NNPC Boosts Gas Supply to Gencos, Redeploys Top Staff

• Oil marketers to sack workers over unpaid $2bn subsidy claim

Ejiofor Alike in Lagos and Chineme Okafor in Abuja with agency report

The Nigerian National Petroleum Corporation (NNPC) increased its daily average natural gas supply to the nation’s gas power plants by 123 per cent to 730 million standard cubic feet per day (mmscf/d) in June.
In contrast, the corporation supplied the power plants 327mmscf/d in the corresponding period in 2016, the Monthly Financial and Operations Report released Tuesday showed.
This is just as the state-run oil firm also announced Tuesday the redeployment and promotion of 55 senior management staff across its value chain.

But even as the corporation released its financial and operations report for the month of June and announced the senior staff redeployment and promotions, all was not well in the downstream oil sector, as oil marketing firms in the country resolved to embark on the mass sack of their workers, following the federal government’s failure to pay an outstanding subsidy bill of $2 billion to the firms.

It is uncertain how the federal government intends to pay the astronomical claims of the marketers, since it disingenuously informed the Nigerian public that it had stopped paying subsidy on petrol consumed in the country, and made no budgetary provisions in 2016 and 2017 to settle the subsidy claims.
According to NNPC’s monthly report, gas supply to power plants increased slightly by 0.13 per cent from 729mmscf/d in May 2017 to 730mmscf/d in June 2017.

The report also indicated that petroleum products supply continued to record remarkable stability nationwide owing to the performance of Nigeria’s three refineries, which produced between five and six million litres of petrol in June.
The refineries also produced between five and six million litres of diesel per day in the period under review, reported the News Agency of Nigeria (NAN).

“The corporation has maintained seamless nationwide supply and distribution of petroleum products which guarantees stable products and queue-free filling stations across the nation,” the report stated.
The report also showed that the performance of the Port Harcourt refinery continued to improve with a boost to the midstream value chain, as it inched towards sustained commercial operations.
The pump price of diesel crashed by 42 per cent nationwide, following strategic intervention by the corporation in May 2017, the report added.

The report indicated that NNPC recorded about 86 cases of pipeline breaks across the country in the period under review. Seventy-seven of the cases were due to vandalism, representing a 40 per cent increase relative to the cases recorded in May.
The report added that while the Port Harcourt-Aba line recorded the highest pipeline breaches of 55 points (66 per cent), there was also an unusual upsurge in the activities of vandals along the Kaduna-Zaria line, which witnessed 13 vandalised points during the period.

There was also a slight decrease in national gas production compared to the previous month, which stood at 227.15BCF, or an average of 7,571.50 mmscf/d, the report noted.
This, NNPC explained, was despite sustaining the success recorded by its enhanced crude oil evacuation and lifting in June, following the re-opening of Forcados Oil Terminal (FOT) on March 31.
NNPC also announced Tuesday the redeployment and promotion of 55 top managers of the corporation ordered by its Group Managing Director, Dr. Maikanti Baru.

A statement by NNPC spokesman, Ndu Ughamadu, said Baru had informed NNPC staff shortly before the announcement was made public that the new appointments would not only help to position the corporation for the challenges ahead but would help fill the gaps created due to the statutory retirement of staff.

Under the reorganisation, Roland Ewubare, formerly MD of the Integrated Data Services Limited (IDSL), was moved to the National Petroleum Investment Management Services (NAPIMS) as the new Group General Manager (GGM), while Diepriye Tariah, former GGM and Senior Technical Assistant to the NNPC GMD, takes over from Ewubare as MD of IDSL.

Malami Shehu, Executive Director Operations of the Kaduna Refining and Petrochemical Company (KRPC) was appointed MD of the Port Harcourt Refining Company (PHRC), while Adewale Ladenegan, former MD of the Warri Refining and Petrochemical Company (WRPC) was moved to KRPC to assume duty as MD.
Muhammed Abah, until recently, the Executive Director Operations of WRPC, succeeds Ladenegan as MD of Warri Refinery.

With the retirement of Alhaji Farouk Ahmed as the MD of the Nigerian Products Marketing Company (NPMC), Umar Ajiya, former GGM in charge of Corporate Planning and Strategy (CP&S), now assumes duty as MD of NPMC, while Bala Wunti, former, General Manager, Downstream, GMD’s Office, takes charge as GGM CP&S.
Other changes included Usman Yusuf who takes over as GGM/STA to the GMD, Adeyemi Adetunji confirmed as MD NNPC Retail, alongside Dr. Bola Afolabi who now functions as GGM in charge of Research and Development Division of the corporation.

Also on the list is Mrs. Ahmadu-Katagum who was appointed GGM (Shipping) in the Downstream Autonomous Business Unit, while Kallamu Abdullahi takes over as the GGM in charge of the Renewable Energy Division in the Downstream ABU.
Dr. Shaibu Musa was promoted MD of NNPC Medical Services Limited, while Ibrahim Birma was named the new GGM in charge of the corporation’s Audit Division now renamed Governance, Risk and Compliance Division.

Mass Retrenchment

But even as the corporation announced the senior staff redeployment and promotions, all was not well in the downstream oil sector, as oil marketing firms in the country resolved to embark on mass retrenchment of their personnel, following the federal government’s failure to meet its outstanding subsidy obligations to the firms.
Rising from a joint meeting held in Lagos Tuesday, the Major Oil Marketers Association of Nigeria (MOMAN), Independent Petroleum Marketers Association of Nigeria (IPMAN), Depot and Petroleum Products Marketers Association (DAPPMA), and Independent Petroleum Products Importers (IPPIs) stated that some of their members were already owing their workers over eight months’ salaries as a result of a $2 billion debt owed them by the federal government since 2015.

In a joint communiqué issued at the end of the meeting, the marketers said they had resolved to downsize their workforce unless the government urgently pays the accumulated debt to save their businesses from total collapse.

The communiqué signed by their legal adviser, Mr. Patrick Etim, stated that the marketers were indebted to Nigerian banks to the tune of over $2 billion, which was incurred on the importation of petroleum products.
The communiqué noted that the federal government’s violation of the agreement reached with marketers on the payment schedule had also put the operations of many commercial banks that provided the funds in jeopardy.
“The hope that the outstanding debt owed marketers will be paid resulting from the intervention of the vice-president, Professor Yemi Osinbajo appears to be dashed, as the payment that was promised to take effect in July 2017 is yet to materialise.

“This is devastating to marketers, as we are being dragged daily by banks for debts owed and are under threat of putting our tank farms under receivership,” said the marketers.
“It was expected that the various meetings held between very senior government officials and the leadership of the oil dealers to resolve the issue of the outstanding debt owed oil marketers will yield the desired result, as the figures were fully reconciled and there was a commitment from government to pay by the end of July 2017.

“However, Nigerian banks that are carrying the indebtedness of the marketers on their balance sheets have had their hopes dashed because as it stands now, the payment of all the debts by the federal government has not been received and this has led to problems between the banks and marketers,” the communiqué added.

The marketers recalled that the contract between themselves and the federal government had stipulated that the government shall pay the difference between the landing cost of petrol and the selling price of petrol, as fixed by the government, provided that the landing cost is higher than the selling price.
According to the oil traders, a key term of the contract was that the under-recovery payments shall be paid to marketers within 45 days of submission of documents evidencing discharge of petrol cargoes and trucking out from storage.

“It was also agreed that after 45 days, the government shall pay the interest charges on the loans taken by the marketers to finance the importation of cargoes of petrol,” the marketers added.
According to them, they opened letters of credit at the approximate exchange rate of N197 per dollar, while petrol cargoes were supplied at the selling prices approved by the government and the repayment calculated using the agreed exchange rate.
According to them, the foreign exchange differentials arose as a result of the initial devaluation of the naira by the last administration from N165 to the dollar.

The marketers stated that it was only in the first quarter of 2017 that the banks were able to liquidate the letters of credit from 2014/ 2015 at N360 to the dollar as against N176-195 to the dollar at the time the LCs were opened because of the foreign exchange scarcity prevalent at the time, leaving their accounts with the huge differential.

“The recent further devaluation of the naira from N195 to N305 and later to over N365 to the dollar, while the federal government agencies based their reimbursement calculation on N197 to the dollar, left petroleum marketers within our association with additional debts in excess of N600 billion. This is in addition to the over N250 billion arrears owed,” the marketers added.

The marketers argued that the downstream sector is now saddled with a debt of over N850 billion, which according to them, has kept rising as the banks keep charging interest on their loans until the debts are fully liquidated.

The marketers added that while they await the payment of monies owed them as approved and announced by the Federal Executive Council (FEC), they are still unable to transact with banks because their accounts have been classified as non-performing.
“There is a need for President Muhammadu Buhari’s government to keep improving governance especially by correcting the wrongs of previous governments and making government responsible for its contracts and responsibilities,” the communiqué added.