Some stakeholders in the Nigerian downstream oil and gas sector have expressed concerns about the inclusion of additional costs that were not originally included in their pricing template.
They have singled out Stevedoring as one of the costs that were added without prior agreement.
According to the stakeholders, while stevedoring (the act of loading or offloading cargo to and/or from a ship) is a common practice in other sectors of the oil and gas industry, such as upstream and midstream, it cannot be accommodated in the downstream sector's costing template at the moment.
Said one of the top Executives of an oil marketing company: "For the downstream business, which is where we are at, yes, the upstream business is slightly different. They run their transactions dollar-based. So I guess they can pay money in dollars. We (downstream players) run our transactions in Naira. Everybody knows that Premium Motor Spirit (PMS) is not deregulated yet; that is the truth, the reality. "
"So given the restriction there, it even makes it difficult to accommodate any other cost that is not within that pricing structure. The pricing structure is clear. It talks about vessels. It talks about anything that has to do with your vessel's activity. It is specific. If you log on to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and Petroleum Products Pricing Regulatory Agency (PPPRA) websites, you will see that there's nowhere where stevedoring is mentioned," added this stakeholder.
He noted further: "When they start to introduce those things into that cost structure, then we are unable to sell, or rather, it's either you are selling at a loss because you are including costs that are not in regulated templates, or you can't sell within the limitation of the regulated price.
I don't know; sometimes I feel as if a lot of these things are done due to a lack of knowledge. So if you give Stevedoring to the upstream companies, their system is robust enough. It has a deregulated structure.
But we should always know that you can't be saying you want us to reduce costs and, on the government side, keep increasing them. So yes, there's an act guiding it."
Given the prevailing uncertain situation, downstream sector stakeholders are calling on the Federal Government and regulatory agencies like Nigeria Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA) to involve major stakeholders before making rules and signing such policies and initiatives into law.
"First, the government should engage the stakeholders; people shouldn't sit where they sit and just make rules around things they know very little about. So it is not just about what the downstream sector wants. Let's engage so that you better understand our business"
He added, "At this point, with where we are with petroleum product in this country, Stevedoring should not be applied to us. Stevedoring is in dollars or cents per litre. You don't denominate your business in dollars because whatever we sell, we sell in naira and kobo. So, you can't apply the same laws that you apply to upstream or midstream to downstream. That's why I said that there's a lack of understanding.
So the first thing to do is to engage the stakeholders in that sector. When you engage, then we can make a decision. For us, the decision is that they need to take stevedoring out of our costing template. We can't apply it as we speak.
We need to talk about it. Do you understand our business? Let us describe what we do to you, and when we describe it, the resolution will be clear. As we have said, you can't apply stevedoring to the downstream sector."
"The authority in charge of stevedoring is the NPA, and they are part of the government. We have to engage them extensively, and like all government parastatals, they do not listen; they just stick to the fact that it has been gazetted and is law," a concerned stakeholder noted.
Meanwhile, the Maritime Workers Union of Nigeria, (MWUN) had in August said the level of engagement of indigenous Stevedoring firms on oil platforms across the country currently stands at 60 percent.
President General of MWUN, Comrade Adewale Adeyanju while speaking with newsmen said that most of the multi-national oil companies are beginning to engage stevedoring contractors.
Adeyanju, also said that although the NPA was yet to disclose the number of IOCs that are complying, there has been a steady increase in level of compliance.
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"The level of compliance by the IOCs on the engagement of Stevedoring companies has reached 60 percent. The once powerful multi-national companies are now engaging Stevedoring companies.
And the Nigerian Ports Authority, has not been able to tell us the number of the IOCs that are complying, they should tell us how these IOCs are obeying the Stevedoring extant laws. The bulk of the matter lies with the NPA ".
Continuing, he adds, "For the Union, they have seen our reactions, if ExxonMobil, Texaco and those big multi nationals engage the services of Stevedoring contractor appointed by the NPA, the level of compliance will be getting better ".
Oil Industry watchers, however, posited that while OICs and other players in the Upstream and Midstream Sectors of the Oil Industry need to sign on to the Stevedoring Regulations, the same cannot be said of the downstream sector players who operate in peculiar circumstances where their businesses are denominated in local currency, Naira, in addition to the fact that such extra costs to be incurred could either lead to a hike in fuel prices or irrecoverable additional costs to the operators in the sector.
