Challenges of downstream petroleum sector
Komolafe Rasheed, Lagos
The petroleum marketing business has continued
to generate alot of questions because of the way
and manner by which it is handled and associated problems which have continued to manifest in the sector.
The major supply chain management of the Nigeria’s most strategic industry have demonstrated to many unsuspected patrons in need of these essentials services as unreliable.
From the bulk sales to depot and down to fuel filling stations, system stinks yet profit attracts more investors into this business in droves.
What are we talking about? The business climate in the Nigeria’s downstream sector is, no doubt, attractive enough that there is an ever-growing demand for white products especially Premium Motor Spirit (PMS), Dual Purpose Kerosene (DPK) and Automotive Gas Oil (AGO). For instance, the average daily demand of Premium Motor Spirit, otherwise known as Petrol, is estimated at 30 million liters per day.
This effective demand is in the face of dwindling supply since the country’s four refineries with total capacity of about 445,000 barrels per day, have remained in comatose as far back as the military era. All the profound solutions including turn around maintenance (TAM) of these national assets have proved largely ineffectual.
According to the half year report released by the Department of Petroleum Resources (DPR) for the first half of 2007, only Port Harcout refineries were producing at 38 per cent of the installed capacities, a development that makes the country to import almost 100 per cent of her white product requirements. This frustration and importation bottle-neck also created opportunity for individuals to enrich themselves at the expense of the populace.
An allusion to the simple fact that the investment climate is good is equally evident in the DPR report, which put existing depot at 79 and those under construction in different parts of the country at 17 considering the huge capital outlay involved in depot construction.
However, despite the much acclaimed deregulation of the downstream sector and various incentives such as PEF and PSF introduced to encourage active participation of private sector operators in the importation of white products, the Nigerian National Petroleum Corporation,( NNPC), remains the sole importer and supplier of these products.
This untoward development encourages the use of discretion by officials saddled with the responsibility of allocating these essential products and this translates into corruption.
At a point in time, the depot owners were accused of making unwholesome profit as kerosene sold to them at N47.70 per litre were allegedly being sold at a cut throat prices of between N90 and N100 per litre to independent marketers who will pass the buck to end users.
Some of the major petroleum marketing companies were not left out in this rat race for excessive profit maximisation behaviors.
As these oil barons smile to their banks for the lodgment of their abnormal profit, one would have expected that such profit margins would translate into better remuneration packages for their core operational staff especially the pump attendants but this is not necessarily the case. For many major petroleum products marketers, it was a tale of two cities for their workers. As those workers that work directly with likes of Total Nigeria Plc, Oando, Conoil Nigeria Plc, Chevron Nigeria Plc, Obat Oil and Petroleum Limited, Swift Oil Limited, Capital Oil & Gas Limited Integrated Oil & Gas Limited, Ibeto, Ascon and Honeywell Oil Limited and so on, earned fantastic salaries and allowances in ten digit their counterparts at the fuels pumps across the country earned less than one per cent of their average income.
Beyond the ambiguity of titles and positions, an attempt to compare and contrast what a pump attendant earns with what an equally low-level employee who works directly with these major marketers would earn make one to suffer humiliation.
How can one explain the average salary of a pump attendant put at N3,000 less than $30 to the salary of the least paid staff of the same company put at N80,000. The former is, no doubt, bad salary especially against the backdrop of minimum wage in the country.
As the gatekeeper for the collection of whatever returns on investment the major marketers anticipate from their investment in the downstream is morally wrong for a pump attendant that earns a meager salary of N3,000 per month to handle cash running up to half a million naira on daily basis?
Besides, is it a sound business strategy to allow these pump attendants who are public relations officers of the marketing companies to engage in sharp practices to get extra fund to support the meagre salaries?
Our investigations of this trend is quite revealing. Some of the major marketers like Total Nigeria Plc, Oando, Mobil Oil Nigeria, Conoil claimed that they out-sourced the distribution of white products at their retail outlets nationwide to dealers to reduce the problems associated with the management of a large labour force.
According to one of the major marketers representative, Mr. Idowu, outsourcing is a global practice which promotes efficiency and higher productivity at whatever cost. It is the dealers that facilitate recruitment, training and placement of all cadres of pump attendants including their supervisors.
Akin Fatunke, the Public Affairs Manager, Mobil Oil Nigeria Plc explained that his company has zero tolerance for such corrupt practices and warned that any dealer harbouring any corrupt pump attendant stand the chjance of losing his/her dealership.
Fatunke also noted that the reported cases are usually investigated and culprits sanctioned accordingly.
How does a pump attendant cope with this near slavery emolument?
Many of them confessed that they engage in sharp practices and unethical ways of making extra income.
Some of their antics include pump calibration or under dispensing, diversionary tactics in which the attention of customers are often diverted for petrol attendants to play the smart game of short changing of unsuspecting customers at their station.
Others confirmed that they make extra money when motorists request for full tank and during fuel supply crises.
The research team of Nigeria Oil and Gas monitor also discovered that it is not only the unsuspecting motorists that fall prey to the antics of pump attendants, dealer too are victims. When measuring to ascertain the level of fuel in the dump they often give inaccurate data and the loot is usually shared with colleagues.
Besides, the research team equally beamed it searchlight on the activities of depot representatives and truck drivers whose sharp practices could run down a new business in this sub sector.
At the depot level, the depot representative of an independent marketing company may sell its lifting right at premium and give his employer the impression that he is still waiting for the allocation of white products. However, this practice is prevalent among those stations with special allocations.
The truck drivers also contribute to operational losses as they dispense about 500 to 1,000 litres of any product before reaching their stations. This is possible with active connivance of the station supervisors or the depot reps.
However, these myriads of operational losses made major oil marketer firm to avoid direct sales at retail outlets. The direct dealing with dealers reduces their overheads and level or risks associated with retailing of white products.
Going by the cost of living index in the country today, is N3,000 per month for somebodythat handles about N1.7m product not bad? Speaking on this trend, tokunboh Korodo, the zonal secretary general of National union of Petroleum and Natural Gas Workers, NUPENG, explained that petrol attendants were poorly paid because most of their employers threatened to sack them if they join petrol services workers union. PSWU a branch of NUPENG that caters for the welfare of this category of oil workers.
Korodo no
ted that all petrol attendants are supposed to be members but because of greediness of some dealers many could not join the union, hence the poor remuneration, saying their situation is worst than casualisation in the oil industry. NUPENG has revived this branch and would not hesitate to sanction any dealer that prevents his or her attendants from joining the PSWU, Korodo said.
Monitor te
am’s rapport with some of the major petroleum marketers confirmed that the sector is looking at ways of motivating and improving the remuneration package of the pump attendants.
These incentive packages, according to an official of Conoil Plc include sales volume commission, training and retraining and other value added services that could improve their overall well-being and productivity.
Another school of thought argued that no matter the amount of salary increase and other incentives, pump attendants would not desist from the antics of making extra. This is anchored on the premise of their bloated life style grossly at variance with their visible income, can you prevent dogs from eating excreta?
Since a leopard cannot change its skin, this may be counter productive.
Efforts to get Mordecai Ladan, deputy director, downstream, DPR to speak on the issue proved abortive.
The only solution to this fraudulent practices is the employment of modern technology through automatic fuel dispenser. This dispensing is operated by motorist suing ATM card and it has zero tolerance for fraudulent activities. No cash transaction. The only disadvantage of this cost effective technology is reduction in the labour force at each outlet. This is the situation in other parts of the world.
Already, African Petroleum Plc has blazed the trail with the introduction of the dollar denominated technology at its retail stations across the country.
Other major petroleum marketing companies in a renewed bid to sanitise this most volatile sector of the nation’s strategic industry, which has remained an irritation to many stakeholders should emulate the gesture.
Besides, gas attendants deserve better deals in terms of motivation and remuneration otherwise they may constitute drum beat of doom for all strategic planning of the major petroleum marketing companies. A stitch in time saves all.
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