The Petroleum Products Pricing and Regulatory Agency, PPPRA, revealed yesterday that the current fuel scarcity was caused by the devaluation of the Naira by the Central Bank of Nigeria, CBN.
The CBN devalued the Naira in November last year and February this year.
Executive Secretary of PPPRA, Farouk Ahmed, made this disclosure when he appeared before the Senate Committee on Petroleum (Downstream) to defend his agency’s 2015 budget proposal.
Ahmed informed the committee that the devaluation caused huge confusion in the oil sector as the petroleum agency did not know the exchange rate to be used for payment on fuel importation.
This disclosure was revealed the same day the Nigerian Navy also disclosed that the country is losing about 100, 000 barrels of crude oil estimated at N1.18bn everyday to oil thieves.
Chief of Naval Staff, Rear Admiral Usman Jibrin, who stated this in his presentation while defending the 2015 budget of the Navy before the Senate Committee on Defence (Navy), said the development is making Nigeria to lose N433.62bn annually.
Ahmed said the marketers could not deliver the cargoes of fuel expected from them because they were not sure of the exact delivery cost as a result of the devaluation, explaining that the old template used for paying the marketers was no longer useful.
“The recent events have to do with delay in the arrival of cargoes. Non-arrival of cargoes made it difficult for Petroleum Motor Spirit, PMS, to be delivered.
“What actually complicated it was the devaluation of the naira – two times. The first one that took place on November 28 devalued Naira from N155 to N168 to $1. The second one that took place on February 18 brought the exchange rate to N199 to $1.
“These two developments brought a lot of confusion into the oil sector. Marketers were not sure of the actual delivery cost. We had to draw a new template as advised by the CBN. The delay we have now is caused by the November devaluation. But the reality is that the policy is clear now,” Ahmed said.
The executive secretary, who explained that PPPRA had to seek the advice of the CBN before it could eventually draw up a new template said the crisis had eventually been resolved as the Budget Office on Monday approved payment for outstanding bills that the marketers are being owed.
He also said the truce was brokered after a meeting of the Ministry of Finance, PPPRA and other relevant agencies.
He said: “The Minister of Finance, PPPRA and other agencies are working closely to ensure that outstanding bills are paid. And that one had been done now.
“Yesterday, we got an approval from the Budget Office for payment of all outstanding bills. We have adjusted the template now. We have to put the exchange rate at the interbank rate. Now, we have a direction.”
Chairman of the Committee, Senator Magnus Abe, who could not conceal his committee’s anger over the none appearance of the Nigeria National Petroleum Corporation, NNPC, before the committee to give its own side of the fuel scarcity directed that the corporation must appear before the committee tomorrow.
“We invited NNPC to come and defend their budget. They didn’t show up. They don’t even have the respect to give any response to the invitation. We are directing the clerk to re-invite the NNPC, Department of Petroleum Resources, DPR, Pipeline Product and Marketing Company, PPMC, and all refineries.
“All of them must appear before this committee on Thursday. All of us have our roles in constitution. The letter should contain a strong warning that NNPC must never repeat this before the committee. NNPC has never agreed to bring their budget for discussion.
“This is the same problem we have every year. I’m disappointed that after we agreed on this issue last year, we are still back to it,” Abe said.
At the Navy event, Chief of Logistics, Rear Admiral Peter Agba, who represented the Chief of Naval Staff, explained that his statistics on oil theft was drawn from the information from the Chatham House, United Kingdom.
The Naval chief lamented that the military institution submitted N205.4bn as capital budget for 2015 but that the Ministry of Finance reduced it to N8bn, which is 90 per cent reduction of its original budget proposal.
According to him, “The proposed capital projects for 2015 (captured in the initial N205.4bn), include the on-going acquisition of two OPVs, acquisition of patrol crafts and helicopters, procurement of arms and development of vital support infrastructure.
“The equipment are needed to improve naval operations and the welfare of personnel.”
The Naval Chief further disclosed that despite the substantial reduction in Naval appropriation in 2014, it was able to arrest 84 vessels and 155 suspected oil thieves.
In addition to this, Jubrin stated that the Navy also destroyed 120 illegal oil refineries, 29 barges, 93 boats and 1, 259 auxiliary equipment and tools used by the oil thieves, stressing that this “deterred criminal activities in the water ways and helped in no small measure in providing the enabling environment for the continued exploration and exploitation of the nation’s oil and gas resources.”
But the All Progressives Congress, APC, said the looting of the $12bn domestic gas fund as well as President Goodluck Jonathan’s administration’s failure to pay the fuel subsidy and the cost of interests on bank loans to oil marketers were the real causes of the scarcity.
The opposition party noted that because of the inability of the government to keep to its side of the bargain, it has become impossible for marketers to begin another round of importation of refined petroleum products
In a statement issued yesterday by its National Publicity Secretary, Alhaji Lai Mohammed, the party said the PDP and the Jonathan Administration decided to divert attention from those problems by accusing the opposition of being responsible for the scarcity – a most laughable and irresponsible statement by a sitting government that is always so eager to blame everyone but itself for the nation’s woes.
“’The truth is that this profligate government has run Nigeria aground, and the oil sector, whether upstream or downstream, has particularly suffered hugely. The quantity of petroleum products that was imported has almost been fully consumed, without fresh products being brought in to augment supplies that have now fallen well below re-order level.
“The implication is that in addition to worsening power supply, crumbling prices of oil at the international market, weakening Naira and unprecedented corruption, Nigerians – who routinely provide their own electricity to power their homes and business, now have to face another round of government-imposed hardship with the ongoing fuel scarcity,” the party said.
It said the fuel crisis would not have reached the stage it is in now had the $12bn domestic gas project fund not been looted under President Jonathan.
The party said that had the gas project being executed, many vehicles, cooking stoves and generators would have been converted to use gas to reduce the importation of PMS, diesel and kerosene, and gas would have been available to fire the gas turbines at power stations while more power would have been delivered to the national grid.
APC said President Jonathan sabotaged the domestic gas project started by the late President Umaru Musa Yar’Adua, with the $12bn cash call provisions for gas development for domestic power generation looted under his (President Jonathan) watch.
The party also slammed the Jonathan Administration for its inability or unwillingness or both to secure power installations from contrived sabotage.
He said: “For a Federal Government that is in control of one million people under arms (military, police, civil defence corps, etc), and one that has spent in excess of N4trn on security, there is no justifiable reason why power installations could not be secured against sabotage,” APC said.
Meanwhile, the Trade Union Congress, TUC, yesterday condemned the return of queues on the Nigerian roads, calling on the Federal Government to quickly move in to address the situation rather than engaging in blame game.
A statement signed by the TUC President, Comrade Bobboi Kaigama and the Secretary General, Comrade Musa Lawal, described the scarcity as fortunate especially coming at a time Nigerians were enjoying the slash of pump price from N97 to N87.
The union said that while it was a bad thing to make Nigerians go through the pain again, it was worrisome that government was engaging in a blame game rather than addressing the situation.
The statement said: “It is bad enough that the masses are meant to go through these needless pains again but worst that instead of the leadership and stakeholders rising up and facing the challenge frontally they are busy casting aspersions and playing the blame game again.
“The Congress finds it very difficult to describe things happening on the eve of the 2015 general elections. It has indeed become an onerous task to explain because instead of politicians addressing issues and how they intend to help the economy to do better they are busy dwelling on personalities.
“Sometimes we wonder if our politicians are bothered by the current price of crude in the international market as against what it was sold for few months ago.
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