Nigerians may celebrate the Christmas and New Year in acute fuel crisis as shipowners are threatening to stop rendering services to the Nigeria National Petroleum Corporation Limited over the non-payment of $90m owed for their chartered services and which has accumulated in the past nine months.
The ship owners told Sunday PUNCH that if nothing was done quickly to settle the indebtedness, they would be forced to terminate the arrangement they had with the NNPC.
A former President of the Nigerian Indigenous Shipowners Association, Aminu Umar, said if the issue was not satisfactorily addressed in the coming weeks, the current petrol supply hitches might be compounded as the members would not be able to fulfil their obligations.
Umar added that if the workers decided to stop because they were not being paid, it would affect the movement of cargoes and that would increase the already existing scarcity.
He said, “There are so many members whose funds have not been paid, so the President is speaking on behalf of SOAN members, who have done business with the NNPC Limited and moved some cargoes and payments are not made. The total amount is almost $90m or over and it is affecting the operations of those companies.
“This may cause more fuel crisis. It is not like the ship owners have stopped lifting for now, but as it is going, they may end up not lifting fuel. Because if someone is not being paid, how will he be able to discharge his duties?
“Remember they too have salaries to pay; they also have to maintain the ships and also pay the banks that fund them. So, all of them are facing problems because of their unpaid funds. In the coming weeks if nothing is done, there may be more fuel crisis because at the end of the day, they will not be able to fulfil their obligations. And if their workers decide to stop because they are not being paid, then it will affect the movement of cargoes and that will compound the already existing scarcity.”
The President, SOAN, MkGeorge Onyung, urged the NNPC Limited to try and pay up the ship owners to enable them to go back to work.
He said, “The NNPC Limited has yet to pay for standard operations. The fact is this, the NNPC contacted ship owners to provide it with Nigerian ships that will do coastal shipping. And we went through the whole processes of negotiations to arrive at the contract of time charter off the vessels for our coastal trade. Granted that the NNPC has metamorphosed into NNPC Limited and the process of transmission may be bureaucratic and of course time consuming.
“We are now almost in the ninth month of working for NNPC Limited and we are still waiting to be paid; that is the fact. Different companies have different contracts and rates. What I am trying to say is yes it is a huge amount of money because some of our members have outstanding with them that are owed before March this year, that is why the amount could reach $90m. The NNPC keeps saying that ship owners should bring evidence; that is not how it works; let them pay the money.”
Sunday PUNCH also learnt that some of the affected ship owners were contemplating taking legal actions against the NNPC Limited.
The ship owners, who spoke on condition of anonymity because of the sensitive nature of the matter, said the decision to seek legal counsel was based on the consideration that the NNPC was now a limited liability company that could be sued and also sue.
One of them explained, “The NNPC is now a limited liability company that can sue and be sued. Some of us are already considering seeking legal action, because the NNPC is a chronic debtor. The debt owed indigenous ship owners is just too much and the NNPC is not showing any sign of clearing it.
“If the NNPC owes foreign shipping companies the way it owes indigenous shipping firms, we wouldn’t be this bothered. But it seems it is only the indigenous operators that the NNPC toys with. We are not leaving any option out. Part of what some of us are considering is taking legal action, because we are already having issues with our banks. The debt is killing our businesses and the earlier the NNPC pays up, the better for us as business men.”
When contacted to speak on the issue of indebtedness to the indigenous ship owners, the NNPC refused to comment despite the massive queues at the Conoil and Total filling stations located directly opposite the headquarters of the company in Abuja.
Its spokesperson, Garba-Deen Muhammad, promised to revert when contacted between Wednesday and Friday about the claims by the ship owners. He, however, did not revert, neither did he respond to text and WhatsApp messages sent to his mobile telephone number on the matter.
Marketers, experts react
Reacting to the development, oil marketers and petroleum experts told one of our correspondents that Nigerians should brace for nationwide scarcity of petrol if the ship owners carried out the threat to withdraw their services to the NNPC.
This, they said, would eventually lead to an economic crisis, as the transportation sector would grind to a halt if the supply of petrol ceased.
The President, Petroleum Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, stated, “I think these are owners of daughter vessels that shuttle products and if they are threatening to withdraw their service, then it is going to be a disaster if their threat is implemented.
“If the daughter ships are not bringing products, then no depot will have product. When depots lack products, there’s no way the retail outlets will have products to sell to the final consumers. So, that is the disaster.
“This is why we keep insisting that the solution is not in imports but in local production of petroleum products through our refineries. So, my advice to the NNPC is that it should not let this group of ship owners withdraw their service.”
Gillis-Harry said the PETROAN team had to move round the country on a fact-finding mission to ascertain the cause of fuel queues prevalent in many states currently.
He added “The reality is that there are no products and what you just asked me as regards the concerns of ship owners could be one of the underlining factors.
“There are no products to lift in many states and once there are no products to lift, then you’ll have scarcity. So the NNPC should not for any reason allow ship owners to withdraw their service.”
On his part, a petroleum expert and Technical Director at Template Design Limited, Bala Zaka, explained that the concern raised by the ship owners was due to the lack of inter-agency collaboration in Nigeria.
He said the threat by the ship owners must not be allowed to manifest to avoid further economic shock on the nation’s struggling economy.
Zaka stated, “If the ship owners withdraw service to the NNPC, then the major mode of transport logistics in Nigeria will collapse and this will by extension lead to a halt in the movement of virtually everything.
“So, we pray that they (ship owners and the NNPC) will reach an understanding and a congruency. But if this comes to the fore, then honestly people will again begin to question where all the money made by the NNPC is spent.
“Where does the money go to? We’ve not been seeing enough drilling rigs; our refineries are not fixed; and if those debts are also there, the question will be, where is the money going?
“So, moving into 2023, we need to make sure that every aspect of the government is adequately audited to ensure transparency and accountability in the administration of activities and services.”
On his part, the Executive Secretary, Major Oil Marketers Association of Nigeria, Clement Isong, said the body would not want to further cause panic among consumers.
He expressed the hope that the NNPC would resolve its issues with the shipowners, but stated that he was not aware of the concerns raised by the vessel operators.
Isong said, “Let me start by saying I have no idea of this fact that you just told me, but I also believe that people should be paid what they are owed.
“However, I am confident that whatever problem they have with the NNPC will be resolved in the interest of the country. I am confident that the NNPC won’t allow it get to that point of implementation of the threat.”
He added, “I don’t want to cause panic. It is more important to make sure that people have fuel to buy at filling stations. This is why we keep saying the government should deregulate (the downstream sector) and make life easier for everybody.
“It is not that simple to get petrol to customers on the street. It is difficult and people don’t know and may not appreciate this. However, like I said earlier, I’m confident that the problem will be resolved in the interest of the country.”
Oil marketers further stated that the current challenges of poor distribution and supply shortage of petrol might lead to widespread queues for PMS during the festive period in December.
Petrol queues failed to clear in Abuja and neighbouring Nasarawa and Niger states on Friday and Saturday as marketers stated that the situation was currently spreading to other northern states.
Retailers under the aegis of the Independent Petroleum Marketers Association of Nigeria told Sunday PUNCH that if the government failed to quickly address the identified hiccups in the downstream oil sector, Nigerians should brace for queues during the festivities.
“Our worry as marketers is that the festive month is at hand and if nothing is done quickly to address the current concerns around supply, I am afraid that it will escalate during the festivities, because it has started,” the Secretary, Abuja-Suleja IPMAN, Mohammed Shuaibu, stated.
Shuaibu described the situation as very precarious, stressing that it was the government that had capacity to address it through the NNPC Limited.
He said, “We are in a very precarious situation and we pray it does not escalate beyond this. But then 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, all of them are not productive, because the pipelines that supply products to them are old or 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 products, it dumps them in private depots, which now take charge of the products.”
Shuaibu added, “But right now, the private depots have raised the price of petrol to as high as N178 per litre and some sell above N180. This is making everyone apprehensive. Those, who have paid at the government approved price, will wake up to find out that they can no longer buy products.
“We also have shortfall in supply. So, the government has to wake up and do the right thing, because it is the sole importer of the product. If the refineries are working, it won’t be like this.”
The IPMAN official said the supply chain was poor, adding that flood also posed a challenge recently, because the roads were covered with water between Lokoja and Abuja.
He, however, stated that the water had receded “and still we have scarcity.”
Shuaibu said, “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 products. 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 trucks spend weeks on roads before they arrive at their destinations due to the bad road network in Nigeria.”
He noted that a lot of retail outlets owned by independent marketers had been shut due to lack of product 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 added.
The National Public Relations Officer, IPMAN, Chief Ukadike Chinedu, earlier stated that queues in Abuja and other parts of the country were due to the unavailability of mother vessels to ship PMS to Nigeria.
“There is a serious lag in product sufficiency from the NNPC because of the unavailability of mother vessels. These are vessels that ship the product from abroad. That is why we have a gap,” Chinedu stated.
He also called for the speedy revamp of refineries as it was now important to get the facilities functional in order to avert further queues for petrol during the Yuletide.