Nigerian Navy has accused the Nigerian National Petroleum Corporation Limited of not revealing the true cause(s) of crude oil theft in the country, but reeling out exaggerated figures to save face.
This disclosure was made to the Senate Committee on Economic and Financial Crimes by the Navy Chief of Training and Operations, Rear Admiral Solomon Agada, during an interactive briefing of the relevant agencies implementing the Proceeds of Crime (Recovery and Management) Act, 2022 at the National Assembly. Our correspondent exclusively observed the proceedings.
Agada revealed that at several interactions with the NNPC, the Navy had explained the causes of fuel scarcity to the company that there was no way anyone would steal 100,000 barrels of oil in a day, but the NNPC had deliberately continued to mislead Nigerians.
He made the disclosure when the Chairman of the committee, Suleiman Kwari, questioned him on why the country continued to experience cases of oil theft if the waterways were secured as Agada posited.
Kwari queried, “The oil theft issue has been a very worrisome one to every Nigerian and more importantly, it has negatively impacted our economy. How come the Navy hasn’t been able to solve the issue of oil theft and if the Navy is claiming that the waterways are secured, why are there still cases of oil theft?”
Agada explained in his responses, “The challenge is that because of the criminal activity inshore by the illegal refiners in tapping into the export lines, those export lines have not been in operation since early this year.
“The major terminals have not been able to process fuel for export since around February/March and instead of the NNPC telling the Federal Government that this product is not brought out to be able to process as export, they say the oil was stolen.”
He explained that the argument of the Navy had been that the NNPC should tell people the difference between the oil that they have shut in and not brought out, and what is being stolen.
He added, “The stolen produce that we have been dealing with among illegal refineries is nothing compared to what the NNPC is declaring as being stolen.
“If you’re talking about stealing 100,000 barrels a day, you need about five-tonne batches 20 times a day from the creek to the high sea, which is very unrealistic. I told them at the NNPC that if that were to be the case, even a blind man would observe that something was happening in Nigeria’s waters and we are there on patrol and not seeing this.
“The only reasonable explanation why the fuels are not coming out is because the Shell platform on Bonny Island is not exporting and the Chevron terminal in Escravos is also not exporting. All these things are very clear, but because it is easier to say these things are stolen, then they just come up with that.
“Let’s get someone who can do proper analysis of these figures and we’ll find out that these claims are just bogus; there is nothing substantive about them. We have communicated appropriately with the NNPC; even at our last interface with them, they agreed with us; but when they come to the public, they say oil theft, hiding the fact from the public.”
Yusuf Yusuf noted that at an oversight function, the NNPC said crude pipelines were being tapped from the pressure pipe under sea and crude oil was usually transferred from there into vessels, and this had been happening for nine years.
“Is the Navy aware or not of the taping going on under the sea?” Yusuf asked.
Agada responded, “On the tapping of the vessel, I also visited that location with the Chief of Defence Staff and there is a directive by the President from the office of the Secretary to the Government of the Federation to set up a committee on that particular incident.
“We are not indicting the NNPCL; we are just saying that let matters be presented correctly so that people can make informed decisions. The Navy has no hand in any stealing of oil in this country. I have no ship or vessel, nor do I know anyone who has; you can investigate me.”
The Navy boss further explained that the increase in diesel price was because of the operation in stopping illegal bunkering on the waters.
He said, “People who have been doing this illegal business will confirm to you that since we started this special task force operation in April, their business has gone sour.
“This is also responsible for the increase in diesel price in the country. Since we stopped the illegal diesel from coming to the market, the price has gone up, because once there is high demand and the supply is low, the price will go up.
“People who ought to import will cut corners and buy the illegal products, but now that they can’t import and the illegal ones are not coming, this has reduced the quantity in the country. But somehow, nobody is coming to share this information with the people.”
He added that the Federal Government had invested in infrastructure through the Maritime Domain Awareness Infrastructure, which had assisted the Navy in detecting and arresting illegal refiners and vessels that were usually handed over to the Economic and Financial Crimes Commission for prosecution.
Agada stated, “And right from Abuja here, we have the capacity to see the entire Nigeria Exclusive Economic Zone. We have 24 hours watch on the exclusive economic zone. Any vessel that enters Nigerian waters that is not permitted to be is immediately arrested because we see their movement.
“Any vessel in the international waters is expected to have their automatic identification system on and that shows that you’re transparently operating; so, any vessel that switches off its identification system automatically becomes a vessel for the Nigeria Navy and we will immediately arrest them and thereafter investigate.
“So, as of today, there is no tanker that can enter Nigerian waters to carry anything without being noticed. All these things that happened now have sent a very strong signal to the international communities that Nigeria is now a place where illegal activities can’t take place anymore.”
Earlier in his speech, chairman of the committee noted that the session was an oversight function of the Senate to oversee the agencies and check on their revenue generation.
Kwari said, “As part of our oversight duties, it has become imperative to ascertain your organisations’ level of compliance with the specific provisions of this Act with due respect to the actual laid down procedures on how you are to handle and dispose of forfeited assets.
“A cursory look at the submissions so far indicated a wide gap between the reserved prices and competitive bid offers if the items were exposed to the general public through licensed auctioneers. This disposal process is meant to generate revenue for the government and should be seen as such.”
Group General Manager, Group Public Affairs Division, NNPC, Garba-Deen Mohammad, could not be reached for comments.
He did not take calls placed to his phone and had not replied a text message sent to him on the matter as of the time of filing this report.
21 depots idle
The NNPC has 21 depots, which are meant for the storage of petroleum products, particularly Premium Motor Spirit, popularly called petrol, but all of them are not functioning.
It was gathered that the facilities had been redundant, just like the four refineries also under the management of the NNPC.
Oil marketers told our correspondent that the pipelines that also used to supply or evacuate products to the depots were either vandalised or obsolete, stressing that this was why the NNPC had been employing the services of private depot owners.
NNPC is the sole importer of petrol into the country, a task it has shouldered for more than four years now. Other marketers stopped importing the commodity due to the difficulty in accessing foreign exchange.
Secretary, Independent Petroleum Marketers Association of Nigeria, Abuja-Suleja, Mohammed Shuaibu, described the situation as precarious.
He said, “We are in a very precarious situation. The government has to wake up to its duties, because as you know, none of the four refineries is productive. They are more or less obsolete.
“We also have 21 depots across the country, nine in the North and 12 in the South. But these depots, which are supposed to be storage facilities, are not productive because the pipelines that supply products to them are old or are vandalised.
“So, the only way to get petroleum products into Nigeria today is through imports. That is only done by the NNPC and when it imports the product, it dumps it in private depots, which now take charge of the product.
“But right, now the private depots have raised the price of the product. This is making everyone apprehensive. Those who paid the government-approved price may wake up to find out that they can no longer buy the product.
“As it is now, all the northern parts of Nigeria have been affected and the depots that are supposed to be the storage facilities do not have the product. Everybody now relies on going down South to bring in the product.
“And when you go there, you are not even sure of getting it. Some tankers spend weeks on roads before they arrive at their destinations due to the bad road network in Nigeria.”
He said a lot of retail outlets owned by independent marketers had been shut due to lack of PMS to sell, giving rise to the activities of black marketers of petrol.
“Many petrol stations have been closed. These outlets were built to sell petroleum products, but when you don’t have the products what do you do? This is why you see black marketers selling petrol in jerry-cans everywhere,” Shuaibu stated.
On his part, the National Public Relations Officer, IPMAN, Ukadike Chinedu, said the dysfunctional nature of the NNPC depots had made private depots to raise the cost of PMS stored in their facilities.
He said some private depots were selling the commodity at N210/litre, whereas the approved NNPC rate was N147/litre.
Ukadike, however, explained that the charges incurred by the private depots such as paying rent for vessels in dollars, among others, were factors that led to the hike in the cost of petrol at the depots.
“This is why we are pleading with the government to bring back the depots under the management of the NNPC, so that we can access the product at the approved rate,” he stated.
Industry sources stated that the concerns in the downstream oil sector had made some people in the industry to profiteer from the lapses, as they urged the NNPC to address the challenges fast.
Meanwhile, officials of the NNPC stated that the vandalism of pipelines that transport and evacuate PMS from depots was the major obstacle to the functionality of the facilities.
An official said, “You can’t be battling with crude oil theft as a result of pipeline sabotage and you now add that of PMS theft through vandalism of pipelines.
“You know that this will be very dangerous because PMS is highly inflammable and vandalising a pipeline that conveys such a product may cause severe damage to the host communities.”
The NNPC spokesman, Muhammad, did not respond to enquiries.
Inadequate daughter vessels
The inadequate supply of daughter vessels required for evacuating Premium Motor Spirit, popularly called petrol, from mother vessels on the high sea to depots, is another reason for the fuel scarcity currently being witnessed across the country.
It was gathered on Saturday that the inadequate supply of the daughter vessels had further triggered the increase in the amount paid as rent by oil marketers for the services of the few available vessels.
Oil marketers told one of our correspondents that the cost of renting daughter vessels rose by 163 per cent within a short period, stressing that this reduced the purchasing power of many dealers.
National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Ukadike Chinedu, said, “Talking about Lagos, that is where most of the PMS vessels come to. When the mother vessel comes into Lagos, its product will be distributed by daughter vessels to ports in Lagos, Warri, Port Harcourt, etc.
“These daughter vessels are hired by independent private tank farm owners or private depot owners, who pay vessel charges in dollars. Some of them source dollars in the open market. So, the dollar also determines the price of products.
“Now, you cannot expect them to sell PMS at N145/litre when the price of hiring a vessel has risen from $38,000 to around $108,000 and $111,000, depending on the level of the vessel. These charges are paid in dollars.”
Providing explanation on Saturday as regards why the cost of renting daughter vessels rose, the President, Ship Owners Association of Nigeria, who doubles as the Managing Director, Jevkon Oil and Gas, MkGeorge Onyung, said the ships were currently in short supply.
He said, “The mother vessels bring in cargoes of 30,000 to 50,000 tonnes and these are big cargoes. The draft in Apapa ports is nine to 10 metres, or a maximum of 11 metres. But the drafts of some of these vessels are up to 12 and 13 metres, so they have to discharge into smaller vessels.
“The word draft is a terminology that I can’t explain to you right now, but the mother vessels’ lengths are about 200 metres long, while their drafts are about 13 to 14 metres. Also, their depths go too deep into the sea, and they will ground if they come into Nigeria.
“So they stay offshore and the daughter vessels go there to pick the cargoes, and right now, these daughter vessels are in short supply. Right now, shipping is priced very high; everything has gone high.
“Therefore there must be a review of all the rates. It is not the making of ship owners or the making of ships. It is what the world is demanding.”
He said the smaller vessels that collect the cargoes could not take more than 15,000 tonnes.
This, he noted, was “because there are restrictions in some of our ports or depots, such as in Calabar, Oghara, Warri etc, which are all very shallow drafted ports of not more than six or 6.5 metres draft.”
Speaking further on pricing, Onyung argued that shipping was an export product, stressing that most exports were priced in dollars.
The SOAN president added, “Shipping is an international business that is priced in dollars, if you want to dry-dock a ship, you are going to pay dollars in a shipyard.
“If you want to buy a ship or its spare parts, you pay in dollars. If you go to ports, you pay foreign currency also. So, shipping is priced in US dollars.”
Meanwhile, a source close to the Nigerian Ports Authority denied the allegation that Apapa ports could not accommodate bigger vessels.
“They can’t tell us that Apapa ports can’t take bigger vessels; the largest vessel in West Africa came to Apapa ports a few years ago. So that story that the Apapa ports can’t take bigger vessels is not correct. If it is Calabar ports, yes, everyone knows the story of Calabar ports,” the source stated.