Corruption Scandal; NNPC Is Killing Nigeria

As the incessant fuel queue returns to Nigeria fuel stations, a THISDAY Newspaper report exposed the oil cartel that has been feeding fat from the multimillion dollar kickbacks resulting from the disgraceful importation regime of fuel products into the country. A regime, which I must add, has persisted for 15 years, making Nigeria the laughing stock of other oil producing countries and the whole world.

A clique within NNPC/PPMC receives N75 million in commissions for every shipment of refined products brought in by oil/commodity traders, NNPC and PPMC.

This is coming as the Management of Capital Oil, an operator in the downstream oil and gas sub-sector has accused major marketers of petroleum products of masterminding the artificial fuel scarcity currently experienced across the country.

When THISDAY exposed this Mafia, the Mafia endulged n all manner of subterfuge to discredit the report. 

Meanwhile, here is the THISDAY report that nailed corrupt NNPC

How NNPC Mafia feeds fat from fuel imports

A mafia within the Nigerian National Petroleum Corporation is feeding fat from the millions of litres of petroleum products imported daily into the country by its subsidiary, the Pipeline and Products Marketing Company.

Investigations revealed that despite President Yar’adua’s stated intention to declare war on the fuel mafia, the mafia, using PPMC, receives a commission of $500,000 (about N75 million) daily from international commodity traders, comprising Trafigura, Glencore and Vitol, that lift crude on behalf of the corporation and also import petroleum products for PPMC.

“Key officials of the NNPC and PPMC share the commissions paid by the commodity traders. Trafigura, Glencore and Vitol pay the commissions to sustain the importation contracts awarded by NNPC and/or PPMC,” a source alleged yesterday.

Also in a desperate attempt to feed fat from the inefficient marketing and distribution structure, it was gathered that the PPMC has abandoned the usage of its own Atlas Cove (Lagos) and Mosimi (Sagamu) storage facilities, in preference for Yinka Folawiyo Oil and Capital Oil depots, both privately-owned storage facilities in Lagos at a great cost.
The irony is that the storage facilities at Moisimi and Atlas Cove more than double those of Capital Oil and Yinka Falowiyo depots combined.
“PPMC pays these private depot owners N3 per litre for storage. Owners of these private storage facilities in return pay the NNPC mafia N1 on every litre of petroleum products stored.

“We are talking of big money here because millions of litres of petroleum products are imported daily. The storage capacity of Capital Oil is 30,000MT while that of Yinka Folawiyo is 60,000MT.
“So, for example, if Capital Oil’s entire facility is leased by the PPMC, N10, 233, 0000 will be paid for storage. The NNPC clique will then get N3, 411,000 as kick back,” the source alleged.
Another conduit, through which NNPC/PPMC officials line their pockets, is the over-importation of petroleum products.
The source said NNPC took this action to muscle out other major oil marketers from the importation of fuel products and show that it can single-handedly manage the importation of products into the country.
As at last Wednesday, about 60 vessels laden with PPMC’s petrol (premium motor spirit) had berthed in Nigerian territorial waters and were waiting to discharge in the third party storage facilities leased by PPMC.
However, since the facilities leased from Capital Oil and Yinka Folawiyo are too small, the ships are compelled to queue for days, and in the process accumulate huge demurrage.
On the average, they wait for about 28 days, before discharging, explained a source very conversant with the importation regime. He disclosed that PPMC pays $20,000 daily as demurrage on each of the vessels.

“The mafia at NNPC also makes good money from the demurrage charges. The official charge should not be more than $12,000 daily per vessel.

“However, port officials, working with the mafia and vessel owners send inflated invoice to the vessel owners. As a result, the difference of $8,000 makes its way to the NNPC mafia when money is paid,” revealed the source

Writing on the Mafi shenanigans threat, Ijeoma Nwogwugwu wrote that Alhaji Umaru Musa Yar’Adua, it will be recalled, had during a press briefing on May 12, 2009, acknowledged that there is a powerful cartel that has been benefiting from the subsidy regime for fuel products.

In an uncharacteristic flash of anger, the president vowed to crush the cartel, describing it as “the greatest institutional corruption in this country.” In the president’s opinion, this cartel had brought pressure to bear on oil marketers to resist the full deregulation of the downstream oil sector which the government attempted to implement at the time.

She continued:

Some basic facts need to be brought to the fore:

1. The regime of partial deregulation and importation is hugely inefficient, increasingly embarrassing for an oil producing country, and has ensured that the refineries do not function. It has also discouraged private sector investment in refineries that can put those run by NNPC out of business and help to moderate prices from local production.
2. The regime has remained in place for a number of reasons: resistance by labour unions and the generality of the public to the complete removal of subsidies; lack of political will on the part of government to push the policy through, despite the fact that it knows that the burden on the treasury and illicit withdrawals from the excess crude account is unsustainable; and resistance to full deregulation by a select few who grow richer by the day from the imposition of subsidies, product diversion, and fuel imports.

From the foregoing, when President Yar’Adua spoke of a cartel that is resistant to the removal of subsidies and has been benefiting from the twisted policy, NNPC/PPMC was not excluded from the president’s statement in any shape or form. Indeed, anyone with an understanding of the downstream oil sector would attest to the depth of the corruption that has permeated the entire industry from government operators to their peers comprising major and independent markets in the private sector.

THISDAY dug deep to unravel the horrid mess in the downstream oil sector. What was discovered was mind-boggling and is enough to make anyone shake their heads in anguish that a country with so much can be held hostage by a few crooked officials and their allies. Further investigation would show that what was published was just a tip of the iceberg. The rot cuts across the entire import chain involving other government departments and agencies.
That an Armada of ships can be brought in all at the same time and left on the high seas to amass demurrage bills for upwards of 40 to 50 days, is a pointer to quality of the people running NNPC and PPMC. That NNPC has to resort to the leasing of private depots rather than make sure that its refineries, pipelines and depots function efficiently, says a lot about where its preferences lie.
That NNPC, a national oil company of the 12th largest crude oil producer in the world and 8th biggest exporter of the commodity, has been awarding fuel importation contracts to commodity traders for a decade and half and has the temerity to boast that it is the supplier of last resort, is an indication of the bribery and corruption in the system on a grand scale. 

A commentator asked: When will Nigerians rise up against this corruption in high places as typified by NNPC/PPMC. In saner and civilised climes the expose by THISDAY, is enough to send all those involved to jail. But what do we have here? The leadership as usual buckling under pressure and not following through with the threat to deal with “the cartel”. Lack of courage and morals on the part of our leaders-simple.