The Executive Secretary of the Petroleum Equalisation Fund
(PEF), Mrs Adefunke Kasali in this interview gives an insight into the
operation of the PEF. Excerpts:

Question: Could you tell us in brief what your Fund does as
it relates to the deregulation of the downstream oil sector

Answer:The Petroleum Equalisation Management Fund was
established many years ago, in 1973 to be exact, and the mandate of the fund
and the board is basically to ensure that marketers who bridge petroleum
products from point of receipt to their retail outlet are reimbursed

for the transport element of that transport activity in
order to ensure that government policy of uniform prices are fulfilled, and the
board has been doing that since all these years.

Our three major schemes are the bridging, the inter-district
scheme and the equalisation scheme.

To give you an idea, what that means, bridging is the
transportation of products over a period in excess of 450 km. It involves going
from one depot which is the loading depot to the receiving depot, and it has to
be in excess of a 450 km

The inter-district is the same thing, from loading depot to
the receiving depot but this time around, it is less than 450km.The
equalisation scheme is when a marketer loads from the receiving depot to his
retail outlet.

For instance, if the marketer is located in Abuja
environment, the marketer will move from, let’s say, a loading facility in
Lagos, could be Ejigbo satellite depot, he will first of all move that product
to Suleja which is a receiving depot which is a PPMC depot and then, from
there, he will move his product to Abuja.

Question:You talked about uniformity in the pricing, against
the backdrop of the deregulation, though the government price is N97, you still
find people selling it as much as N150, is that uniformity in pricing still
viable?

Answer:I think it is important to go to the background of
our uniformity in prices. Our country is vast. The terrain is very different
from area to area. There are some that are very swampy; in the south-south, you
find creeks and petroleum products are best transported through pipelines.

We all know what happened to pipelines in the recent days’
vandalism, sabotage, breakdown, poor maintenance over the years, has caused the
integrity of some of those pipelines, in fact, majority of them have been
questionable.

When you then move petroleum products through them and you
know somebody is just waiting to hack them once they know that petroleum
products are moving, it creates all kinds of issues.

That’s why we see the concept of bridging, that is, moving
these products by trucks come up a lot in the last few years. PEF as an
organisation is the one that then takes care of that bridging activity without
which, movement of petroleum products and the receipt of the product around the
country will be very difficult.

That idea behind uniformity is that you shouldn’t be
disadvantaged based on where you live. If you live somewhere that is not easy
to get pipelines through the place, then you shouldn’t be penalised for living
in that area.

As to the issue of the pricing, we found out that in some
areas, that there are some unscrupulous marketers that probably take advantage
but it’s not everywhere they take advantage of the situation. It is usually
worse when there are things happening in the country when you see the hike in
prices at retail outlets.

But generally speaking, you find out that prices are around
about where government has put them. (N97).

Question: Some marketers have complained of delay or refusal
to pay them, what are you doing in this regard?

Answer:There are some marketers that we refuse to pay
because they have issues with us, either because we found out that they have
submitted questionable documentation with us to come and collect reimbursement
from us. In that case, if they have bad or questionable weigh-bill, there will
be necessary delays in processing some of these claims until we resolve all of
these claims.

There are times in the past when we have had delays in
payment and if you come to our office, and have a look at where we put all
these claim files. It is in stacks and stacks of files.

(Cuts In)

Question:Why should you allow stacks to mount, if they were
attended to on time?

Answer: We don’t allow them to mount, unfortunately, the
rate at which they bring them is just far outweighs the ability to properly
scrutinise those files and we have to ensure that we are not just paying
government money, without ensuring that those documents are valid.

We have to ensure their veracity, we have to ensure they
loaded the products, we have to ensure that they delivered the product and so
in the process of doing all these confirmation, with the staff we have, it is
very tedious.

The other thing is that, sometimes we just don’t get the
document that we need to do the confirmation. And so, we have a process now
whereby the loading facility and the receiving facility must both send us those
claims and we then match them. Otherwise, somebody might load and not deliver
them and come and make claims. We are a responsible organisation and we cannot
allow that to happen and so may cause delay in some cases.

Question: As a follow up, are there sanctions for
defaulters? How many have you been able to pay in the last two years?

Answer: The act establishing the fund has a penalty in
there, but it is very old. It is like N50,000 (Fifty Thousand Naira.) When the
act is revised by the PIB, that will change. That’s not very punitive, it just
puts it on us, and we have to do the proper work to make sure if the penalty is
not deterrent, then we sort them out and sift these things out (files).

On our marketers’ list, we have thousands of marketers, and
on the retail list, all independent marketers. We deal with major marketers, we
deal with DAPPMA marketers. And so we have very many marketers, and we process
well over 100,000 claims every year.

So if a marketer moves a product now and concluded the
transaction, he may wait to move 10 or 15 other transactions and put them in
altogether. So all those individual lifting, we have to find the receipt of
payments, the invoice and the delivery confirmation, the loading confirmation
for each and every one of them.

So in a file that contains 20 meter tickets representing 20
liftings, that work has to be done for each of those 20 loadings, but we have
now been able to design a soft ware that we are just now in the process of
verifying, and perfecting that will do that matching for us automatically.

But when we don’t get data from all the facilities involved,
then again we will just slow the process down.

Question: The software that you talked about, could it be
the planned electronic loading scheme project Aquila, how much has PEF been
able to save for Nigeria from the introduction of that project?

Answer: That project, the software I was just talking about,
is something we designed along the way, that’s not the Aquila. We have been
working on Aquila since December 2007. We have spent the last four years
perfecting it and doing all the other implementation on project Aquila.

Project Aquila will actually eliminate all the things that
we are talking about here. With project Aquila, the first thing is that there
must be a loading and receiving. One of the issues that we have had is that we
are never sure whether a product was loaded or received. In some cases we have
had situations where it was purportedly received but it was never loaded.
Aquila will ensure that there is a genuine transaction.

The other thing with Aquila is that the product is now very
smooth and efficient and then the payment is done under two weeks. So you don’t
have the delay because it is now all electronically done.

With Aquila we have moved to an end-to-end electronic
solution where it is loaded and dispatched by a mobile computer working with an
RFID device. So that at each of our depots, our depot representatives have this
device, this is the mobile computer; part of it and this is the RFIDD device,
which reads the information.

On every truck registered and tagged there is this RFIDD tag
that is affixed on that truck and all the information on that transaction is
actually stored on the device. The software is re-writable and so when the
transaction is ready; our depot representative reads all the information from
our server unto this device and dispatches the truck electronically.

Right now, the manual system we have to stamp and they
falsify our stamps. Now there is no stamping required, you just go in there
once it is dispatched, that information from this device once the truck has
been let go that information automatically goes into the server in our head
office and at the receiving depot where that truck is headed.

By the time the truck gets there in two or three days or
however long it takes that truck driver to get there, that information is
already sitting on the server and when the truck gets there the depot
representatives at our receiving depot basically goes to the truck and verifies
that information.

To be continued