Fixing the fuel distribution challenge

By John T. Ikyaave

From the social angle, fixing the fuel distribution challenge and ensuring that petroleum products are easily available to Nigerians irrespective of their location at the official rates are some of the key objectives of the far-reaching structural reforms being undertaken by the Minister of State for Petroleum Resources, Dr. Ibe Emmanuel Kachikwu at the instance of the President, Muhammadu Buhari. This is understandable because petroleum products are critical to the movement of people, business and trade as can be seen in the biting effects of the ongoing fuel shortages being experienced across the nation on economic activities.

It was, therefore, no surprise to industry watchers last month when NNPC Retail was retained as one of the Strategic Business Units that emerged from the recent restructuring of the NNPC. Alongside NNPC Retail which had Mrs. Esther Nnamdi-Ogbue, the former PPMC boss as Managing Director, others include: Upstream: Roland Ewubare-MD IDSL; Downstream: Esther Nnamdi-Ogbue-MD Retail, Ahmed Farouk-MD Nigeria Petroleum Marketing and Dalhatu Makama-GGM Marine Logistics. While all the units are linked together and form parts of one service chain, NNPC Retail is very significant because it is the interface with the public through the retail outlets that it operates nationwide.

The context for the changes is, of course, the perennial challenges that continue to afflict this vital sector that remains Nigeria’s economic lifeline. Broadly speaking, there is an urgent need for two kinds of reforms in the sector. The first is structural reforms which have been in the works for over a decade and which are encapsulated in the Petroleum Industry Bill (PIB). Expectations are high that the PIB which was officially brought back to life in the National Assembly recently, will finally be passed and start yielding the expected fruits in terms of greater openness, efficiency and contribution to the national coffers. The second area that needs urgent attention is the immediate and sustainable improvement of the aspect of the sector, which has become a barometer of its many woes: supply and distribution of petroleum products. The long queues that remained across the country over the past few weeks were a sad reminder that the challenge remains and the ongoing reforms being implemented in the sector must deliver, not only in the boardrooms of investors but also at the nozzle when Nigerians drive in to get petrol, kerosene or diesel. This is the crux of the matter.

It would be recalled that NNPC Retail started operations in August 2002 as a subsidiary of the NNPC with the mission to establish and profitably operate model retail outlets with efficient service delivery of petroleum and allied products to customers in an environmentally friendly manner. Its vision was to ‘become the preferred market leader, driven by excellence in operations and customer service delivery’ with its strategic business objectives being to ensure business growth, self-sustainability and customer satisfaction.

As a flagship tool for NNPC’s entry into the retail market, NNPC Retail was designed to provide the Corporation with the vehicle for intervention in the market during periods of emergency and avoidable supply disruptions. It was also meant to serve as a performance benchmark for key players in the distribution chain alongside ensuring safe, orderly and profitable retailing of products in the country.

Furthermore, the set-up of NNPC Retail was the practical demonstration of the desire of NNPC to build a world class retail business by integrating its upstream and downstream businesses in a similar manner to other national and international oil companies.

Today, close to 14 years after its set up not, though a lot has been done, there is a lot more work to be done towards actualising the vision of the company as conceived in 2002. Currently, NNPC Retail operates 37 Mega Stations, 12 Floating Mega Stations and about 500 Affiliate Stations across the country. According to the 2015 operational report from NNPC, NNPC generated about N5 billion last year.

In a market as large as Nigeria that consumes an estimated 40 million litres of PMS daily, NNPC retail unit currently has about 12% of the market while the rest is controlled by independent marketers who most times collude to hoard the products and sell at more than official rates to Nigerians. The potential for business expansion and increased revenue generation for the country is as huge as the social impact of ensuring that Nigerians in the hinterland are able to get petroleum products easily and at official prices.

As the new Managing Director of NNPC Retail resumes work and settles into the work, her primary task would be to oversee the implementation of the Kachikwu-led reforms. This will be by driving change in the organisation to ensure staff key into the reform project of the minister. It will also involve overseeing the implementation of systems and process that will improve efficiency in its operations in order to reduce cost and increase profitability. Furthermore, she will lead efforts aimed at aggressively expanding the national spread of NNPC’s retail outlets across the country so that more Nigerians in the hinterland will have easy access to its range of petroleum products in decent environments and at official prices.

One of the key projects that would require her immediate attention is the ongoing expansion plan which aims to increase the market share of the company from the current 12 per cent by building about 109 mega filling stations – that is three mega filling stations in each state – across the country. The successful implementation of this very strategic plan would help NNPC Retail to become an important player in the downstream sector of the oil and gas industry and serve as a landmark achievement under her leadership.

To succeed at this very important assignment, the Managing Director would leverage on her academic background as a specialist in petroleum law and several years’ experience in the oil and gas industry.  Besides, she would be expected to use the framework of the ongoing industry reforms which are designed to ensure that all units work efficiently together towards turning the corporation into a transparent, efficient and profitable enterprise that is delivering practical results to the Nigerian people.

*Ikyaave is a public affairs analyst based in Abuja

The article first appeared on The Guardian