Tuesday, 2 February 2016


The indigenization decrees had been passed so that Nigerians could increasingly own shares in businesses operating in Nigeria. The law also forbade foreigners from engaging in some lines of business especially distributive trade. On petrol filling stations, government had ordered the foreign companies to dispose of 40 per cent of their shares to Nigerians. Thus Mobil, Texaco, African Petroleum (now Forte Oil), Total, Agip, Shell (then National) sold 40 per cent of their shares to Nigerians. Other companies in the distributive trade were similarly required to sell 40 per cent of their shares to Nigerians- CFAO, SCOA, UTC, BEWAC, UAC, Leventis, and Niemeyes etc. Some companies were unwilling to do so and pulled out entirely from petrol filling stations distributive trade- for example, Chevron, Esso.

Roundabout the same time, Nigeria found out that BP was breaking the sanctions imposed on Ian Smith and Southern Rhodesia by supplying petroleum products to that illegal regime. The Federal Government in retaliation nationalized BP in Nigeria, that is, bought the 60 per cent shares held by BP since BP had previously divested itself of 40 per cent of its shares to Nigerians. The Federal Government also took over the Port Harcourt refinery, which was operated by BP.
The government vested the BP shares it bought in NNPC. Esso decided to pull out of the distributive oil trade and all its shares were bought over by the Federal Government. Shell (National) was the largest distributor of refined products, followed by Mobil, then African Petroleum, which had taken the old identity of British Petroleum. This then was how NNPC almost inadvertently got into the petrol distribution business. Before long a large chunk of the petroleum outlets business was with NNPC – AP, Shell (National) Esso, Texaco etc. NNPC did not exhibit any great interest in running these Federal Government assets as represented by the companies running petrol filling stations, except sometimes sending NNPC staff to run these companies.

In total the NNPC had control of over 700 filling stations throughout Nigeria. At that time, fuel (PMS) was supplied to the station through trucking contractors, who ensured that each filling station received its products. In the 70s, a network of pipelines and tank farms were established all over Nigeria, thus further reducing the necessity of tankers. In addition, railways carried much of the petroleum products.

The experience of Petrobras and Petrominas soon hit NNPC when some of its leaders decided that NNPC, being an oil company, it should also have outlets. Petrobras and Petrominas have the largest network of filling stations in Brazil and Malaysia. They circumstances of Petrobras owning these outlets were quite different from Nigeria. Brazil had developed the use of alcohol in place of petrol for the cars manufactured in Brazil and this had to have outlets to sell alcohol for their cars and vehicles etc.

However in Nigeria, in pursuit of some half-baked policy that NNPC must be in all aspects of the industry, NNPC officials started itching to get into the business of petrol filling station just as it had gone into the refining of crude oil (and had failed). But that failure did not teach NNPC lessons as to limiting itself to what it can do and do it well. Since it was receiving 400, 000 barrels of oil per day for its refineries it continued to do so even when its refineries were not working. Thus started the genesis of oil subsidies. Government had also decided to privatise its holdings in the oil distribution companies: thus BPE was to dispose of government shares in AP (Okocha, then Femi) National (Mike) Texaco (Dantata) Esso, Agip (Tinubu) etc.

This brings us to the issue of failing policy cycles or mission creep, which goes nowhere. In the midst of the scandal of subsidies, shortages and unprecedented cheating, NNPC embarked again in the business of owning and operating petrol stations. If this had been their intention all along, why did they allow BPE to sell what has now become Oando, Forte Oil, Conoil etc. outlets? They already owned it – all they needed to do was to change the logos to NNPC filling stations and they would have had nearly 700 petrol stations.

They sold these, have built several new ones all over the country and now want to build another 109. One can smell a fat rotten rat of contract awards, leakages etc. Anyone who has a petrol station knows that it is a rogue’s gallery: owners must watch constantly and even so, bribery, theft, chicanery are by-words for petrol forecourts. Why should a leaky organisation like NNPC, which ought to be reduced, made more efficient, want to go into a business that cannot bring it any kudos but would further damage its reputation because there is no way NNPC running petrol stations would not be corrupt and unprofitable. Why put your hand in a nest of bees?

The acute fuel shortages at Christmas had become an annual event. No one understands why but everyone is convinced it is manipulated so that owners of petrol stations and importers of fuel make a lot of money. When a group is making money in Nigeria, every conceivable trader, vendors etc. would use the fuel shortage to make extra money. Why can we not solve this yearly scourge we bring to ourselves?

This is how ridiculously and dangerously we have politicized everything that happens in Nigeria. NNPC has to be careful, to make plans in advance so that the usual Christmas fuel violatity is stopped. It must rethink its policy to venture into retail marketing of petroleum products. It is merely stocking up for an inevitable scandal. (Source: Guardian)