USA Africa Dialogue Series - Passage of PIB will determine future of PEF, says Kasali

Tuesday, 21 January 2014 00:00 Written by COLLINS OLAYINKA

ES-PEF Sharon Adefunke Kasali is the Executive Secretary, Petroleum Equalisation Fund (PEF), in this interview with COLLINS OLAYINKA of our Abuja Bureau, she explains the challenges confronting payment of fuel equalization as well as the position of PIB on the continued existence of PEF among other issues in the oil and gas industry… Excerpts:

  It was well received when we started by the marketers who are our major stakeholders. It was so good because marketers were getting their money in less than five days. The idea is that we need to get everybody on. In 2012, we expanded it but in April we expanded it to all other marketers and by January 2013, we went into it in fully. Only a few, maybe like four or five out of the almost 70 facilities that are in the country, did not have the infrastructure for whatever reason.

  And by March 2013 we began to feel that something is wrong. The first thing we saw was that people were either coming back to report that their tags were being stolen or they were losing them for whatever reason. So, we said to ourselves, what should we do about this loss of tags and complaints that tags were being stolen? We came up with a penalty, which we now see was the wrong thing to do. We thought we could put something that would act as a deterrent, but it didn't. Those who were not happy with this, especially people who were doing the bridging by air before, capitalized on it and leaked into the market that the tags contain mercury or they have chips in them that could be used to make phone calls.

  Basically, we found out that the tag was the weakest link in the project, otherwise the project was well thought-out and well implemented and executed. We knew some of our workers had to be involved because marketers do come to us to make such complaints. So, one of the things we saw was that they were stealing the tags and they were taking them to the company. In fact, by that time we had terminated the agreement of the company once we started to see that they were not doing what they were supposed to do. And we now got independent people working under us. We found out that there was a particular person, who is still at large even up till now, that they go to him and he would take the tag, erase the information on it and write something else. We found this out in June and we called a meeting of all our management staff and we brainstormed for a whole week.

  Right at that time we terminated all the contracts because they were temporary staff and I directed that the job of erasing and re-writing should be taken away from the people on the field and be taken to the head office. Immediately this was done, we saw a reduction and we moved in with the SSS and started to look for the people involved in the fraud. A few people were arrested while some were convicted. The major culprit may have gotten information and he basically disappeared, but we were able to at least stop that whole thing.

  Another complication we had was that the suppliers of tags came at the end of 2012 to tell us that they were closing down shop on that particular tag and were bringing another one out. We were very upset with them. This was because the tags were finished, but we managed to get a different one but it was not adequate. But we knew that when we started the process we got enough and in the process of arresting the fraudsters by the SSS, we found several tags. We found a gang that does not even have tags but have license plates and can fabricate the plates. So for one truck they could use it to collect four to five different tags. So those became challenges, but quietly we were working on solutions.

  And towards the end of last year we found a system that will tag the truck, mark it with a dot metric marker and then we keyed in with the Federal Road Safety Corp. This is because the FRSC has a fantastic system that, in a lot of way, mirrors what were doing in PEF. When we started to come up with this idea we decided to get different tags. So, our new policy now is that we will only give that new tag to a truck that is registered with FRSC. For, in the FRSC system, once you put that information in, it is registered. FRSC has now given us access to their portal, so from our office we can put your license plate number and if you have not registered with FRSC you cannot get tag with us. Aside that, we are now going out to integrate our two systems. The challenge has now strengthened our processes well.

  Now, our partnership with FRSC is going to cut out all those fraudulent people because once you have one tag you cannot get it again from PEF and no one can register twice.

  We also got all our markers to either mark in 2D code or on actual metal and there is a machine that will read that code and link it directly to our system.

  We also found out that there are areas where loopholes exist in our registration. But right now the registration process is being fully automated. When this is done, you can schedule your registration online just like is done with the visa process.

  And then to ensure now that it not just one person, every tagging process will have an audit staff, a security personnel, an operation and an IT staff. They will screen your document for you will bring your original document and the photocopy and these staff will check all the details. Once they accept it, then the IT staff will write it and we will now tag. We are not tagging on the body as it was done before. Now we are tagging on the compartment that is permanently attached to the body, which is always under lock and key. And in the case of the major marketers it is sealed.

  By June, the date that FRSC cuts off, we will disable all the other former tags that are out there.

  Marketers are not paying anything for the new tags. They did not pay even for the ones we are phasing out now. It was when people started stealing it that we then put a fee as a sanction to serve as a disincentive.

  One of the things that happened was that at a point I wanted to write the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke on the gains of 'Project Aquila'. I then decided to do a comparative analysis of 2012 when we started running manual operations and 2013 when 'Project Aquila' came on board, and we found that there was a difference of about N26 billion. Though I may not be able to put a figure to what was paid out when the stealing of tags became rife, the period that that unfortunate event took place was very short for any monumental fraud to take place. We disengaged people working on the field who perpetrated this act in June last year and from then on, it became very difficult to perpetrate any act of sabotage. The loophole was created between March and June last year.

  Before 'Project Aquila' came on board . . . we have two major schemes, which are bridging and equalization. In the equalization scheme, there are nine zones, which comprise 50 kilometers each zone. Marketers in zone one and two are expected to return money to PEF under the National Transportation Average (NTA). Those that fall within zone three and nine, PEF pays them money. So zone one and two is supposed to equal that zone three and nine. What is collected from zone one and two is supposed to be the same with what is paid out to zone three to nine. When 'Project Aquila' came, we embedded NTA into the bridging where the computer will automatically calculate the money depending on where the delivery takes place. What we now saw was that everybody started delivering in zone three to nine and nobody is delivering in zone one and two. That brought curiosity and we said no to the prank. Those who were profiteering from the prank were those threatening to go on strike. But the National President of Independent Petroleum Marketers of Nigeria (IPMAN) has assured us of the leadership support to continue to do the right thing.

  One thing we also found out was that immediately 'Project Aquila' came and payments were made in record time, so many people came into the business. We have now written IPMAN and said if somebody is not a member of IPMAN, he cannot do business with us. The Act setting up IPMAN says that members must have a bulk storage agreement with the NNPC. Working with the State Security Service (SSS), we found some persons who had no filling station anywhere in this country trying to claim money from PEF. I have pictures to show where people cited car park and cattle grounds as petrol stations. 

  To be honest I don't know. You know very well that the Bill is still with the National Assembly, which means we cannot comment on the possible outcome of the bill. We are waiting for the bill to see what it contains. As a Chief Executive I have sat down to ask myself so many questions such as: what plans should I have for PEF? Should I wind down its activities? Should I have plans of growing PEF or should I just leave it as it is? And when I look at the staffers I have here, I see people who are well trained and have fantastic attitude to work. We have developed these workers aggressively over the last seven years. What I do know is that whether PEF gets to stay as an organization, PEF staff will continue to be valuable staff that government will not be willing to throw away. The provisions in the executive bill presented to the National Assembly is that PEF would remain until such a time that there would be no need for PEF as determined by the Minister of Petroleum Resources.

  There is no tenure limit in the Act establishing PEF. My predecessor in office was there for 11 years. However, I am aware that the normal eight years of two-time tenure is now inserted in the new PIB for all chief executives