The retention of the Petroleum Equalisation Fund (PEF) under the new liberalised downstream sector of the oil industry may cost the Federal Government losses of up to N2.2 billion monthly as marketers will use it as a window to defraud the system, according to findings.
Though the Ministry of Petroleum Resources has over 10,000 fuel distribution trucks in its scam busting Aquila network, it has failed to apprehend marketers who collect the Equalisation Fund but divert products to the black market.
The losses of up to N2.2 billion, it was gathered, are calculated by what marketers collect per litre to distribute products to far flung places from the ports, all in a bid to make products available to all parts of the country at the same price.
It was recently reported that the country stand to lose up to N20 billion by the third quarter ending September this year if it continues to pay out money from its Petroleum Support Fund (PSF) to subsidise cost of fuel importation.
However, the Federal Government last week announced an end to the PSF subsidy regime, while retaining a somewhat partial subsidy of petroleum products through the PEF.
Specifically, it was gathered that the continued existence of PEF will provide a window for corrupt marketers to have access to free money while diverting the product to black markets in neighbouring countries.
Set up by law since 1975, the PEF, currently managed by the Ministry of Petroleum Resources, helps equalise transportation differentials in product marketing in the country. Ordinarily, fuel pump price would be costlier in places in the North but consumers rely on rebate from PSF to have the product at almost same cost nationwide.
This is because transport from coastal depots in Lagos and Port Harcourt creates additional cost that needs to be bridged. The fund pays marketers the cost of transporting the products to far flung areas of the country.
Going by PEF template, a marketer loading product from Lagos to Aba, for instance, gets N8.02k on every litre; Lagos to Kaduna gets N12.72k subsidy and Lagos to Enugu is N7.90k per litre. What this translates to is that a marketer that loads 20 trucks of 33,000 litres each with assumption of bridging it to Kaduna will get between N500, 000 to N839, 520.
With an estimated 150 trucks officially trucked out to the North alone, it was learnt, that most of the products are diverted to black marketers while claiming to have been distributed to regular outlets.
“What these marketers do is to claim to have non-existing filling stations as outlets scattered all over the country,” explained a source in the Nigerian National Petroleum Corporation (NNPC). “After loading product in Lagos, they return with reports that they had offloaded it at these stations, whereas they had diverted the products immediately after leaving the depots,” the source added.
According to a source in PEF management board, Abuja, 90 percent of the fuel loaded in Lagos depots disappears in Lagos. “Only 10 percent gets to the final destination,” the source added.
Perhaps more baffling is the seeming helplessness of the ministry in the matter despite having integrated automated system in stemming the bleeding. As far back as 2014, PEF had no fewer than 10,000 trucks registered under its system of electronic loading of petroleum products at oil depots around the country under its ‘Project Aquila.’
The package entails tagging of the trucks to ensure proper monitoring and delivery of petroleum products across the country. Divided into two phases, the first one ‘Project Aquila 1’ focused on depot-to-depot activities. But ‘Project Aquila II’, the second phase, is to track products’ movement from depot to outlets, to check diversion.
Since the liberalisation of the market price of petroleum product is pegged at a high of N145 per litre, stakeholders fear that price of the product may be much higher in places far from the ports. This may have informed government to retain the PEF to cushion effects of transportation to the hinterlands.
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