There are strong indications that over N4 trillion downstream investments are being threatened, as over 198 private depots or tank farms across the country have remained inactive since the Nigerian National Petroleum Corporation (NNPC) assumed the full importation of petroleum products.
Nigerian Guardian is reporting that the depots do not include the 22 operated by NNPC through which it pumps refined products across the country.
It is also understood that about 19,000 direct jobs are at risk in the event that the depots close shop, aside from thousands more jobs that would be lost indirectly.
The failure of the depots to function is due to the inability of the major and independent marketers of petroleum products to access foreign exchange (forex), and also to obtain letters of credit to import.
The development has brought to the fore the proliferation of private tank farms and their sustainability in the long term, against the backdrop of the Federal Government’s promise to end products importation next year.
Speaking on the development, Jude Azubuike, a property expert, disclosed that it costs between N18 and N30 billion to construct a depot depending on the size – while at N18 billion per one the 198 tank farms will translate to, at least wasting N4 trillion investments.
According to him, about 50 of these depots in Lagos and Port Harcourt, and Warri have been put up for sale, by their owners to recoup their investment. But prospects are low because of the Federal Government’s promise to end fuel importation by 2019.
While the NNPC owns over 22 depots located in different parts of the country with storage capacity of over 87 million litres, coupled with it’s aspiration to make Nigeria self-sufficient in the refining of petroleum products by 2019, investment in the over 198 private depots may be lost completely.
Explaining the NNPC’s role in the downstream sector, the Group General Manager, Group Public Affairs Division, NNPC, Ndu Ughamadu, said that the corporation now has enough depots to store all imported products.
According to him, with the corporation’s over 21 depots across the country fully functional, the need to patronise private depot has reduced.
However, the Executive Secretary of Depot and Petroleum Products Marketers Association (DAPPMA), Olufemi Adewole has a slightly different explanation, as he attributed the idle depots to the inability of the marketers to import petroleum products due to the scarcity of foreign exchange.