The  Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) and Minister of State for Petroleum, Dr Ibe Kachikwu, describes the challenges in the downstream sector of the oil sector as enormous but says “we are getting to the solution”. Kachikwu spoke to the NNPC staff  in Abuja. Excerpts:

“This week, we address the fuel subsidy. It’s not by happenstance that you see me with my sleeves all rolled up. And I hope you’re visiting filling stations and helping us work this difficulty.

“This is probably the most challenging issue since I took over as GMD and Minister of Petroleum, and the reality is that a lot of us, even within the company (NNPC), do not know why this is so, and so for those who don’t know, I’ll first go through why you have this situation.

“First, on resumption in August, we had a  major problem on our hands, because subsidies of close to N600 billion, had not been paid over a one year period, and so the majors, those who were  importing, had began to quietly reduce the  levels of importation allotted to them and, though I got the approval of the National Assembly and the President  to eventually pay a good portion of that subsidy, sometime in November, by then it was too late.

“Too late because although they got the money, they didn’t have access to foreign exchange, so the  main reason we have this supply gap now is that, although NNPC has its own 445,000 barrels allocation of crude and is meeting its own 50% of  delivery, the individuals, who should provide the balance of the 40% component, are not bringing in any product.

“So, we’ve had to be very creative over the last 4 to 5 months, until we basically ran out of options and the sort of creativity that we put in place was forward buying, forward purchase, forward crude allocations, and also, just to bring in more product, because we saw NNPC transit from a 45% provider to suddenly 80%, and about this month really to 100% provider of petroleum products in Nigeria.
“That was not sustainable, we didn’t have the capacity, we didn’t have the funding, we didn’t have access to the products, we didn’t have the foreign exchange. So in very many ways, it’s surprising that we’ve even been able to survive this long.

“However, the key element has been, how to find foreign exchange for those who want to participate in the stream, who have been doing this traditionally, to get into the space, buy their products, come in, distribute. That’s something we’ve had to work on.

“Of course, the second problem was incessant pipeline disruptions. Literally, if you look at the statistics of this year, as against last year, we’ve had almost two times the number of pipeline disruptions than we’ve had over the last two, three years, in this year and that for us is very disturbing.

“We have now thrown a couple of ideas on this. The first thing that I have tried to do is, for the first time in this country, is to be able to convince the upstream companies to provide some FX buffer over the next one year for those who are bringing in products.

“So, I’ve tied  Total Upstream to Total Downstream, Mobil Upstream to Mobil Downstream, Agip ENI to Oando, Shell to Conoil and things like that. It’s been very innovative, putting 200 million dollars of FX availability out into the space. It’s taken a lot of goodwill, it’s taken a lot of work from me.

“The second thing we’ve done is to box our way through the CBN to get a little allocation; because we provide the bulk of this foreign exchange, we should have a bit of it to help stabilise the situation, because fuel queues, make no mistake about it, it doesn’t matter what we achieve in our transformation agenda, is the single most difficult item, which if not solved can bring down the polity and can create mayhem here. So it is something that we have focused on. So I have been able to get some co-operation from CBN on that.

“Now, I’ve also been able to convince Mr. President to give us access to some, outside the 445,000 barrels from national production. The difficulty with that, of course, is that it goes into the FAC entity, so once you touch any barrel there, you’re going to have governors’, understandably, quarrel with you on this. But these are some of the innovative solutions we’ve done.

“We’ve thrown our creative options on the pipelines, by pointing a set of trial, by contracting contractors to get into the pipelines, and show us that they can deliver if we give them the contract.

“What that has done is that, for the first time in  eight  years, we’ve been able to capture back system 2B all the way to Ilorin. For the first time in over  six  years, we were able to pump crude from Escravos into Warri and we were able to pump oil from Brass into Port Harcourt. And we were able to pump from Warri right into Kaduna, with a few skirmishes here and there. This is the first time in over 10 years that we’ve been able to accomplish this. We accomplished this by not spending money, but owing obligations.

“Now, we are moving to the stage of contracting, where we are going to advertise this and see how we can put this as permanent features into the system. So a huge amount of work has been going on in this stream.

“Our depots are at the stage right now of looking at policies geared towards advertising and our pipelines for purposes of contracting joint ventures that will put in money, refurbish depots that had been abandoned for upwards of a decade, so that we can have the distributional network that we need to be able to solve this.

“It’s not enough to bring in the cargoes which we are beginning to do, but if you bring the cargoes and they arrive in Lagos, if you have to send 3,000 trucks round the whole country, it will take an average of  four to seven  days to do that, and the very next day, you’re back to the same place, so the sheer logistical nightmare is not what NNPC was set up to do, so we need to be able to get those pipelines back, get the depots functioning, push a lot of the responsibility to the major oil companies who are basically leaving us to do all the work and picking up the profit at the end of the day.

“So, it’s been a very difficult work, very challenging.  We’re getting to the solution, the first few cargoes are beginning to come in and I think, by the second week of April, we should be hopefully out of this queue situation. But that is not a long-term solution.

“The long term solution is that we have to throw private initiatives to the downstream. We’ve got to have a situation where we create enough policy direction, such that people can get in there and do the business. We can take care of our own filling stations, NNPC stations and perhaps some of the affiliates that are going to be with us, but that is a job we’ve done and done well but we can do it better. We can go into growing the affiliate stations even more so that we have a lot more affiliate stations that we use as response to security situations.

“But ultimately, the business must go back to where it belongs,  the private sector, not the public sector and until we do that, deal with the issue of pricing, which our price modulation has helped us manage, but not quite completely, we’re not going to solve the problem.

“Now, how do you come in? Get out into the filling stations, BYbe a proud NNPC official, HELP regulate traffic, HELP push product, HELP report scams that are going on in depots, even by our own officials and HELP talk about the change, HELP talk about the problems and BE the spokespeople for your own company, HELP create ideas. HELP suggest ways in which we can find lasting solutions to this. And if we do that, collectively, every one of us a piece, at the end of the process, people will remember the difficulties, but will also remember an NNPC that was united in the solution to this problem.

“At the end of the day, it’s not all about ME, it’s actually about YOU.”

http://www.vanguardngr.com/2016/04/fuel-scarcity-close-solution-kachikwu-minister-state-petroleum/

in summary....nnpc cannot solely provide fuel for national consumption except there is partnership with major marketers, however major marketers dont have access to fund unless cbn intervenes.

oga....dont tell me this is all what the crisis is all about abeg

drsteroid:
The  Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) and Minister of State for Petroleum, Dr Ibe Kachikwu, describes the challenges in the downstream sector of the oil sector as enormous but says “we are getting to the solution”. Kachikwu spoke to the NNPC staff  in Abuja. Excerpts:

“This week, we address the fuel subsidy. It’s not by happenstance that you see me with my sleeves all rolled up. And I hope you’re visiting filling stations and helping us work this difficulty.

“This is probably the most challenging issue since I took over as GMD and Minister of Petroleum, and the reality is that a lot of us, even within the company (NNPC), do not know why this is so, and so for those who don’t know, I’ll first go through why you have this situation.

“First, on resumption in August, we had a  major problem on our hands, because subsidies of close to N600 billion, had not been paid over a one year period, and so the majors, those who were  importing, had began to quietly reduce the  levels of importation allotted to them and, though I got the approval of the National Assembly and the President  to eventually pay a good portion of that subsidy, sometime in November, by then it was too late.

“Too late because although they got the money, they didn’t have access to foreign exchange, so the  main reason we have this supply gap now is that, although NNPC has its own 445,000 barrels allocation of crude and is meeting its own 50% of  delivery, the individuals, who should provide the balance of the 40% component, are not bringing in any product.

“So, we’ve had to be very creative over the last 4 to 5 months, until we basically ran out of options and the sort of creativity that we put in place was forward buying, forward purchase, forward crude allocations, and also, just to bring in more product, because we saw NNPC transit from a 45% provider to suddenly 80%, and about this month really to 100% provider of petroleum products in Nigeria.
“That was not sustainable, we didn’t have the capacity, we didn’t have the funding, we didn’t have access to the products, we didn’t have the foreign exchange. So in very many ways, it’s surprising that we’ve even been able to survive this long.

“However, the key element has been, how to find foreign exchange for those who want to participate in the stream, who have been doing this traditionally, to get into the space, buy their products, come in, distribute. That’s something we’ve had to work on.

“Of course, the second problem was incessant pipeline disruptions. Literally, if you look at the statistics of this year, as against last year, we’ve had almost two times the number of pipeline disruptions than we’ve had over the last two, three years, in this year and that for us is very disturbing.

“We have now thrown a couple of ideas on this. The first thing that I have tried to do is, for the first time in this country, is to be able to convince the upstream companies to provide some FX buffer over the next one year for those who are bringing in products.

“So, I’ve tied  Total Upstream to Total Downstream, Mobil Upstream to Mobil Downstream, Agip ENI to Oando, Shell to Conoil and things like that. It’s been very innovative, putting 200 million dollars of FX availability out into the space. It’s taken a lot of goodwill, it’s taken a lot of work from me.

“The second thing we’ve done is to box our way through the CBN to get a little allocation; because we provide the bulk of this foreign exchange, we should have a bit of it to help stabilise the situation, because fuel queues, make no mistake about it, it doesn’t matter what we achieve in our transformation agenda, is the single most difficult item, which if not solved can bring down the polity and can create mayhem here. So it is something that we have focused on. So I have been able to get some co-operation from CBN on that.

“Now, I’ve also been able to convince Mr. President to give us access to some, outside the 445,000 barrels from national production. The difficulty with that, of course, is that it goes into the FAC entity, so once you touch any barrel there, you’re going to have governors’, understandably, quarrel with you on this. But these are some of the innovative solutions we’ve done.

“We’ve thrown our creative options on the pipelines, by pointing a set of trial, by contracting contractors to get into the pipelines, and show us that they can deliver if we give them the contract.

“What that has done is that, for the first time in  eight  years, we’ve been able to capture back system 2B all the way to Ilorin. For the first time in over  six  years, we were able to pump crude from Escravos into Warri and we were able to pump oil from Brass into Port Harcourt. And we were able to pump from Warri right into Kaduna, with a few skirmishes here and there. This is the first time in over 10 years that we’ve been able to accomplish this. We accomplished this by not spending money, but owing obligations.

“Now, we are moving to the stage of contracting, where we are going to advertise this and see how we can put this as permanent features into the system. So a huge amount of work has been going on in this stream.

“Our depots are at the stage right now of looking at policies geared towards advertising and our pipelines for purposes of contracting joint ventures that will put in money, refurbish depots that had been abandoned for upwards of a decade, so that we can have the distributional network that we need to be able to solve this.

“It’s not enough to bring in the cargoes which we are beginning to do, but if you bring the cargoes and they arrive in Lagos, if you have to send 3,000 trucks round the whole country, it will take an average of  four to seven  days to do that, and the very next day, you’re back to the same place, so the sheer logistical nightmare is not what NNPC was set up to do, so we need to be able to get those pipelines back, get the depots functioning, push a lot of the responsibility to the major oil companies who are basically leaving us to do all the work and picking up the profit at the end of the day.

“So, it’s been a very difficult work, very challenging.  We’re getting to the solution, the first few cargoes are beginning to come in and I think, by the second week of April, we should be hopefully out of this queue situation. But that is not a long-term solution.

“The long term solution is that we have to throw private initiatives to the downstream. We’ve got to have a situation where we create enough policy direction, such that people can get in there and do the business. We can take care of our own filling stations, NNPC stations and perhaps some of the affiliates that are going to be with us, but that is a job we’ve done and done well but we can do it better. We can go into growing the affiliate stations even more so that we have a lot more affiliate stations that we use as response to security situations.

“But ultimately, the business must go back to where it belongs,  the private sector, not the public sector and until we do that, deal with the issue of pricing, which our price modulation has helped us manage, but not quite completely, we’re not going to solve the problem.

“Now, how do you come in? Get out into the filling stations, BYbe a proud NNPC official, HELP regulate traffic, HELP push product, HELP report scams that are going on in depots, even by our own officials and HELP talk about the change, HELP talk about the problems and BE the spokespeople for your own company, HELP create ideas. HELP suggest ways in which we can find lasting solutions to this. And if we do that, collectively, every one of us a piece, at the end of the process, people will remember the difficulties, but will also remember an NNPC that was united in the solution to this problem.

“At the end of the day, it’s not all about ME, it’s actually about YOU.”

http://www.vanguardngr.com/2016/04/fuel-scarcity-close-solution-kachikwu-minister-state-petroleum/

there is fuel in Benin, but they are selling at 240 naira a litre.
Give us a dedicated number, twiter, FB, whatsapp and SMS were we can report any petrol station selling more than the approved prize and hoarding the product

Nice one... permanent solution is all we want mr technocrat....

Mr kachikwu,i don't have to blame on dis issue as minister for state for petroleum but pmb who is the minister of petroleum.
u have a family & i don't expect u to be doing pmb job as minister of petroleum while he is junketeering around the world with notn to show for it & probably he is collecting salary as a minister of petroleum.
my advise for u is simple if u want to live long on dis job & also alleviate the present petrol problem coz Nigerians can never be satisfied unless this problem of fuel scarcity is solved.
ALLOW GUYS TO GO BACK TO LOCAL REFINING FOR NOW TO ALLEVIATE THE PRESENT CHALLENGES WE ARE FACING... after u ppl must have built refineries then u ppl can scrap the local refining coz it will even create jobs for guys in niger delta.

Gaskiya fa, we better be close to the solution.

Thank God we are close to the solution.

I am a big fan of this Kachikwu.

I pray all these plans are achieved.

We shall get there, God will intervene.

Such a long news item shouldn't be quoted, we know you're replying to the thread when you comment, it's annoying pls
cc jojo1man

Kachikwu iis th only minister in buhari's cabinet who appears to be working.

This is a completely new terrain for him and he is tackling it quite well. . . .although he is being handicapped by his boss, the petroleum minister.

Congratulations to Mr. Kachikwu for having the opportunity to serve the nation in this challenging position and at this difficult time.

However, the key element has been, how to find foreign exchange for those who want to participate in the stream, who have been doing this traditionally, to get into the space, buy their products, come in, distribute. That’s something we’ve had to work on.

Finding foreign exchange for products, as things were, is a sole prerogative of Mr. President. This issue deserves all exigencies - it has practically grown into the most significant politico-economic factor in the short live of this administration. Coupled with issue of power failure Mr. President and his government are loosing people's confidence and support daily.

While it is commendable that nnpc under Mr. Kachikwu has come-up with creative means of meeting the forex requirement for steady product supply the ultimate solution still lies with the President powers on forex availability.

The forex buffer secured with the upstream major is only for 1 year and from what we see in our daily live this is still a long short of what is required to ensure steady product supply.

We already know the permanent solutions (working refineries and secured pipelines) will take a while to put in place.

“Of course, the second problem was incessant pipeline disruptions. Literally, if you look at the statistics of this year, as against last year, we’ve had almost two times the number of pipeline disruptions than we’ve had over the last two, three years, in this year and that for us is very disturbing.

This factor is also out of Mr. Kachikwu's control. It is glaringly a security and political issue! This is why Mr. President needs to stay back home and solve these teething issues.

“We’ve thrown our creative options on the pipelines, by pointing a set of trial, by contracting contractors to get into the pipelines, and show us that they can deliver if we give them the contract.

“What that has done is that, for the first time in eight years, we’ve been able to capture back system 2B all the way to Ilorin. For the first time in over six years, we were able to pump crude from Escravos into Warri and we were able to pump oil from Brass into Port Harcourt. And we were able to pump from Warri right into Kaduna, with a few skirmishes here and there. This is the first time in over 10 years that we’ve been able to accomplish this. We accomplished this by not spending money, but owing obligations.

If contracting is already yielding good fruits that is good news but will that eliminate the issue of vandalism?
I understand one of the key duties of NSCDC is to protect pipelines but relying on human surveillance like this in 2016 is not going to very efficient. As a permanent solution nnpc and or its contractors should totally embrace pipeline network surveillance technologies combined with human responses.

These technologies have been around in Nigeria for a while. For example all Nigeria LNG pipelines are monitored from control room since 2004.

We shall do our best to help nnpc and government but that we can only continue while we are hail and hearty.

Curbing corruption without control mechanisms is like chasing a white goose around a circle. It's not only by putting DSS and EFCC to go after looters, it's by putting the necessary checks in place to ensure people do the right thing

Over the past few weeks, most filling stations have tempered with their dispensing pumps and they give feul at a ratio of 3:1. You need to see the price at which fuel is sold in other states of the federation. It is heartbreaking.

Kaichukwu is confused, Deziani did a better job. He is in a way towing Deziani's approach to fuel supply.

Look at this charge and bail lawyer scoping Nigerians cuz he wants to defend his boss
When a ministry has problems, the minister has the responsibility to address the problem, sit down with technocrats and profer far reaching solutions
But the petroluem ministry is an exemption cuz the minister who happens to be johnny walker does not have time for the ministry he heads.
Please we should stop deceiving ourselves, PMB should stop all these useless trips and focus on his jobs
Our economy cannot be fixed by squeezing face all around, he should stick his old butt to his chair and work

Is OK


Anyway, show some love to lazyreporta Today is ma birthday

the useless man is still talking?
fuel scarcity that was 99% solved by Diezani when oil was high price of over 100 dollar
is what this fool and his equally useless oga - buhari cannot sove now oil is 35 dollar.

Achuwa1:
Mr kachikwu,i don't have to blame on dis issue as minister for state for petroleum but pmb who is the minister of petroleum.
u have a family & i don't expect u to be doing pmb job as minister of petroleum while he is junketeering around the world with notn to show for it & probably he is collecting salary as a minister of petroleum.
my advise for u is simple if u want to live long on dis job & also alleviate the present petrol problem coz Nigerians can never be satisfied unless this problem of fuel scarcity is solved.
ALLOW GUYS TO GO BACK TO LOCAL REFINING FOR NOW TO ALLEVIATE THE PRESENT CHALLENGES WE ARE FACING... after u ppl must have built refineries then u ppl can scrap the local refining coz it will even create jobs for guys in niger delta.

or better still legalize the illegal refineries if they can't look the other way?

thought they boasted that they've been studying the economy and know exactly what to do if they're voted in. Now its clear that they're just using us to do trial and error.


I sound confused, but trust me, the govt. is even more confused.

This is one technocrat that l believe is willing to work under this administration despite the mammoth challenges.

But it is apparent the 'cabalic' forces are beyond his power..

Kudos to Diezani despite her thievery to curtail them, offer them their ' sacrifices' and kept us off long queues..

Stop talking and get to work!!!



Diarrhea of the mouth

Getting it right in Nigeria is like fight an unseen hand.
The issue isn't availability of refined crude at international market but the fall in Naira value and the shift in consumer taste from Bonny light to Middle East oil. Unlike Daziani's era.

Just sort the darned thing already!

Please how can I become a Benin wizard as I want to be flying to abroad by myself and also want to have the powers of disappearing inside a bank vault.

Also, I want to be able to go invincible so I can go into any car lot and drive-out any car of my choice without the naked eye seeing me.

Please note that I don't want to use it for evil. Just wanna use it to become the richest Man in the world.

Your advice will be appreciated.

Immediately I saw him walk towards me with a grin on his face, my attention on the phone call returned to where I was.
Just crossed the busy Oshodi road without using the pedestrian bridge. After a couple of months in Lagos, I have been finally nabbed doing the unthinkable.
He simply held me by the collar........
The rest is history now. My last card collected.
My NYSC status couldn't salvage the situation.
Anyways, KAI better luck in my next life.

Who still still listens to this guy APRIL FOOL MINSTER,Last month he said by April 7 that the fuel scarcity will disappear but it's now worse,APC=HIGH HOPES, NO ACTION, ZERO RESULTS.

I still have strong and solid faith in this Government.

Kachikwu pls stop talking and work.

What does this even mean? "close to the solution"

My patience with this government grows thin everyday.

Chai, my good people of naiaraland, as buhari no gree give me light and sell fuel for me make una just console me with likes Abeg cos today is my birthday. ibe kachikwu, do something o

This kachukwu should just resign
Buhari too

Abeg make una try ooo. We dey suffer no be here ooo.




Anyways... i added another year to mine today, i know we all love to celebrate birthdays in joy and happiness. But one bonus for all of you who click LIKES for me.... UNCEASING MONEY FOR YOU ALL

( CLICK LIKE TO CLAIM YOUR PRICE ) and more petrol to your tanks




DrabeeyWasHere

You sha lied to us

pls sir, just shut up