…as Nigerians pay N300 more per litre of fuel
Nigerians may have to wait a bit longer to experience the full benefits of the 650,000 barrels per day Dangote Refinery in Ibeju-Lekki area of Lagos, as a major infrastructure for the evacuation and distribution of refined products from the gigantic refinery is presently lying in ruins, Business Hallmark can report.
According to BH checks, the nation’s multifaceted fuel evacuation infrastructure, which consists of five thousand kilometres of pipelines stretching across the country, and 23 storage depots in major cities are at present in a deplorable state.
While most of the pipelines, which are very old have ruptured in several places, and the rest have been sabotaged by vandals and oil thieves, making fuel evacuation through them impossible.
Likewise, from Ejigbo in Lagos, to Mosimi in Ogun, Apata in Ibadan, Ore in Ondo, Warri in Delta, Ilorin in Kwara, Aba in Abia, Yola in Adamawa and many others, multi-billion naira depots for storing fuel are currently lying idle, forcing the nation to rely solely on the uneconomical and inefficient water and road transportation system for fuel distribution.
It would be recalled that former President Olusegun Obasanjo had constructed the pipelines and depots as a military ruler in 1976 to help the Pipelines and Products Marketing Company (PPMC), a wholly owned subsidiary of the Nigerian National Petroleum Corporation Limited (NNPCL), to store and evacuate refined products from the nation’s refineries.
Each of the depots with the capacity to deliver up to 300 cubic metres of petroleum products per hour, while still active, ensured flawless supply of petroleum products to Nigerians in their catchment areas, BH checks revealed.
According to PPMC’s own words, its mission is “To ensure security of supply of petroleum products to the domestic market at low operating costs, market special products competitively in the domestic and international markets, provide excellent customer service by effectively and efficiently transporting crude oil to the refineries and moving petroleum products to the market”.
For over 10 years after its establishment, PPMC, apart from the occasional fuel supply disruptions caused by operational hiccups, largely lived up to expectations.
However, starting from the late 1980s, the pipelines began to suffer neglect by succeeding military administrations and vandalism by restive host communities and oil thieves, ably supported by some corrupt military officers, especially from the Nigerian Navy (NA).
Several efforts to revive the pipelines were frustrated by vandals who always vandalized them as soon as they were put back in operations.
Between 2014 to 2016, the pipeline crisis festered to a point that the NNPC was forced to shut down the facilities used to transport both imported and locally produced petroleum products.
For instance, the System B2, a major pipeline artery serving the South-West, was permanently shut down by the NNPC in 2017 owing to constant vandalization by oil thieves.
Likewise, in October 2018, the NNPC shut down the System 2E pipeline, a key oil pipeline network in the Southeast that evacuates both crude oil and refined products due to constant vandalisation by suspected oil thieves.
By the end of 2020, the whole pipeline network serving the country had all been shut down alongside the four national refineries in Port Harcourt, Warri and Kaduna.
According to available data, Nigeria lost N165 billion between 2009 and 2012 to the activities of vandals across the country. The sum, PPMC claimed, includes the cost of repairs and products theft.
Also, in the nine months of 2021, the NNPC put losses suffered from pipeline vandalism at N898.93 billion.
Unable to overcome the challenge, NNPC and marketers resorted to moving fuel products by sea and road at huge cost.
Products are now taken from Lagos to far away towns and cities like Yenagoa, Abakaliki, Damaturu, Sokoto, Kano, Maiduguri and Kaduna by road or vessels.
Meanwhile, owing to the non-supply of petroleum products to the 23 government owned fuel depots, the facilities have become idle and run down, forcing the NNPC to rely on private depots, an action energy experts described as uneconomical.
BH checks revealed that apart from the Atlas Cove and Ejigbo fuel depots in Lagos, Warri depot in Delta, Port Harcourt depot in Rivers and Calabar depot in Cross River, the remaining depots across the country are in dysfunctional states.
It was observed that these functional depots were not serviced by the broken down pipeline network, but get fuel supply through ocean going vessels.
Imported products are discharged into these depots through coastal mother vessels from where they are loaded into daughter vessels which convey then transport them to tank farms majorly owned by private fuel marketers in the coastal cities.
However, other landlocked depots like the ones in Ibadan, Aba, Ibadan, Benin, Enugu, Gusau, Gombe, Jos, Kano, Makurdi, Maiduguri, Minna, Yola and Ore that rely heavily on pipelines for their supplies are idle and steadily rotting away.
When our correspondent visited the Mosimi depot in Ogun State on October 4th, 2024, it was devoid of any human activity, with all eight tanks – four for petrol, two each for diesel and kerosene, were empty of products.
A security guard at the entrance gate informed our correspondent that the depot had not been operational for over ten years.
Speaking on the development, a former board member of NNPCL, Alhaji Abdullahi Bukar, lamented that the now idle facilities were built to enable the distribution of products by pipeline to depots to make the journey to retail outlets easier and cheaper.
“At each node, depots were built to store and disburse the AGO, PMS, and DPK. Only the LPFO and the LPG were to be transported long distance by road.
“Tankers were intended to only distribute from depots to the customer outlets and other nearby private depots”, Bukar explained.
As a result of the deplorable state of the fuel storage and transportation infrastructure, Nigerians are not benefiting maximally from petroleum products being churned out of the gigantic Dangote Refinery in Lagos.
Based on BH analysis, Nigerians pay huge fortune for the inadequacies inherent in the existing fuel supply system, starting from crude supplied by NNPC and oil producers through vessels to the refinery and refined products evacuated to fuel stations by tankers.
Nigerian fuel consumers, BH gathered, pay between N350 and N400 as transport cost on a litre of petrol supplied by sea or road, instead of the about N70 to N100 cost they would have incurred if the product was moved through pipelines
According to various cost estimates seen by our correspondent, the average cost of transporting crude oil to local refineries by ship in a desperate attempt to bypass damaged pipelines currently stands at $7.52/barrel.
On the contrary, the cost of shipping oil by pipeline, which vary significantly based on several factors, including distance, capacity, terrain, regulatory environment, and market conditions range from $0.50 to $3.00 per barrel.
Speaking on the matter, an energy expert, Engr. Robert Nweke, said Nigerians are paying for the inefficiencies in the fuel supply system.
“Until we get some things right, any hope of getting a reprieve from Dangote Refinery is hoping in vain. The gains will only be marginal as we are already seeing.
“One of the inefficiencies that must be addressed is the mode of transporting crude and refined products through the sea and on our bad roads. These methods are not economical.
“Apart from these inefficient transportation methods adding to the price of petroleum products, they are also destroying our roads and lives through multiple accidents as witnessed daily.
“If the government can get this done (fixing the pipelines), Nigerians will immediately feel the impact.
The estimate is that consumers are currently paying between N180 to N300 on a liter of every refined petroleum product either imported or produced in the country transported through the sea or roads”, Nweke argued.
Officials at Dangote, however, failed to give the current cost of transporting crude to the refinery.
