How Fraudulent NNPC Cabal And Tank Farm Operators Connive To Unleash Traffic Mayhem On Apapa

NNPC and Cabals


It took the arrest by the Directorate of State Service (DSS) of Chief Ifeanyi Ubah, the Capital Oil and Gas boss for the mystery surrounding the epileptic distribution of petroleum products through storage tank farms located at Apapa area of Lagos while neglecting a network of functional pipelines crises crossing the country to unravel.
A cabal within the Nigerian National Petroleum Corporation (NNPC) had been colluding with owners of tank farms to subvert the functional depots in Lagos and south west for their private gains. Extensive investigations by Okey Ibeke and Pius Mordi, Editors of Business and Maritime West Africa, show that apart from underhand deals that abound in the storage of petroleum products in private tank farms and distribution chain, the unpatriotic adventure is also a major source of traffic gridlock that threatens the structural integrity of vital bridges linking Apapa to the rest of the nation.

 Despite building a network of oil pipelines for the direct distribution of premium motor spirit (PMS) and other refined products to depots dotted across the country, somehow, the relevant agencies have contrived to find reasons why the pipelines cannot be utilized. 

 Although vandalism and sabotage have long frustrated attempts at direct distribution nationwide, that did not apply to the Lagos area and the rest of the south west. The oil depots at Mosimi and Ejigbo have been in good working condition with the pipeline linking them with Atlas Cove Jetty quite operational.

 Curiously, NNPC failed to put the depots to maximum use, preferring to use the privately-owned and operated tank farms in Apapa area of Lagos State. 
That the preference for the Apapa tank farms was sustained when trucks had virtually blocked the access roads to the area and the roads ultimately failed absolutely made no business or operational sense. 

PIX1:  Dr. Ifeanyi Ubah, managing director of Capital Oil and Gas

 What was not known to Nigerians was the deals going on behind the scenes in the distribution of imported refined products. When the DSS arrested Dr. Ifeanyi Ubah, managing director of Capital Oil and Gas, over allegations of diversion of refined products belonging to NNPC which were stored in his company's tank farm, it was thought the weighty nature of the allegation would have triggered a chain reaction that could unleash a backlash on the cabal.

Although Ifeanyi Ubah insisted that he sold the products to recover debts NNPC was owing him, it was not an isolated incident but just a deal with the cabal within the NNPC and Products Pipeline Marketing Company (PPMC) that went awry, Business and Maritime West Africa can confirm.

 Operatives of the DSS had on May 5, 2017 detained Ubah on allegations of criminal withholding of over N11 billion realised from the sales of petroleum products stored in his facility by the NNPC.

 However, in opting to use storage facilities in privately-owned tank farms, the cabal within the top management cadre of NNPC had weaved a web of channels for reaping huge incomes for a small circle of officials while crippling the functional and cost effective network of pipelines that could have been used to distribute imported products. 

PIX2: Former PPMC managing director, Mrs. Esther Nnamdi-Ogbue

 It will be recalled that the former PPMC managing director, Mrs. Esther Nnamdi-Ogbue, had alleged that she was sacked because she raised an alarm over illegal diversion of products the pipeline company stored in a private tank farm by the owners of the storage facility. 

A source close to Nnamdi-Ogbue also claimed that the issue of alleged criminal activity embarked upon by an oil and gas marketing company that was being investigated by the appropriate government agencies “was at the center of her sacking.” 

 The source said that prior to the deregulation of the downstream oil industry, NNPC used to have all its products from the Pipeline Products and Marketing Company (PPMC). What this meant was that NNPC Retail had no immediate need of operating its own depot facilities. But this soon changed when the downstream sector of the oil industry was deregulated in 2016. At this point, the retail subsidiary decided to seek alternative product sources through direct importation, third party supplies, among others. 

PIX3: Minister of State for Petroleum in Nigeria, Ibe Emmanuel Kachikwu

 According to the source, since NNPC Retail Ltd had no depot facilities, it decided to engage private depot owners under what it called the throughput arrangement so that products so imported or procured through third party sources could be stored pending when they would be distributed to its stations nationwide. Under this arrangement, any storage depot picked was expected to make available its facilities made up of storage tanks with not less than two million litres capacity, loading gantry, truck parking areas and office space. 

 From our findings, everything went on well until it was discovered that two of the companies were engaging in unauthorised sale of products in their facilities. It was observed that there was a wide disparity between the NNPC book balance volume and the ending stock volume which indicated the actual volume of products in the companies’ storage tanks was much less than the book balance. One of the companies which our source identified was quick to atone for its indiscretion by making payment to the value of the products ascertained to be unaccounted for.

The other company bluntly refused, preferring to stretch its luck further.  

 The source went on to explain that the inventory reconciliation indicated that while NNPC Retail Limited book balance showed more than N13 billion worth of products in favour of NNPC subsidiary, the ending stock disclosure or the actual volume of products in the depot was about one quarter of that. Those directly responsible for supervision were immediately rounded–up and subjected to investigation while the company was summoned for a meeting and demanded to either re-stock in favour of NNPC or pay the monetary equivalent. 

 “Based on the directive of the managing director, PPMC was able to salvage the situation by trucking out the remaining PMS amounting to almost two million litres. Still, that left an outstanding indebtedness of almost 85 million litres of PMS in favour of NNPC Retail Limited. This is valued at more than N12 billion,” he said. 

 The summary of his narrative was that the criminally-minded oil and gas marketing company had removed the unaccounted-for volumes of the product illegally because it was not done with the consent of the NNPC Retail Limited. All attempts by the NNPC Retail Limited to recover the shortfall from the marketing company, either in material sense or in monetary equivalents, yielded zero results.

 In the words of management staff of NNPC Retail who asked not to be named, "it sounded believable except for one missing link. My reasoning was that it was irresponsible of the management of NNPC Retail Limited to sit tight while the scam lasted. It is natural for you to think that Nnamdi Ogbue deserved what happened because she presided over a huge scam. That would be correct if she did nothing about the situation; or if she was a part of the scam.” 

 He disclosed that as soon as the scam was discovered, Mrs Nnamdi-Ogbue raised several memos to every agency of government and certain top government functionaries first, by way of information; and second, to call the offending company to order. Several letters were written to the Economic and Financial Crimes Commission (EFCC) and the DSS to investigate the scam. 

 In the beginning, it was doubtful if some top officers of the retail company were not involved in the scam; including the managing director and her management team. But the level of alarm she raised and the vigour with which she pursued the matter left no one in doubt that she was genuinely shocked and embarrassed by the magnitude of the scam and was bent on ensuring that the marketing company would not go unpunished. That was exactly what put her in trouble. It is believed that she must have innocently stepped on big toes.

PIX4: Acting EFCC Chairman, Ibrahim Magu

 As soon as the offending company refused to honour its obligation to NNPC Retail Limited within the stipulated deadline, the managing director alerted the EFCC and the DSS seeking their full-blown assistance to recover the money or the unaccounted-for volume of the PMS. However, nothing seemed to happen. After several letters were written to these agencies without any action being taken against the marketing company, “we became curious and disturbed.” 

 Over the years, tank farm owners and the cabal in NNPC had enjoyed a mutually beneficial cozy relationship driven by deals associated with the handling of the nation's imported refined petroleum products. The opaque management of the products has seen the loss of hundreds of millions of litres of petroleum products through the active collaboration between officials of the NNPC and tank farm owners. 

 The preferred approach is the refusal of NNPC to utilise the pipelines linking the depots in the south west with the Lagos reception facilities. 

 From the main reception facility at Atlas Cove Jetty where imported fuel is discharged, the network of pipelines to PPMC depots at Mosimi and Ejigbo in Lagos and Ore in Ondo State ought to be utilised to serve the south west. 

 However, our investigations revealed that even though the pipeline system is now fully functional following rehabilitation, the cabal within NNPC and PPMC have continued to rent the storage facilities of the tank farms owned and operated by private organisations. In an arrangement that involves the majority of tank farm owners, the oil cabal usually entered into private, albeit unwritten agreement whereby the actual quantity of products stored in the tank farms is seldom accounted for. 

Investigations by Business and Maritime West Africa revealed that the tank farm owners were usually at liberty to dispose of some of the products in their custody without any repercussions.  

 In the case that led to the arrest of Ubah, it was a deal that went awry as the Capital Oil and Gas boss was said to have reneged in paying what was due to the cabal's members. The DSS which effected his arrest had spoken vociferously about how the action is such that could have earned instant execution. 

PIX5: DSS DG, Lawan Daura

 Ubah acknowledged that he truly diverted the consignment, but justified his action. According to him, NNPC is owing him huge sums of money from previous transactions. It is instructive that after the media show by DSS, the Capital Oil and Gas boss was never charged to court. Ubah was released by the DSS after being in their custody for a few weeks. Through ubah’s release without prosecution might have proved that NNPC was actually owing Ubah, the alarming contention is the ease with which Ubah disposed off the products without prior official agreement with NNPC top brass. 

 "We have always known that that was the norm here. Nobody from the NNPC ever raised a query. That is why every stakeholder, especially the unions was surprised with the arrest of Ubah", Mr. Dapo Adebunmi, an operations staff in one of the tank farms told Business and Maritime West Africa. 

 Leveraging on fears of disruption in the distribution chain, the cabal routinely uses the private tank farms for holding what is usually touted as buffer storage to stave off product scarcity with only storage fees expected to be paid to the farm owners. 

 However, a fairly steady importation has taken focus off the stock held in private tank farms giving room for the deals to be executed without any eyebrows raised.

 Although the precise loss of products through the deals could not be ascertained, an industry operator confirmed that for every consignment stored in the tank farms, not less than 10 percent is sold illegally. "Sometimes, up to 50 percent is officially unaccounted for and this goes to the pocket of the cabals and their collaborators.

PIX6: Tank Farm

 The loss to the country is incalculable," a staff of one of the tank farms said. 
Another attraction for the cabal's continued negligence of PPMC storage facilities is the charges paid to tank farm owners for product storage. Our investigation revealed that both the storage charges and products' volumes are inflated and the difference shared by the cabal and their collaborating storage facility owners. 

 In the heat of the controversy that followed Ubah's arrest, the Independent Petroleum Marketers Association of Nigeria (IPMAN) had appealed to the federal government to re-activate the five depots in the South-West Zone to ease congestion in Apapa. Alhaji Debo Ahmed, the chairman of South-West Zone of IPMAN, said supply of products to Ilorin and Ore depots, which have capacity for holding about 20 million litres of products each, had become irregular for months now.

 Similarly, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) called on the federal government to check the illogical under-utilisation of depots in Ilorin and Ibadan at a time of huge traffic on the roads leading to Apapa. 
In the words of the South-West chairman of the union, Mr. Tokunbo Korodo, “NNPC should begin to use its System 2B pipeline network, to pump petroleum products from Atlas Cove Depot to other depots in the southwestern part of the country. 

 “Now that the depots are in good shape, there is no reason the corporation should still be using private depots in Apapa to distribute petroleum products,” he said. 

 Skeletal supply of products has begun to Ejigbo depot, Mr Amos Adeniyi, a marketer at the depot said. “We urge the government and its agencies to get involved in the fight. A few unpatriotic and corrupt elements should not hold the larger majority of Nigerians, the states and Federal Government to ransom.” 

Of even greater concern is the impact of the gridlock on the bridges linking to Apapa with the Federal Road Safety Corps (FRSC) warning that the trucks and articulated vehicles almost permanently parked on the bridges in Lagos were dangerous and would have damaging effects. 

 “We are sitting on a keg of gunpowder because the bridges are weakening on a daily basis as tankers, trucks and articulated vehicles are parked on top of them due to traffic congestion," Hyginus Omeje, Lagos State Sector Commander of the FRSC, said of the gridlock on the roads and bridges leading to Lagos ports. 

 “When these vehicles are stationary on the bridges for a long time, they have a negative impact, including deterioration, bridge-fatigue, damage or even collapse; moreover, there is no money anywhere now to build these kind of solid bridges again," Omeje said. 

 “The issue of Apapa traffic congestion is multi-faceted; you cannot address the gridlocks in the area without addressing the state of the roads and activities of the petroleum depots located in the Apapa area of Lagos. 

 “These gridlocks cannot be controlled without proper road rehabilitation in the area and relocation of tank farms located in the area or for the NNPC to start distribution of products through pipelines and PPMC depots scattered around the Southwest part of the country”. There is need to also speedily work on the road network there, as well as the drains,'' he said. 

 Similar concerns have been expressed by truck drivers themselves and IPMAN who said they lose thousands of man-hours daily in the traffic gridlock.