Fuel side of the downstream sector is a complete mess

DOWNSTREAM

Oyebanji

Fuel Side of the Downstream Sector is a Complete Mess - MD, 11 Plc

The Managing Director

of 11Plc, formerly called

Mobil Nigeria Plc and Chairmen, Major Oil Marketers Association of Nigeria (MOMAN), Tunji Oyebanji, has said that the fuel side of the downstream sector of the Nigerian oil and gas industry is a complete mess. He stated this in an exclusive interview with Majorwaves Energy Report, on the side line of the Nigerian Oil and Gas Conference, which was held in Abuja early in July.

Oyebanji, who led a panel discussion on,” Harnessing the Opportunities to Draw Nigeria Closer to Energy Security” during the Conference, said that some of the operators in the downstream sector of the Nigerian oil and gas industry are in debt and are unable to service their loans, their tank farms being confisticated by the Asset Management Corporation of Nigeria (AMCON), leaving only the brave ones managing to invest in other areas like

Liquefied Petroleum Gas (LPG), believing that things will improve in the future. He identified inflation, staff continuous demand for increase in salaries, increment in charges by government agencies and price fixing of petroleum products by the government as some of the factors affecting the downstream sector. Oyebanji blamed over regulation of the sector as the reason why International Oil Companies (IOC) sold their assets, noting that even those who bought some of these assets, are divesting.

“I want to be extremely candid as far as the fuel side of the downstream is concerned. It is a complete mess. It’s a disaster. Many people are getting out of the business. AMCON is selling people’s tank farms because they can’t service the loans they have taken. The brave ones are still trying to invest in certain areas like LPG and things like that, hoping that

things would get better in the future. But certainly right now, the true margins in the retail side of it are always thin and operators there have to be very efficient there to survive. But currently, the situation is very dire because inflation is there. Staffs are always asking for salary increases; various government agencies are increasing the charges on us for almost everything. And yet, the margins we have are fixed by the government. So, under those circumstances, you see, what you find is that most of the IOCs have left and even the people who bought those companies are also divesting. So nobody needs to tell you. If the thing was sweet, people would stay in the business,” he said. Speaking on the topic discussed at the panel session, he said that he tried to get the views of the panelists on whether there was energy security in the country or not,

18 Majorwaves Energy Report AUGUST 2019, Vol 2 No 5www.majorwavesenergyreport.com