28 August 2017

Nigeria Pays $120 Million Demurrage Annually On Imported Fuel

Lagos — The federal government is currently counting significant losses arising from demurrage paid by vessels which bring in imported petroleum products into the country. Available statistics shows that the country pays $120 million annually on demurrage due to infrastructural constraints.

LEADERSHIP learnt that major marketers who augment importation of products into the country reportedly build the cost into final receipts issued to the Nigerian National Petroleum Corporation, NNPC, which bore the additional cost so that pump price stays at N145 per liter for Premium Motor Spirit, PMS also called fuel.

LEADERSHIP reports that infrastructural constraints has continue to have a significant impact on the distribution of petroleum products; with 70 per cent of Nigeria's domestic petroleum products demands being met through petroleum importation. As at 2016, Nigeria spent N2.5 trillion on the importation of refined petroleum products according to data from the Nigerian Bureau of Statistics (NBS), making it the 7th largest petroleum importer in the world.

Speaking with the LEADERSHIP on the constraints and huge costs to operators, the executive secretary of Depots and Petroleum Products Marketers Association, DAPPMA, Olufemi Adewole, said at present only MRS, Yinka Folawiyo and Atlas Cove have the capacity to receive some ocean going vessels.

" We are experiencing difficulties receiving products from big vessels of about 100,000 metric tons of products. For instance Yinka Folawiyo can take up to 33,000 metric tons while MRS jetty can land up to 60,000 to 80,000 metric tons vessel. At the high sea, these big vessels stay for several days and lighter vessels are used to bring them to the beach side where we have receiving facilities" Adewole said.

According to him, This adds additional but significant costs to operators, some of these vessels are just 15,000 metric tons capacity vessels moving 100,000 metric tons of products from the mother vessel that is offshore. He said the problem with existing jetties is that their drafts are very shallow with limited capacity to hold only lighter vessels.

Adewole complained the 127 jetties in Nigeria have insufficient capacity to service the needs of the country, posing a major challenge for imported vessels trying to discharge at the port.

He said the fuel jetties at the Apapa Wharf are incapable of accommodating large volumes of fuel imports, with maximum vessel size restricted to between 18,000 and 20,000 metric tons stressing that every 30,000 metric tons vessel that berths at the Apapa jetty must be lightered into a daughter vessel at an extra cost to the marketers. LEADERSHIP gathered form industry sources that it costs approximately $245,000 per lightering operation.

Also speaking, Mr. Dolapo Oni, head energy desk of Ecobank Plc said the country should focus on expanding capacity of jetties since they are key to receiving vessels bringing products. "I think we need to concentrate energy and Investment in that area so that by the time we attain self-sufficiency in in country refining and begin to export as envisaged by government these facilities would be ready to support such projects" he said.

Meanwhile to counter this infrastructure deficit and in line with its commitment to long-term economic growth in the country, Oando, Nigeria's leading indigenous energy player, conceived the construction of a mid-stream jetty.

The novel infrastructure, which is the Downstream sector's first in decades, will provide a more efficient platform for product receipt to all marketers currently using the major marketers, MOMAN jetty as well as ease the plight of oil marketers' and save the country over $120million in demurrage annually.

The facility, LEADERSHIP learnt has a half-kilometer subsea pipeline and a 16" 3km onshore line is capable of delivering over 3 million tonnes a year.

Our Correspondent gathered that every vessel that berths at the Apapa jetty has a waiting time of between 14 to 21 days, incurring a demurrage of between $280,000 to $420,000 per operation and fuel importers now have a preference for discharging their products outside Nigerian waters, specifically at the ports in Cotonou, Benin, Niger Republic and Lome, Togo.

Apart from Oando, the MRS has also expanded its jetty at its terminal in Lagos, which now has the capacity to hold up to 80,000 metric tons vessels. The facility can save the country a minimum of about $2 million per voyage that is wasted due to ship-to-ship operations, shallow drafts and delays.

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