How Shady Oil Marketers ‘Ghost’ Nbillions Out Of The System In Illegal Deals

…the means and strategy involved

Information contained in this report provide eye openers on how shady all marketers ‘ghost’ billions out of the system in shady underground deals.

The report is produced as sourced.

Time was 11pm. Inside a popular hotel in Apapa, Lagos mainland, a truck driver, a journalist posing as someone interested in illegal oil deals and an oil thief were discussing. The oil thief had just been introduced to this reporter. Doubts were written all over him. He sounded as though he did not believe the story about this reporter being an ex-banker ready to join the murky terrain of oil theft. oil

He was eventually convinced and pronto they made their way to a jetty in Apapa, where the new convert was to be introduced to the world of stealing and smiling to the banks. Here is a ready market for fuel stolen from the popular Arepo pipelines in Ogun State and other sources. Here shady deals in petroleum products running into millions of naira go on daily at the wee hours. Oil marketers call the shot in this illegal market. Some of the oil marketers, through their agents, even paid in dollars that night.

That night when a vessel arrived, long hoses were used to tap the fuel from the vessel to the trucks that packed close to the jetty. Everybody was armed with touch lights of various sizes; some women were around to sell food and sachet hot drinks. The place was lively but these oil thieves were careful. No unknown face was allowed to have his way.

When the trucks had been loaded, some bouncers and naval officers in uniform came around to escort the tankers to its final destinations. Navy spokesperson Commodore Kabiru Aliu, however, denied the involvement of any of their officers.

Kabiru said: “Such allegation is baseless without any iota of truth. We are doing our very best to sanitise our maritime environment by tackling illegality on our water. Our men cannot be a party to all these illegalities. The Navy made it clear that any personnel caught in any act of misdemeanor will be sanctioned.

“We do not have anything doing with the present fuel scarcity in the country. Anybody who has any concrete evidence against any Navy officer should come out and prove it.”

A source told The Nation that “all the so called people in the high places have their people on ground who are fronting for them.” He explained that occasionally security agents do visit, “but we have our people within them who usually tell us when not to come for business on the sea”.

The authorities are not unaware of this market. But, they are helpless because of the caliber of the people involved. The Managing Director of Pipelines and Product Marketing Company (PPMC), Mrs. Esther Nnamdi-Ogbue, said the country had lost 531 million litres of petrol valued at over N50 billion to pipeline vandals between January and September, this year at the problematic System 2B Pipeline network.

He added that the efforts made to entrench zero fuel queues across the country were being hampered by the activities of some unscrupulous marketers involved in hoarding, sharp practices and diversion of petroleum products for sales in black markets across the country.

Some of the products that find their way to jetties, such as the one in Apapa, are not from Arepo pipelines or any other pipelines. Some are duly assigned products for which false bridging claims have been received.

An investigation by The Nation showed that oil marketers are fleecing the Federal Government of several billions of naira every month on false bridging claims. A source within the Petroleum Equalisation Fund (PEF) in Abuja told The Nation that some 20,000 markets got N72.5 billion as bridging claims from PEF last year. Another N59.45 billion had allegedly been disbursed by the Fund between January and July this year.

“Whereas in reality, the actual payment should not be up to half of the money claimed,” the source alleged.

The word ‘bridging’ crept into the local oil industry lexicon as a make-shift arrangement during Turn-Around Maintenance (TAM) at the refineries. Under the arrangement, the Federal Government encourages and supports marketers in the transportation of products nationwide.

Although bridging was introduced as a temporary solution for refineries to resume full capacity production, the sorry states of the refineries have not been helpful, thus creating a leeway for a cabal to hold the country by the jugular and ensure that TAM becomes a permanent feature.

To worsen the situation, pipeline vandalism by economic saboteurs have become so endemic that tankers have become the major source of distribution as pipes that take fuel from deports to points of distributions have been ruptured by oil thieves and vandals.

The initial projection was to have a maximum of 10 per cent of total petroleum products bridged while the remaining portion will be pumped through the pipelines. However, trend analysis indicates that bridging of products have consistently increased over the years to about 60 per cent. Some members of the Independent Petroleum Marketers’ Association of Nigeria (IPMAM), who formed about 98 per cent of oil marketers, are taking advantage of the loophole to fleece the country of billions on false bridging claims.

Against the precarious situation, products are bridged from Southeast, Southsouth and the Northern parts of the country to make products available from the refineries in Port Harcourt, Warri and Kaduna.

The Nation, however, learnt that rather than deliver the products at agreed destinations, the bulk are diverted and dispensed at black markets by some unscrupulous operators, who return to PEF with bridging claims.

When bridging started, it was on manual operation, a situation that allowed for lots of manipulations and deep corruption. According to a top official in the Nigerian National Petroleum Corporation (NNPC) in Abuja, billions of naira had been lost by the corporation to false bridging claims to IPMAN members, who have formed themselves into a cabal too powerful to rein in.

He lamented that the corporation has been helpless as perpetrators are mere fronts to highly-placed individuals, especially top government functionaries and lawmakers, who will do everything within their power to sabotage government’s effort to sanitise the oil distribution chain.

“That was why it was extremely difficult for the corporation to know how much the country was generating on crude oil as there were about 30 accounts which the corporation was operating until recently that the bubble burst with the enforcement of the Treasury Single Account (TSA) by the President Muhammadu Buhari administration to curtail the sharp practices.”

Modus Operandi

It was learnt that when the PEF Management Board was using manual operation, the marketers have a free day and billions of naira were lost to false bridging claims.

What the dubious marketers did, a source said, was to lay claim to non-existing filling stations as outlets scattered all over the country and after loading products in Lagos, they returned with reports that they had offloaded at these stations, whereas they had diverted the products immediately after leaving the depots. They were going as far as Niger, Chad and the Republic of Benin, where they had collaborators.

The source further alleged that all the documentations, including meter ticket, are perfected by bribing their way through the system and the waybill alone will be sent to any of the six NNPC zonal depots in Ibadan, Enugu, Kaduna, Port Harcourt, Warri and Gombe depending on the operating chart of the marketers.

Further investigations showed that those stamping the waybill without sighting the loaded truck as stipulated, have their palms greased with money ranging from N80, 000 to N100, 000 to sign the necessary papers qualifying the marketers for bridging claims.

It was also learnt that bridging claims and rates depend on the destination from the depots. For instance, a marketer loading products from Lagos to Aba gets N8.02k on every litre; Lagos to Kaduna (N12.72k) and Lagos to Enugu (N7.90k). So, if a marketer loads about 20 trucks of 33,000 litres each with assumption of bridging it to Kaduna, he will collect N839, 520:00. And if the marketer belongs to the cabal, all the trucks would be diverted to black markets.

A marketer with only one filling station in Anambra State was recently found wanting by the PEF. In its document with PEF, it claimed to have outlets all over the Southeast and Kaduna. Investigation by The Nation revealed that as at 2011, the firm had only one petrol station at Nanka in Anambra State and added another one in Nkpor in Onitsha in 2013. There was none in the North. Yet in its bridging claim of fuel lifted between May to September 2013 to Kaduna from Lagos, it wanted to collect N15.325 million. This was detected at the last minute and it was refused payment. PEF detected that 90 percent of the fuel loaded at Lagos depot allegedly disappeared in Lagos. Only 10 per cent got to the final destination.

Another firm was also alleged to have made such frivolous claims but was detected and black listed by PEF. About N200million false bridging claims, which the company would have dubiously claimed, was salvaged.

These two oil marketers are among the 12 oil marketers blacklisted in 2013 for fraudulent practices. A PEF document sighted by this reporter said: “All the directors of the companies have also been barred and will not be accepted under different company names. Staff of the blacklisted companies was fingered in the stealing of tags affixed on petroleum tankers under the Project Aquila meant to monitor the loading and delivery of products. The Board, worried by the theft of the tags had started massive sensitisation to warn marketers of the dangers of the theft of the tags issued free.”

However, the General Manager, Corporate Services of PEF, Mr. Goddy Nnadi, kept mute on the marketers that were blacklisted, noting that the introduction of Aquila project had minimised the degree of fraudulent practices by unscrupulous marketers.

The Nation gathered that the introduction of ‘Aquila project’ in 2013 detected a lot of fraud perpetrated by some marketers and a lot of them were blacklisted, though they had defrauded the country of millions of naira before this was discovered.

Project Aquila requires petroleum marketers and transporters, including the Independent Petroleum Marketers Association of Nigeria (IPMAN), MOMAN, National Union of Petroleum and Natural Gas Worker (NUPENG) and Petroleum Tanker Drivers (PTD), amongst others, to register and tag their trucks for easy tracking and processing of financial claims by PEF.

This computerised framework processes claims of oil marketers with minimal human interventions, thus, reducing wanton corruption that had characterised operations in the country’s downstream petroleum sector.

This automated e-business solution also confirms the loading and delivery of petroleum products at depots, thus, enhancing transparency in administration of bridging claims.

The immediate past Executive Secretary of the PEF, Mrs. Adefunke Kasali, said the Project Aquila is a high-tech electronic loading and delivery system introduced by PEF to check leakages in the system as well as enthrone transparency and due process.

Kasali explained that Aquila is also known as e-loading which ensures the delivery of petroleum products to the right destination.

“The process checkmates the annual loss of N15 billion to the activities of some unscrupulous petroleum tanker drivers who engaged in some unethical activities such as division of some petroleum products.”

According to her, through a creative high tech platform, ‘Project Aquila’ PEF was able to save for Nigeria more than $2billion that would have gone into the pockets of dishonest petrol transporters as bridging claims.

Kasali, who disclosed this while handling over the management of PEF to the Mrs. Asabe Ahmed in Abuja, said her tenure superintended over cleansing of corrupt practices on payment of bridging claims to petrol transporters in the country.

“Just look at the way we designed the business, we saved $2 billion up front because we wrote the codes in house and how about all the tens of billions we have saved that people used to claim.

“There was a time when we stopped N847 million worth of fake ticket and all the ones we have serving ever since and we thank God for that, “she said.

Refuting claims that the board was underpaying some marketers or delaying their payment, she said: “Those who are complaining are those that the robust Project Aquila has blocked their old ways of milking the system and are uncomfortable with the new measure imposed to check past abuses.

“If any marketer said he was not paid, it means we could not confirm that they were loaded; so, if somebody said his claim has been stocked it means that they were not loaded.

“The system of giving 10 or 15 per cent before you collect your cheque is gone. Central Bank of Nigeria gave us award in 2013. We were the agency that the government understudied before directing all Federal Government agencies to commence e-payment because PEF did it and we have been recognised for it.

“A lot of complexities that need to be understood before corruption can be totally erased from an industry that has been enmeshed in corrupt practices for years. The cabal will not allow the system to work and all within their arsenal will be done to sabotage the efforts.”

As effective as Aquila project was designed to be, The Nation gathered that the marketers who are used to free money still have their ways of sabotaging this laudable idea by completely removing the tag from the truck immediately it was loaded and diverting the products to the black market and still eligible for bridging claims.

Way out

How long will the country continue in the midst of all these uncertainties ravaging the oil industry? The country is groaning under acute shortage of petroleum products, following the non-participation of Major Oil Marketers Association of Nigeria (MOMAN) members in the distribution of the premium motor spirit. The bone of contention is their yet-to-be paid 413 billion subsidy claims, which allegedly shot up to N512 billion before the Senate approved a supplementary bill of N521 for the payment.

An energy consultant Olabode Sowunmi noted that there was need for all the stakeholders to come together and work out a workable frame work.

Sowunmi said: “If you look at the figure for subsidy now, it is alarming. There should be a modality and framework that the Department of Petroleum (DPR) will try to monitor at the downstream if actually we want to move forward. By the time the summit is conducted and a frame work is ironed out, all can work like a team to face off the era of cabal holding the country to ransom.”

Mr. Oliver Mordi, who has been in the industry for over a decade, expressed confidence in the new NNPC to squeeze out the thieves.

But a top official of the DPR in Lagos said all those who had been a source of the national calamities in the industry should be sacked.

He said: “If a few individual within the system can make sure that the refineries are practically rendered useless in order to pave way for bridging where billions are made, then the place needs forensic expert to put things in proper direction.

“The President must do a massive recruitment for civil defense corps and let them be adequately armed to police all the pipelines 24 hours. This can be done and the resources to be used will be lesser to what the country is losing everyday to the activities of vandals who are not ghost.”