Energy
FG explains deregulation of oil downstream sector
The Minister of State for Petroleum Resources Chief Timipre Sylva says the deregulation of the downstream oil sector was to ensure economic growth and development of the country.
Sylva made this known in a statement in Abuja, on Thursday.
He said it was unrealistic to continue to subsidise the Premium Motor Spirit (PMS) also known as petrol as it had no economic value.
He urged Nigerians to ignore recent misguided comments and innuendos on the issue.
“It has become expedient for the Ministry of Petroleum to explain misconceptions around the issue of Petroleum Products Deregulation.
“After a thorough examination of the economics of subsidising PMS for domestic consumption, the government concluded that it was unrealistic to continue with the burden of subsidising PMS to the tune of trillions of naira every year.
“More so, when the subsidy was benefiting in large part the rich rather than the poor and ordinary Nigerians.
“Deregulation means that the Government will no longer continue to be the main supplier of Petroleum Products, but will encourage private sector to takeover the role of supplying Petroleum Products,” he said.
According to him, market forces will henceforth determine the price at the pump.
This, he said was in line with global best practices adding that government would continue to play its traditional role of regulation; to ensure that this strategic commodity was not priced arbitrarily by private sector suppliers.
“A regulatory function not unlike the role played by the Central Bank of Nigeria in the banking sector; ensuring that commercial banks do not charge arbitrary interest rates.
“Petroleum Products are refined from Crude Oil. Therefore the price of Crude (the feedstock) for the refining process will affect the price of the refined product,” he added.
Sylva noted that when Crude Oil prices were down, government, through its regulatory functions ensured that the benefits of lower Crude Oil prices were enjoyed by Nigerians by ensuring that PMS price was lowered.
He noted that government at that time indicated that increase in Crude Oil prices would also reflect at the pump.
“This is a necessary action taken by a responsible government in the overall interest of Nigerians.
“Indeed, one of the reasons we have been unable to attract the level of investments we desire into the refining sector has been the burden of fuel subsidy.
” We need to free up that investment space so that what happened in the Banking Sector, Aviation Sector and other Sectors can happen in the Midstream and Downstream Oil Sector.
” We can no longer avoid the inevitable and expect the impossible to continue. There was no time government promised to reduce Pump Price and keep it permanently low.
“Let us therefore ignore the antics of unscrupulous middlemen who would want status quo ante to remain at the expense of the generality of Nigerians.,” he added.
The minister noted that in addition to attracting investments and creating jobs and opportunities,the policy direction would free up trillions of naira to develop infrastructure instead of enriching a few.
He said that government was very mindful of the likely impact higher PMS prices would have on Nigerians.
“To alleviate this, we are working very hard to roll out the auto-gas scheme, which will provide Nigerians with alternative sources of fuel and at a lower cost, ” he said.
(NAN)
A plot may be afoot to damage Nigeria’s interests by attacking the integrity of certain institutions of government to discredit them for yet unknown reasons.
A recent report by the BBC Africa Eye on the pipeline explosion that occurred in Sabo, a Lagos suburb, on March 15, 2020 appear to fit a pattern of media blackmail of critical government institutions, especially the Nigerian National Petroleum Corporation, NNPC.
The report said the BBC Africa Eye had obtained new evidence which contradicted NNPC’s official explanation on the cause of the explosion which claimed 23 lives.
NNPC had claimed at the time that the explosion occurred as a result of a truck that hit gas cylinders around the petroleum pipeline, where people had turned into a residential and commercial area contrary to regulations and in blatant disregard for the pipelines right of way.
But the media house said its evidence – a five-minute video and three sources (said to be experts in petroleum pipeline safety) – showed that there was a leak of “vaporized liquid” from the point of explosion on the pipeline.
The media house then said the evidence indicated that there was inadequate protection of the pipeline from soil erosion and that the NNPC failed to maintain industry standard.
The BBC Africa Eye, in the tradition of true journalism, sent a questionnaire to the NNPC requesting for the Corporations response to the allegations, including claim that victims of the explosion were not compensated.
But the medium breached all rules of balance and objectivity when it published the report of its investigations without reflecting the position of NNPC to all the allegations raised.
The media house portrayed the report as premeditated when it sent it out to some local media in Nigeria, including this website, with a plea to help republish.
But the NNPC response to the BBC Africa Eye questionnaire, dated August 28, obtained by this website, contained details of its own investigations and conclusions which were ignored.
The Corporation responded to all the five allegations put to it in details, insisting on its initial explanation that the explosion was caused when a truck heavily laden with stones hit gas cylinders around the pipeline..
In a detailed response addressed to Marc Perkins, editor of the BBC Africa Eye, the Corporation insisted that a truck, heavily laden with stones, was in the vicinity of the explosion, which clearly “indicated that it was instrumental to the explosion. A close look at the area would show that most of the people carrying out their businesses there were in breach of the Corporation’s Pipeline Right of Way which is 15 meters on either side of the pipeline.”
The NNPC stated further that residents of the area engaged in LPG (Liquefied Petroleum Gas) vending, saw-milling, cement trading,
“The eye-witness reports we
On the claim that there was a leakage on the pipeline which released vaporized liquid that caused the explosion, the Corporation stated that there was no leakage of PMS or any other vaporized
Instead, it said, “At about the time of the explosion (0852hrs to 08S7hrs), a pressure drop from 42 to 8 bar was observed during our pumping operations and the pipeline was immediately shutdown. Any leakage prior to the incident would have resulted in a drop in pressure. But that was not the case.
“It must also be noted that both Liquefied Petroleum Gas (LPG) and Premium Motor Spirit (PMS) are petroleum products that essentially burn the same way. Since there was an LPG vending shop at the location, it is more likely that the incident was caused by LPG explosion. The incident was typical of gas explosion.”
But curiously, a report on the explosion circulated in the local media by BBC Africa Eye made little or no reference to the official response of the Corporation, but instead repeated claims made by its sources which were at variance with the official explanations it requested from NNPC.
Its only reference to Nigeria’s official explanation was to its third and fifth allegations that the pipelines were not well protected and that the Corporation did not pay compensation to victims of the explosion.
But even the NNPC’s responses to the allegations were largely ignored, and got only a passing mention.
The Corporation had described claims of inadequate protection of the pipeline against erosion as incorrect, and that the pipeline was not exposed at the vicinity of the explosion, but that “the pipeline was excavated to enable repair works after the incidence and the area has since been restored and the pipeline re-commissioned for operations.”
According to the document, the Corporation insisted that its pipelines were designed “operated and maintained in strict compliance with the safely and regulatory guidelines of the Department of Petroleum Resources (DPR) and API/ANSI/ASME standards,” maintaining there was no issue of negligence in terms of ensuring the integrity of the pipeline.
In conclusion, the Corporation stressed that despite the fact that the explosion was not caused by any negligence on its part, it still worked “closely with the Lagos State
The Nigerian National Petroleum Corporation (NNPC) has announced an increase of 19.14 per cent in the average daily natural gas supply to power plants in April 2020.
The Corporation disclosed this on its Monthly Financial and Operations Report (MFOR) for April released in Abuja on Thursday.
It said the increase translated to 788 million standard cubic feet of gas per day (mmscfd), an equivalent to power generation of 2,873 megwatts (MW).
It noted that a total of 226.51 billion Cubic Feet (BCF) of natural gas was produced in April, translating to an average daily production of 7.786 BCF per day.
According to the report, the figure indicates an increase of 3.73 per cent at 226.51 BCF, compared to the output in March.
It added that out of the figure, a total of 136.44 BCF of gas was commercialised, consisting of 36.99 BCF and 99.45 BCF for the domestic and export market, respectively
“Out of the 1.233 BCF per day of gas supplied to the domestic market in April, about 787.70 mmscfd, representing 63.88 per cent was supplied to gas-fired power plants.
“The balance of 445.31mmscfd or 36.12 per cent was supplied to other industries,’’ it said .
Similarly, the report revealed that for the period of April 2019 to April 2020, an average of 1.184 BCF per day of gas was supplied to the domestic market.
This, it said, comprised an average of 677.87 mmscfd or 57.24 per cent of total, as gas supply to the power plants and 506.42 mmscfd or 42.76 per cent, as gas supply to industries.
“For the period of April 2019 to April 2020, a total of 3.0823 trillion standard cubic feet (TCF) of gas was produced, representing an average daily production of 7.857 BCF per day during the period,’’ it said.
It added that from the period-to-date, production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 69.57 per cent, 21.46 per cent and 8.97 per cent respectively to the total national gas production.
On the downstream sector, it noted that a total of 0.94 billion litres of Premium Motor Spirit (PMS) also known as petrol, translating to 31.37 million liters per day, was supplied for the month under review.
It added that the corporation had continued to diligently monitor the daily stock of petrol to achieve smooth distribution of petroleum products and zero fuel queue across the nation.
In the period under review, it revealed that 65 vandalized pipeline points were reported, a marked increase from the 19 points recorded in March 2020.
It said that the Atlas Cove-Mosimi stretch accounted for 55 per cent, while Mosimi-Ore recorded 22 per cent and other locations make up for the remaining 23 per cent.
The MFOR indicated that in April, NNPC remitted the sum of N219.16 billion to the Federation Account, reflecting the naira proceeds from the sale of domestic crude oil and gas.
“In terms of dollar receipts, an export receipt of 193.05 million dollars was recorded in April.
“The NNPC remains committed to sustaining effective communication with stakeholders through publication of its Monthly Financial and Operations reports on its website and in national dailies.
“This is in line with the concept of Transparency, Accountability and Performance Excellence (TAPE) agenda of NNPC Management.” It added. (NAN)
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu has said that reforms initiated by the federal government to clean up years of corrupt practices in the Nigerian National Petroleum Corporation (NNPC) have not completely guaranteed that the state oil firm is now transparently run.
This is coming as a group of civil society organisations (CSOs) operating in Nigeria’s extractive industry has accused the international oil companies (IOCs) of complicity in the huge theft of crude oil recorded in the country.
Kachikwu explained that there are still a lot of works to be done to completely transform the corporation and make it accountable and its operations transparent to all Nigerians.
The minister stated this in the October edition of the monthly podcast he released to intimate Nigerians on the status of the country’s oil and gas industry. This edition was recently released in Abuja by his office and he stated in it that the government had though made some efforts in repositioning the NNPC.
“We delivered an open NNPC, we basically opened up our books, we published and tried to be as transparent as we can, but a lot of works still needs to be done there, but for the first time we delivered the kind of NNPC that has never been the sort of NNPC that you used to know,” said Kachikwu, on the results the government had recorded in the last one year.
In a related development, a group of civil society organisations (CSOs) operating in Nigeria’s extractive industry have claimed that IOCs in the Niger Delta cannot be totally absolved of the huge theft of crude oil recorded in the country.
They said IOCs had been found culpable of stealing oil from Nigeria, and that oil theft cannot be limited to illegal refining in the Niger Delta.
Rising from a recent workshop on improving CSOs’ engagements in Nigeria’s extractive sectors which they held in Enugu, the CSOs led by Publish What You Pay (PWYP) Nigeria, also stated that it was difficult to achieve transparent contracting processes in the country’s extractive sectors.
They said in a communique signed by the National Coordinator of PWYP Nigeria, Mr. Peter Egbule, that: “It is difficult to achieve contract transparency in the extractive sector in Nigeria. Although, there are legal frameworks that regulate contracts in the industry, however, they are not always complied with.”
“Nigerians find it difficult to know the exact quantity of crude the country produces. Tax incentives are granted to companies without cost benefit analysis. Oil theft is not limited to illegal refining, IOCs have been found to be culpable of oil theft in Nigeria,” the communique stated.
It further explained: “At the moment, EITI application standards in Nigeria are faced with numerous challenges. Efforts are being often being concentrated on transparency, without adequate attention on accountability.
Experience has shown that transparency alone does not deliver good governance, it must come with accountability.”
They noted that the Land Use Act has become a legislation the states use as a justification for the exploration of minerals without adequate compensation to communities.
In their recommendations, they called on the government to ensure that citizens know the exact quantity of crude produced and lifted daily from the country’s oil fields.
“Besides transparency, environmental and human rights issues must begin to dominate discourse around EITI standards. The civil society needs to demand accountability alongside their strong demand for transparency, CSOs should make sure all facts are crosschecked and are correct before engaging in advocacy,” they added.
