How Kachikwu got IOCs to support forex demand by petrol marketers
Vice President Yemi Osinbajo said at the
weekend that pipeline vandalism in the Niger Delta was causing Nigeria
huge revenue losses and preventing the country from meeting its daily
crude oil production plan. Osinbajo made the assertion on Friday in
Warri after an assessment of the damage to pipelines at the
Forcados
Terminal in Delta State. He said the federal government was weighing
several options in an attempt to tackle the menace, including dedication
of a special anti-vandalism security force to the oil producing areas.
The Navy has already commenced a massive operation in the Niger Delta to secure oil facilities.
In a related development, THISDAY has
learnt how International Oil Companies operating in the country
acquiesced to a request by the Minister of State for Petroleum
Resources, Dr. Ibe Kachikwu, to support petrol marketers with more
foreign exchange to import premium motor spirit. PMS, the most consumed
petroleum product in Nigeria, is mainly imported. Shortfalls in the
product’s supply in the last three months owing to foreign exchange
shortages have engendered a scarcity that is threatening both economic
activities and living standards.
But in recent meetings with the IOCs,
Kachikwu was said to have appealed to them to show greater commitment to
the country, particularly, by helping the federal government’s effort
to resolve the protracted petrol scarcity.
Nigeria recently lost its Africa’s top
oil producer status to Angola following vast drops in crude oil
production. According to the latest data from the Organisation of
Petroleum Exporting Countries, Nigeria’s daily crude oil production fell
by 67,000 barrels per day last month. In its Monthly Oil Market Report
for April, which was released on Wednesday, OPEC said Nigeria produced
1.677 million barrels per day in March, down from 1.744 million bpd in
February, while the Angolan oil output rose from 1.767 million bpd to
1.782 million. It was the second time in four months that Nigeria would
be pushed to the second position by Angola in the continental crude oil
production profile.
Lamenting the damage to Nigeria’s
production capacity due to the destruction of oil and gas facilities in
the Niger Delta by pipeline vandals, Osinbajo said the federal
government was considering deploying more sophisticated military
machinery in the region to protect the oil infrastructure.
Fielding questions from newsmen, he said
the country was “losing thousands of barrels of production. We are not
able to produce as much as we ought to. About 250,000 barrels are lost
per day. We are losing large sums of money daily. We look for
alternatives while we look forward to repairing the pipelines.”
Osinbajo said vandalism was also affecting gas supply to the country’s power stations.
“The damage done has led to low supply
of gas and most of the power plants are not functioning to maximum
capacity. We went to Forcados to see for ourselves the sabotage done to
our pipelines. We have seen the alternative steps that the NNPC is
taking in order to ameliorate the damage that has been done and the
problem associated with getting gas from that terminal to all of our
plants.”
The vice president, who was accompanied
on the visit by the Delta State governor, Dr Ifeanyi Okowa, and some
senior federal and state government officials, added, “There is a lot of
effort being made by the federal government and (Delta) state
government as well as communal help. We must meet current vandalism
challenges but also look into what we can do in the future.
“We would have to deploy even
sophisticated weapons to ensure we contain the vandalism, overhaul
security, and a permanent pipeline security force might also be an
option to look at.”
He likened pipeline vandals to “any type
of terrorists or saboteurs,” saying President Muhammadu Buhari’s
position on confronting vandals with the severest measures possible
should be supported by all and sundry. “I agree entirely that pipelines
vandals should not be tolerated under any circumstances,” he said.
Meanwhile, a top official of the
Nigerian National Petroleum Corporation, who did want to be mentioned
because he was not authorised to speak on the matter, told THISDAY
yesterday that the foreign oil companies had agreed to aid the petrol
marketers with foreign exchange. He said the arrangement was not a
profit hunt by the IOCs, but basically a mission to help Nigeria resolve
its crippling fuel problem.
The official said Kachikwu had to bring
his relationship in the industry to bear on the deal, having worked in
the upstream sector with ExxonMobil.
He said under the deal, the IOCs would
sell their dollars at current Central Bank of Nigeria exchange rate to
the marketers, stressing, “It was a huge sacrifice they were willing to
make for Nigeria.”
Kachikwu had recently announced a $200
million forex package negotiated with the IOCs and the CBN to ease the
forex challenges of petrol marketers. The package, he explained, would
see individual IOCs tied to select fuel marketing companies to help them
with forex to meet their Quarter-2 importation lot.
The source explained, “That’s the sector
that he used to work in and so what he did first was to leverage on the
relationship he had built over the years to salvage the current
circumstance when we don’t have enough to go round everybody.
“The truth is that it is a lot of
sacrifice for them because these companies are also under a lot of
pressure and they are going through challenging times with oil prices,
but they could turn around to do this for Nigeria.
“We needed to think out of the box and
so he went to them, sat with them and talked with them individually to
try and get commitment because, no doubt, everybody would want to hold
on to their dollars. But he got them to agree to support this in the
interest of the country.
“It is better for everybody to get
involved in this and that was the driver for the initiative. He has
matched each of the IOCs to every local player so every one of them is
linked to the players they will support at this period.”
Asked about possible objections by the
boards of the IOCs to the request, the NNPC official said, “It is down
to the same will and more than maximising shareholders returns. Unless
you are not a player who has come to stay here, then you will step aside
and say you really don’t care.
“‘It is goodwill and emotive connection
that made them support the initiative and this was more than the usual
boardroom bureaucracy and thinking.”
He also said the minister did not agree
to any form of concession with the IOCs on the forex deal, adding,
“There was no concession; you could almost look at it from a CSR stand.
“They do business here and they get
value and they have invested good money here too. But in times like this
it is fair for them to show a long-term commitment to this country.
That is what they have done.”
The source also disclosed that as part
of the compromise, the IOCs would exchange their dollars at extant CBN
rates to the marketers while the CBN will in turn exchange the naira for
dollar whenever they need it for procurements and other forex
denominated expenses.
He said other upstream operators in the
country that were initially left out of the arrangement had begun to
turn up and ask to be included.
In the meantime, the NNPC has been urged
to urgently lift the suspension it placed last month on product
allocation to credit marketers to ease the current scarcity in the
country.The marketers alleged that NNPPC’s ban on petrol allocation to
credit marketers in March coincided with aggravation of the now
three-month-old acute shortage of petrol.
One of the marketers, who is a member of
the Association of Credit Marketers of Petroleum Products in Nigeria
(ACMPPN), told reporters that credit marketers had not been allocated
products by the NNPC since last month. The marketer who spoke
anonymously explained that the decision of the NNPC to deny them
products had contributed to the shutting down of about 1,000 filling
stations across the country.
He noted that the argument that credit
marketers were hugely indebted to NNPC was not true because the
marketers had bank guarantees to back their purchases.
He stated, “Each credit marketer has a
bank guarantee and that means the credit is secured. So why is NNPC
asking the major marketers to go back to business and we that have bank
guarantees you are shutting us out.
“What is happening is nothing short of
sabotage because the credit marketers have the best distribution
business not only in the big cities like Abuja and Lagos but across the
country.”
He noted that the credit marketing
framework worked well during the time of former Presidents Olusegun
Obasanjo and Goodluck Jonathan, adding, “NNPC knows that without our
participation it will be very difficult to end the scarcity and so the
big question is, why are they still not allowing us to do our business.
In all the depots across the country no marketer is loading product.”
When contacted to clarify the
development, the national president of ACMPPN, Mr. Samuel Nwoga, said
the group was already in talks with the NNPC and the situation was being
looked into. He, however, insisted that the credit marketers were not
indebted to the NNPC.
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