Oil Marketer Laments FX Scarcity, Inadequate Delivery Ships on Product Marketing

•Seeks total downstream deregulation, building of more modular refineries

Peter Uzoho

Downstream oil and gas operator, Eterna Plc has lamented the effect of the intractable scarcity of foreign exchange (FX) and the inadequate number of delivery ships technically known as ‘Mother vessels’, bringing imported petroleum products to Nigeria.

The newly- appointed Managing Director and Chief Executive Officer of the oil marketing firm, Mr. Benjamin Nwaezeigwe, who said the foregoing challenges had put marketers in a tough business situation, however, urged the federal government to urgently deregulate the downstream sector and allow a free market environment to thrive.

Nwaezeigwe made the assertions yesterday in Lagos, during an interactive session with journalists, explaining that the Russia-Ukraine war had also made accessing petroleum products like other import commodities costlier and difficult.

He said the continuous existence of the Nigerian National Petroleum Company (NNPC) Limited as the sole importer of petrol poses a major challenge to marketers. He pointed out that the current ex-depot price and pump price of petrol was difficult for them to cope with, considering the rise in their cost of operation.

Nwaezeigwe added that the non-refining activities at the four NNPC’s refineries, which are now under-going rehabilitation, have compelled marketers to import the products outside the country, with attendant risk of exposure to foreign exchange challenge and high demurrage payments owing to inadequate mother vessels to load products from.

He explained, “Scarcity of FX is there, and these days, the most recent one has been, there is a daughter vessel, but you don’t have the mother vessel to load from. So, these things bring in a lot of demurrage.

“So, it’s been tough. We’ve seen a situation in January, where you can do $140,000 and as at today, it has risen to as far as $260,000 to hire just one vessel. From $17,000 per day, it’s today at about $45 to $50,000 Lagos-Lagos. And it’s been pretty tough.

“The bank rate, with 20 to 25 per cent even though the Central Bank of Nigeria’s (CBN) Monetary Policy Rate (MPR) rate is 13 per cent. Of course, they will definitely give you something higher. With 20 to 25 per cent, there is little or nothing you can really do with such fund.

“So, that has also been part of the challenges we’ve been facing. But we hope things will improve. It’s been tough, but in spite of that, we’ve been able to pull through.

“The scarcity of mother vessel is a challenge. You get the Private Finance Initiatives (PFI), you pay, you should be able to circle out in 26 days, from payment, to loading to discharging at your facility to trucking out. Now, when you don’t do that, the interest begins to accrue. So, the mother vessel is not there.”

The Eterna boss added, “You have a daughter vessel, the mother vessel is not there, demurrage starts counting on you. In fact, it’s even difficult for you to start planning for a daughter vessel when you don’t even have a mother vessel you want to load from. So, those challenges are just there.

“And when this mother vessel eventually comes, everybody wants to load out first because we are all waiting. So, God have mercy when you are the last to load, definitely, you are going to incur some demurrage and this has a way of eating into the slim margin you are already trying to protect.”

However, to address the challenges, Nwaezeigwe advocated for more investments into shipping to close the gap in that area of the business, adding that government should also deregulate the downstream sector so that more investors would be willing to invest in modular refineries and help to make the products available locally.

Despite the tough situation for businesses, which he blamed on COVID-19 and the Russian/Ukraine War, the Eterna CEO said the company had been able to record N4.1 billion gross profit in the first half of 2022.

He attributed the financial performance to the quality of staff the new management met on ground and those that came on board.

The Chief Financial Officer of Eterna Plc, Mr. Abudukerimu Sule, said Nigeria should not be carried away by the current wave of energy transition, arguing that the country’s focus at the moment should rather be on achieving energy security.

Noting that Africa ranks the least in energy consumption per capita, the CFO said it was imperative for both political and business leaders in Nigeria to collaborate with their counterparts in other African countries to ensure massive investment in energy within the African space in the most cost-effective way.

“You can always play catch up in the renewable energy which is the main issue as of today and to that extent, there is a new Environment, Sustainability and Governance (ESG) policy encouraging companies to actually report what they do in the renewable space and all that.

“Majorly, collaboration should be the key answer here, where key leaders within the African region pool resources together, bringing a blend of liquefied petroleum gas (LPG). You look at the poverty level in Africa.

“What do we have to go into renewable energy now? So, for me, energy security should be the way forward,” Sule stated.

In her contribution, the Executive Director, Corporate Services, Eterna Plc, Mrs. Phoebean Ifeadi, revealed that the company had invested over N20 million in corporate social responsibility (CSR) in the last two years, informing that they would now be focusing on empowering Nigerian youth to get them to live a better life.