appeared like an effort by the NNPC to explain its position on the June 2018 revenue remittance to FAAC, which has remained controversial till date, the letter suggested the DPR was suspicious of the volumes of petrol the NNPC frequently claimed to have imported and upon which it based its subsidy deductions.
However, the NNPC insisted that petrol cost under-recovery was based on supply and not evacuation or consumption and therefore accused the DPR of bad faith.
Even though the NNPC admitted it did not have an accurate data on the volume of petrol required by Nigeria on a daily basis and may have been importing petrol with figures the PPPRA handed to it, it was however of the view that the DPR divulging such information to the NGF without confirming with it was aimed at embarrassing the federal government.
“NNPC observes that the submission by the DPR was not well intentioned as they should have appropriately discussed and gotten alignment or explanations from PPPRA and NNPC before divulging to third parties. This should be guided upon to avoid embarrassing the government,” Baru said in the letter.
He specifically insinuated it was probably the DPR that told the NGF that the petrol importation figures frequently claimed by the NNPC were not trustworthy.
To deflect the claims that the corporation was shortchanging the FAAC, Baru said: “Honourable minister would recall the ongoing engagement by the inter-ministerial team composing Ministries of Petroleum and Finance with the participation of the NNPC, DPR, PPPRA, PEF, OAGF and the CBN to put in place a monitoring system for the entire fuel supply and distribution system in the federation.
“Also, the Ministry of Petroleum Resources is engaging the National Bureau of Statistics to establish actual consumption of petroleum products in the country. The outcome of these exercises may establish the actual fuel consumption in the country.”
He said the NNPC had previously utilised 35 million litres per day as the basis for supplying its shares of the national consumption, and faulted the data provided by the DPR to the NGF, saying the figures might not be fully reflective of the actual evacuation figures from the various depots.
He explained: “However, our evaluation of the PPPRA evacuation data for all depots and terminals from January 2016 to December 2017 indicated average load out of about 48 million and 50 million per day respectively.”
In the same letter, Baru disclosed that the corporation made deductions worth N88.91 billion as subsidy claims for May 2018 and part of outstanding subsidy claims for 2017.
Indicating the claims were based on the supplies figures, Baru noted that N31.12 billion was for May 2018, while N57.79 billion was claims for the 2017 outstanding.
“For the month of June 2018, NNPC proposed deductions of N88.91 billion as PMS cost underrecovery against domestic crude cost receivable in May 2018. This comprises N31.12 billion for the month of May and N57.79 billion as part of the outstanding for 2017.
“The 2017 under-recovery was not recovered due to low production and prices, which would have had adverse impact on FAAC remittance in the succeeding months,” he noted.
Confusion
Despite NNPC’s claims of 50 million litres, the confusion about the country’s consumption volumes continued to persist, with the DPR and PPPRA conflicting figures of 45 million litres and 30 million litres, respectively.
THISDAY checks from a highly placed official in the PPPRA added a fresh perspective to the paper’s exclusive report on the controversy. While the DPR also affirmed its position.
While the NNPC claimed that the country’s daily consumption was averaging 50 million litres, and at some points got to 60 million litres, the PPPRA source, who asked not to be named, explained the agency had maintained a 35 million litres per day consumption figure, but sometimes mark up to 45 million during periods of national religious celebrations and holidays, which pushes consumption a bit up.
He noted that the agency had never marked up daily consumption to 50 and 60 million litres, adding, “Consumption is always high during the festive period because people usually travel and there are lots of consumption.
“PPPRA in the past had always placed daily consumption between 30 and 35 million, but the figure rises to 40 to 45 million during the festive periods.”
He equally suggested the NNPC might be exploiting its current role as a sole importer.
Further, THISDAY’s review of the latest petrol products stock data of the PPPRA, which was last updated on July 8, indicated that the country’s total average consumption for petrol was 45 million litres; diesel, nine million litres; household kerosene, eight million litres and aviation fuel, 1.5 million litres.
The document stated that the country’s total petrol stock – marine and land based - was 1,462,329,507 litres, with 32 days sufficiency, which when calculated gave a daily consumption ratio of 44.9 million litres.
Similarly, an official of the Downstream Division of the DPR, who opted not to be quoted because of the sensitive nature of the issue, told THISDAY that the NNPC operates like a cult, whose activities are not transparent.
He noted that the efforts by successive administrations to open up the NNPC failed, adding that the figures being bandied by the NNPC as the country’s daily consumption for petrol were false.
According to him, Nigeria does not consume more than 30 million litres of petrol daily.
He said: “It is false for NNPC to claim high figures. We are not consuming more than 30 million litres daily. But the NNPC operates like a cult and it did not start today. It has always been like that. Successive members of the National Assembly have tried to unravel the mystery behind the cult-like operation of the NNPC, but nothing changed. NNPC will go to the National Assembly and make presentations and the matter will end. It is only when you get to the level of the presidency that you will understand how the NNPC operates.”
Expert
Based on the controversy, a former Director at the DPR, and now Lead Consultant to the National Assembly on the Petroleum Industry Bills (PIB), Mr. Osten Olorunsola, suggested at a recent meeting in Abuja, that the controversy indicated how secretive the business of managing Nigeria’s downstream petroleum sector had become.
Olorunsola, who is also a member of the Expert Advisory Panel (EAP) of the Nigerian Natural Resource Charter (NNRC), explained that details of the country’s petrol consumption should not be too difficult to get, or secretive. He said the controversy created some shadow of doubts about the claims of the agencies.
He, however, stated that the promulgation and implementation of the Petroleum Industry Governance Bill (PIGB), which is currently before President Muhammadu Buhari, for assent would help clear such issues, adding that with its assent, the country would be better off.