The Minister of State for
Petroleum Resources, Emmanuel Ibe Kachikwu, yesterday apologized to
Nigerians over the biting petrol scarcity that keeps many at the pump for
hours.
Dr. Kachikwu, who appeared
before the Senate Committee on Petroleum Resources (Downstream), noted
particularly that his comment that he is not a magician to cause fuel queues to
disappear overnight was not meant to insult Nigerians.
The minister said the “I’m not
a magician” comment was made jocularly and never intended to slight Nigerians.
The comment attracted the ire
of Nigerians, including All Progressives Congress (APC) National Leader Asiwaju
Bola Ahmed Tinubu, who insisted he must apologise to Nigerians.
Kachikwu said he shared the
pains Nigerians are going through to get fuel. He is working round the
clock to resolve the problem, he said. He rejected the call for him to resign.
The fuel queues will disappear by April 7, Kachikwu promised.
He said: “I share the pains of
Nigerians. I feel that pain every day when I walk the streets. On Easter day, I
was in Lagos monitoring fuel distribution and the depots. I have given 24 hours
attention to the problems. I have continued to work with one sole purpose which
is that every problem must have a solution and I think that is the reason I was
picked. I do apologise for the comment that I made jocularly with my friends in
the press about being a magician and it offended Nigerians. It was not
meant to be, it was a side jocular issue. I did go on to explain what needed to
be done. I did not know that it would create the kind of hyperbole that it did.
Let me first admit that I am not a typically experienced politician. I am a
technocrat. I come to work. Some of the phraseologies that I may use, while
being acceptable in the arena in which I play obviously will not be acceptable
in the public political arena. So if anybody’s sensibilities were offended by
those, I totally apologise. I share the pains of Nigerians. I feel that pain every
day. I worked the streets and those who are following my trajectories since I
resumed office would see that even on Christmas Day, I was at the refineries. Like
I said on the Easter Day, I was in Lagos, monitoring fuel distribution at the
depots. I have given 24/7 attention to the problem in this industry which were
unbelievable. I have continued to work with one sole purpose in mind, which is
that every problem will have a solution. I am a very humble person even
imagining the thought that I dictate to Nigerians. I am not somebody like
that.”
On the reason for the current
fuel scarcity he said: “Let me put the reasons for the scarcity in three
categories. First, what did I meet? When we came in August, this country had
arrears of unpaid subsidy claims that were in excess of N600 billion which were
not paid for over a year. So, progressively over a period of eight months,
prior to my coming on board, people have been staying away from importation not
at a heavy level but by about 10 to 15 per cent of allocation were not being
met. There was hope that ultimately, if the subsidy regime continues, they
would get paid. So, some people continued to import, but by the time we came
in, people had reached a breaking point and most of the companies didn’t have
the liquidity even to go to the banks and open letters of credit and that
became a major issue, and we succeeded in paying, late October last year, the
N500bn subsidy. Some element of the subsidy like the foreign exchange components
remained unpaid, which has been carried into this year’s budget. It became
clear to me that having regards to the difficulty that we faced in terms of
paying for the subsidy, the country can no longer, quite frankly, afford
subsidy payment. We were faced with the challenge of ensuring supply of
petroleum products without the need for a subsidy regime. As of January
1 this year, the country is no longer paying subsidy, saving us a
cumulative of over N1trillion in a one year period. That was the first major
issue.
“Second major issue was that
once the N600bn subsidy money was paid, the ability of marketers to import the
product became a challenge because they could not raise letters of credit and
up to this point that still remains a major issue. So even if they wanted to
import, they needed letters of credit and adequate foreign exchange cover. Some
of them were owing arrears of liabilities as a result of commitment I had made
on petroleum importation prior. So, whatever money they had was taken by banks
to offset certain obligations. Going forward now, they didn’t have money to
import fuel again. What that meant was that by late August last year, we moved
from the expected obligation of the NNPC to bring in 50 per cent of the
national consumption of about 45 to 50 million litres per day but we now have
to cover a 100 per cent platform because nobody was bringing in the product,
the consumption was still static and we needed to cover the gap. We took up
that challenge without increase in crude allocation, without any excess
allocation as it were and we have to work exceedingly hard from August last
year to cover the gap but we didn’t cover it 100 per cent because we didn’t
have the ability to do so. So, the gap we could not cover was responsible for
the queues. That was responsible for the 80 per cent of the problem.
“Third issue is that of
pipeline vandalism. We met pipelines that were in comatose, for instance Mosimi
was not working. This morning, after a three months intensive work with private
partners, we’ve just been able for the first time, to recover the Escravos to
Warri pipeline and about a month ago, we recovered the Brass to Port Harcourt
pipeline. For the first time, we will be able to pump crude to the refineries
without the need to use vessels which are extremely expensive which I stopped
as soon as I came. For the first time in six years, we are trying to recover
the pipeline. We have 18 depots across the country. 90 per cent of them are not
in a state of use. They have not been maintained. They have been abandoned for
years. Money was needed to work on them. But we have advertised for joint
partners to come in and work with us to put in the required facilities to get
depots working and get pipeline repaired. But through hard work we have been
able to recover some pipelines from Mosimi up to Ilorin but with a few
punctured points. The absence of the pipelines makes movement of the products
from Lagos taking up to a week. Because the importers are not bringing in the
product, the logistics of the NNPC had been expanded, creating great nightmare
for us. Not only do we bring in the product but we also lighten it and take it
to the storage tanks of the majors and some cases if you notice, we also are
taking intervention trucks and taken products into the stations of this
individuals because if they do not sell and the stations are empty, it is a
challenge. NNPC basically over extended itself in terms of what it was set up
to do and what it has the capacity to do.
“Lack of infrastructure too is
affecting us because we are moving up to 3, 000 trucks round the country
everyday this is not the best way to circulate or distribute products in a
civilised world but that is the only option that we had. NNPC was losing N40bilion
every month when we came but this had been reduced to N3billion by December
last year. We met a company with a debt profile of N4trillion and with that of
NPDC which is about N1trillion. The access to open up letters of credit
continues to be a challenge.”
On diversion of products by
marketers, he said, “Marketers are diverting the product, some days we load 300
trucks from Lagos coming to Abuja and one third of that, are dissipated into
areas where people could make quick returns and so they won’t get to Abuja. We
do not have a computerized system that will enable us to track every truck that
is loaded from our depots. We are however working on this. It has not been
there for 20 years.
“We are currently working very
collaboratively with the oil majors, that is upstream producing companies, to
see how they can sell us foreign exchange for the naira components they would
require for their local operations. When they bring in the foreign exchange,
they give us the first call. We are using that module to cover up the foreign
exchange gap. We are also working collaboratively with the CBN within the
limits of what it can tolerate to give us a little bit of foreign exchange.
“Additionally we also brought
in the DSDP programme because the number of litres of consumption as a nation
was spectacularly false. We were carrying figure of 55 million litres per day
that was geared towards creating opportunities for people to make more money
during the subsidy regime. We did analysis and we discovered that we were
consuming 45 million litres which means that we are saving about 10 million
litres per day.
“April begins the DSDP
programme which will save us $1billon a year. This means that the contract upon
which we were importing fuel in the past was extremely faulty. Once that begins
from April 2, we have commitment of much more arrival of the product. That
covers the 60 per cent that our crude allocation can deal with. There is still
that 40 per cent gap which importers had got to bring in. That is being worked
on through the collaboration of oil majors and the CBN.
“We are also setting up, for
the first time, strategic reserves in this country of close to about two
million tonnes to provide products always. That would be operational as from
May. It would contain between five to seven cargoes of fuel as a reserve. Once
we do that, we should be away from the incessant fuel crisis that we have. We
expect that between now and about the 6th to 7th of April, the fuel queues
will disappear, the DSDP will begin and the foreign exchange allocation will
see us smoothly through the track. The refineries will be working and the
volumes they would be producing will be sent to the strategic reserves to
address difficult times. In April we are expected to get to get 150 per cent of
the volumes that would be needed. A lot of that will go to storage tanks.
Hopefully that should sort out the problem.”