Nigeria's foremost Online Energy News Platform

How to avert fuel scarcity, by NNPC

The Nigerian National Petroleum Corporation (NNPC) yesterday said the only permanent end to fuel scarcity in the country is investment in downstream infrastrcuture.

Its Chief Operating Officer, Downstream, Engr. Henry Ikemefuna Obih who spoke at the ongoing Nigerian Oil and Gas Summit in Abuja, said there’s urgent need to find the right mix of incentives for operators and business men that would ensure continued investment in the value chain. He said that is the only way business could stay afloat.

“But the truth is that, the scarcity that we saw a few years ago, and felt very bad as consumers will be child’s play in the next few years if we don’t start today to invest, build infrastructure that will grow along,” he said.

According to him, the challenge for business is to be innovative, adding that more investment is needed to achieve this.

Because deregulation comes with its challenges, Obih argued that it is the perfect market for any marketer adding it’s an environment where investors will know how much they would make from every liter.

“The challenge for you is to do a  review of what kind of business model you need to still deliver profit at the N6 margin at the pump. That is the challenges for businesses, because when deregulation comes, the small player won’t survive.

“I think the danger we have today is marketers sitting and complaining that the market is not deregulated, margins are not enough and so we are not investing, but the demand for fuel is growing, population as well and nobody is investigating in infrastructure. We will do all we can within NNPC to be at the fore and make life easy for Nigerians,” he said.

The United Nations had estimated the nation’s population growth of about 200 million people.

He asked rhetorically: “But where are the assets, service stations, distribution networks, infrastructure supports that can hold the growth?”

He stressed the need to put the pipelines to function adding that there is no way the nation can continue to live with over 30,000 trucks plying the roads daily.

He said petroleum products are smuggled to Mali, Bokinafaso, adding that in some cases, the corporation had received reports that the product is also being smuggled to Côte d’Ivoire.

“This is the reason why the NNPC has got more involved in actually dealing with the issues, it’s believed that the corporation should go out and fix the issue,” he said.

According to him, the reason for this is the differentials in pump price of petrol which is the biggest challenge in West Africa. “In some of those markets as we speak, pump price is about N400 per liter and the lowest which is in Lome is around N240 and N250.

“So if you check the difference in pricing between Nigeria at N145 per liter and the rest of those markets, it shows that surely there is more incentives for a person looking for opportunities to engage in smuggling activities. So no matter how many security agencies you line up at the border, or the communities that owned the land at the border, you will have more cash from the smuggling to pay everybody else,” he said.

SOuRCE: TheNation