Connect with us

Energy

PMS Deregulation: Buhari’s unfulfilled promise By Sunday Folayan

Published

on

According to the Fuel consumption Statistics published by the Nigeria Office of Statistics, the average daily consumption of PMS in Nigeria is between 41m and 52m litres per day.

This was the statistics in 2016. It means that the total Annual consumption will be 365 x 41m, ie 14,965million litres, or simply put, 15Billion litres per year.

The figure has now risen to 55m litres in 2018 .

At the current retail price of N145 per litre, it means the total annual expenditure of Nigeria on PMS is N2,169Bn or N2.1Tn. It is therefore disturbing to read in the news that Nigeria spends N774m daily on fuel subsidy.

Everything does not add up. When you consider the fact that Nigeria has 774 Local Government Areas, If each LGAs in Nigeria get an extra N1m per day, I am sure development will go deeper into the grassroots.

From the published daily statistics, with 52 million daily consumption, it means that the pump revenue is 52mx145 ie N7.54Bn. To pay a subsidy of N774m ie N0.774Bn daily therefore means that the level of subsidy is (0.774/7.54) ie 10.27%. So, you will ask, why do some stations sell Premium Motor Spirit (PMS) at N145, some at N143 and some at N142?

The answer is right there in the Pricing template of the Petroleum Products Pricing regulatory Agency (PPPRA). It has been taken off-line! So much for a Government that is fighting corruption.

When Fuel price was increased from N86 to N145 per litre in may 2016, several components of the pricing template were adjusted as reported by the Press then.  It was reported that:

“Littering expenses, which hitherto attracted a N2 charge, would in the new dispensation attract N4.56 per litre, while the charges for the Nigerian Ports Authority, NPA, and the Nigerian Maritime Administration and Safety Agency, NIMASA, which had N0.21k and NO.15k before, would now get N0.84k and N0.22k respectively.

Financing, which usually received N0.64k, would now receive N2.57k, while retailers’ margin, which used to take N5, would now take N6 per litre.

Other component items include transportation cost, which increased from N3.05 to N3.36; dealers’ margin, from N1.95 to N2.36 per litre; bridging fund, from N4 to N6.20, while administrative charge increased by 100 percent from N0.15k to N0.30k per litre.

The only component that remained unchanged was the charge for marine transport average, MTA, which would still be getting N0.15k per litre.

The new template also fixed ex-depot price, which, until May 10, 2016, was N72.20, at a price band of between N116.03 and N126.63 per litre.

Equally, ex-depot price for collection, which used to be N76.50 per litre, would now be between a price band of N123.28 and N133.28 per litre”

If you look carefully at this, you will see that costs such as Financing (N2.57k) Retailers Margin (N6), Transportation (N3.36), Bridging Fund (N6.20) all add up to be N18.13.

For a 33,000 litre Tanker, the transportation allowance is N33,000×3.36 or 110,880. That will transport fuel from Lagos to Maiduguri. What then is bridging fund and where does it go?

According to the 11th July 2016 news from the sun newspaper.

“Petroleum Equalisation Fund which was es­tablished by Decree No. 9 of 1975 (as amended by Decree No. 32 of 1989) charged as reimbursement to petroleum marketing companies for losses suffered solely and exclusive, as a result of sale of petroleum products at uniform prices throughout the nation has become another drain pipe on government purse.
Indeed, while those in the hinterland that are supposed to be the major beneficiary of the fund, suffering acute shortage of petroleum products as a result of scarcity of the products, those involved in that act of sabotage through diversion of products are smiling to the banks.

In the heat of the last fuel scarcity across the country, for example, immediate past Managing Director of Pipelines Products Marketing Company (PPMC), Mrs. Esther Nnamdi-Ogbue, raised the alarm over the massive diversion of petroleum products to neighbouring West Africa countries.

Before the President assumed office, he was quoted as saying:
On subsidy, Buhari said: “It’s Nigerian money [that was spent on exploration of crude oil and building of refineries and depots]. From each Nigerian crude, whether Akwa Ibom, Bonny Light or whatever it is, you can work out how much products it will give you; how much petrol it will give you; how much diesel it will give you if you want to produce diesel.

“We could tell how much Nigerian crude cost, the cost of transportation from there to the refinery, the cost of refining, the cost of transportation to the pump stations and maybe 5 per cent go for overhead. I can understand if Nigerians pay for those costs. But somebody is saying he is subsidizing Nigerians. Who is subsidizing who?”

He promised to look at the economics of fuel pricing when he gets into government. Buhari said the zoning of positions in government was a “speculation” because he only read it in the newspapers, and said party supremacy does not mean the APC national working committee should not have extended “courtesy” to him on the issue.

Having been in the saddle for almost three good years, what is the President waiting for? Indeed recently, NNPC clearly stated what the problem is, during a visit to Comptroller General of the Customs. According to the News Agency of Nigeria in March 2018 when Baru visited Ali.

“My mission today is to sensitise your top management on the issues relating to smuggling of Petroleum products, particularly the regulated one which is the Premium Motor Spirit (PMS) popularly known as Petrol.

“We have seen a lot of volumes being smuggled out of the country, we have seen volumes been evacuated in very high quantities.

“ I want to bring to your attention that there is a huge differential between Nigeria’s sells price of petrol and that of our neighboring countries.

According to Baru, because of the regulation of the price, government is under recovering a lot of cost base on landing cost and exchange rate of the product in the country.

He said that currently it had been observed that the marketers sell the products between N170 to N185 per litre.

These challenge, he said had made marketers to stop importing and left NNPC with the sole importation of the products.

He said special market for Nigerian product were been created in the various neighbouring countries to sell these smuggled products.

He added that the arbitrage opportunities in the neighbouring countries had pushed daily National consumption from less than 35 million litres per day to over 55 million litres per day.

There you are!! Now you see that 57% of the fuel cost is lost to rent seekers. The concept of making Fuel the same in Lagos as in Zaki-Biam is just like making Yam the same in Lagos, as it is in Zaki-Biam. That is pure economic sabotage.

As a matter of priority, we need to abolish petroleum subsidy. Scrap agencies such as the PPPRA and Equalization fund, SURE-P etc. These are rent seeking pipes and not in anyway pro-masses.

The hardship will be temporary. Within months, responsible companies will continue to import petroleum and sell at decent prices. The activities of Bovas Petroleum in the South West of Nigeria is an indication of what will happen, if shenanigans and rent seekers exit the business.

Take a stand today, accept deregulation, it will not be harder!!

Source: Sundayfolayan.name.ng.

GrassRoots.ng is on a critical mission; to objectively and honestly represent the voice of ‘grassrooters’ in International, Federal, State and Local Government fora; heralding the achievements of political and other leaders and investors alike, without discrimination. This daily, digital news publication platform serves as the leading source of up-to-date information on how people and events reflect on the global community. The pragmatic articles reflect on the life of the community people, covering news/current affairs, business, technology, culture and fashion, entertainment, sports, State, National and International issues that directly impact the locals.

Continue Reading

Energy

AVEVA is providing data management support for renewable natural gas projects

Reporter: Godwin Ezeh

Published

on

Caspar Herzberg, CEO of AVEVA

Key Highlights

●        AVEVA’s industrial information infrastructure has been selected by Archaea Energy to provide key data management support

●        AVEVA’s industrial software to optimize performance across Archaea’s RNG plants

AVEVA, a global leader in industrial software driving digital transformation and sustainability, has been selected by Archaea Energy, the largest renewable natural gas (RNG) producer in the US, to build a comprehensive operations data management infrastructure.

Using AVEVA’s software, Archaea Energy can collect, enrich and visualize its real-time operations data, enabling performance analysis across its growing network of plants.

Using AVEVA PI Data Infrastructure, a hybrid solution with cloud data services, the plants will be able to share data to highlight operational opportunities and optimize efficiency.

Caspar Herzberg, CEO, AVEVA, stated,

“Through this collaboration and the use of AVEVA PI Data Infrastructure, Archaea’s growing network of plants will have streamlined operations with accurate performance analysis throughout the expansion. AVEVA’s CONNECT software platform leverages industrial intelligence from a central location, making it easier to deploy additional digital solutions in the future.”

“As the largest RNG producer in the United States, we are dedicated to delivering reliable, clean energy,” said Starlee Sykes, chief executive officer of Archaea Energy. “This relationship will allow us to optimize operations and offer detailed performance analysis as we continue to expand across the country.”

Continue Reading

Energy

Boost for Nigeria’s Oil Production, As NNPC’s Utapate Crude Grade Hits Global Oil Market

Published

on

Utapate Crude Roadshow

…OML 13 Asset Eyes 80,000 bpd by End of 2025

In a major boost for Nigeria’s crude oil production, revenue generation and economic growth efforts, the NNPC Ltd has officially unveiled its latest crude oil grade, the Utapate crude oil blend, before the international crude oil market.

It would be recalled that in July, 2024, NNPC Ltd and its partner, the Sterling Oil Exploration & Energy Production Company (SEEPCO) Ltd introduced the Utapate crude oil blend, following the lifting of first cargo of 950,000 barrels which headed for Spain.

During a ceremony held at the Argus European Crude Conference taking place in London, United Kingdom, on Wednesday, the Managing Director, NNPC E & P Limited (NEPL), Mr. Nicholas Foucart described the introduction of the Utapate crude oil blend into the market as a significant milestone for Nigeria’s crude oil export to the global energy market.

“Since we started producing the Utapate Field in May 2024, we have rapidly ramped up production to 40,000 barrels per day (bpd) with minimum downtime. So far, we have exported five cargoes, largely to Spain and the East Coast of the United States; while two more additional cargoes have been secured for November and December 2024, representing a significant boost to Nigeria’s crude oil export to the global market,” Foucart told a packed audience of European crude oil marketers.

He added that since its introduction into the global market, the Utapate crude oil blend has enjoyed a positive response from the international crude oil market, due to its highly attractive qualities.

Foucart said the Oil Mining Lease (OML) 13, fully operated by NEPL and Natural Oilfield Services Ltd (NOSL), a subsidiary of SEEPCO Ltd, boasts a huge reserves of 330million barrels of crude oil reserves, 45 million barrels of condensate and 3.5 tcf of gas. 

“We have a number of ongoing projects to increase our production from the current 40,000bopd to 50,000bopd by January 2025 and 60,000bopd to 65,000bopd by June 2025. Essentially, we are targeting opportunities to increase production to 80,000bopd by the end of 2025,” Foucart added.

He said the Utapate crude oil terminal is sustainable, affordable and fully compliant with the rigorous environmental regulations and sustainability principles especially those aimed at reducing carbon emissions and other ecological effects.

Also speaking, the Managing Director of NNPC Trading Ltd (NTL), Mr. Lawal Sade said the pricing structure of the Utapate crude oil blend is similar to that of Amenam crude as it is a light sweet crude which is highly sought after by refiners across the world due to its low sulphur content, efficient yield of high-value products, API gravity and other similarities.

He said in bringing the new crude oil blend to the global market, NNPC Ltd wanted to optimise value for both its producers and counterparties across the globe.

He added to ensure predictability and sustainability of supply, the NNPC Trading intends to run a term contract on the Utapate crude oil blend cargoes, principally targeting off-takers from the European and the US East Coast refineries.

Produced from the Utapate field in OML 13 in Akwa Ibom State in Nigeria, the Utapate crude oil blend is similar to the Nembe crude oil grade. It has a low sulphur content of 0.0655% and low carbon footprint due to flare gas elimination, fitting perfectly into the required specification of major buyers in Europe.

The NNPC E&P Ltd and NOSL partnership is also committed to operating in a manner that is safe, environmentally responsible, and beneficial to the local communities.

The Utapate field development plan, executed between 2013-2019 and approved in October, included converting wells and facilities from swamp/marine to land-based operations.

The plan involved a multi-rig drilling campaign for 40 wells and the development of significant infrastructure such as production facilities, storage tank, a subsea pipeline and an offshore loading platform to facilitate crude oil evacuation and loading.

The entry of the Utapate crude oil blend into the market is coming barely a year after the NNPC Ltd announced the launch of Nembe crude oil, produced by the NNPC/Aiteo operated Oil Mining Lease (OML) 29 Joint Venture (JV).

This remarkable achievement signals the commitment of the NNPC Ltd to increasing Nigeria’s crude oil production and growing its reserves through the development of new assets.

Continue Reading

Energy

NNPC Ltd Set to Supply 100mmscf/d Gas to Dangote Refinery

…10-year Deal to Boost Local Production, Revamp Industrial Growth, reports Ikenna Oluka

Published

on

NNPC and Dangote
L-R: Managing Director, Nigeria Gas Marketing Limited (NGML), Barr. Justin Ezeala and President/CEO of the Dangote Group, Aliko Dangote display a signed Gas Sale and Purchase Agreement (GSPA) for the supply of natural gas to the Dangote Petroleum Refinery and Petrochemicals FZE, on Tuesday, in Abuja.

The NNPC Gas Marketing Limited (NGML), a subsidiary of the Nigerian National Petroleum Company (NNPC) Limited, has successfully executed a Gas Sale and Purchase Agreement (GSPA) with Dangote Petroleum Refinery and Petrochemicals FZE.

The agreement, signed by the Managing Director, NGML, Barr. Justin Ezeala and the President/CEO of the Dangote Group, Aliko Dangote on Tuesday at the Corporate Head Office of Dangote in Falomo, Lagos State, outlines the supply of natural gas for power generation and feedstock at the Dangote Refinery, in Ibeju-Lekki, Lagos State.

This major milestone is in line with President Bola Ahmed Tinubu’s policy of utilizing Nigeria’s abundant gas resources towards revamping the nation’s industrial growth and kickstarting its economic prosperity.

This development, which sees a huge investment of this nature penned with zero capital expenditure (CAPEX) outlay, has been described by many as unprecedented in the history of NGML or any gas Local Distribution Company (LDC) in the country.

Under the terms of the agreement, NGML will supply 100 million standard cubic feet per day (MMSCF/D), 50MMSCF/D being firm supply and the rest 50MMSCF/D interruptible natural gas supply to the refinery for an initial period of 10 years, with options for renewal and growth.

This collaboration is a significant step toward ensuring the operational success of the Dangote Refinery and enhancing Nigeria’s domestic gas utilization.

NNPC Ltd, through NGML, its gas marketing subsidiary, continues to lead efforts in promoting the use of domestic gas to support industries and businesses nationwide.

The agreement represents a milestone for both NNPC Ltd and Dangote Refinery, aligning with their shared commitment to boosting local production and providing vital products for the benefit of all Nigerians.

It is also a further proof of NGML’s unwavering commitment to business excellence and fulfilling NNPC Ltd’s core mandate of ensuring Nigeria’s energy security through the execution of strategic gas projects across the country.

Continue Reading

Trending