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| Photo credit: Seably |
Is bunkering really an illegal business? What opportunities
are there in bunkering business? What actually is bunkering?
Find out answers to these questions and more, on this much
misunderstood service area of the Oil and Gas sector, in Clickhealth's exclusive interview
with Otunba Sola Adewumi, President, Bunker Traders Association of Nigeria.
It’s both revealing and educative.
Excerpt of the interview follows.
Clickhealth:
Sir let’s meet you.
Otunba Sola Adewumi: My name is Otunba Sola Adewumi. I
am an accounting graduate, a trained accountant, and qualified as a chartered
accountant. I was an artist for some years before I joined the banking sector.
I left banking to join a shipping company; and by the grace of God, today I am
the managing director of Equatorial Energy Company, a company that specializes
in bunker sales. We are into shipping and bunker sales, with international
affiliations.
Clickhealth: You are the President of….
Otunba Sola Adewumi: ..Bunker Traders Association.
Clickhealth: Can you give us some little insight
into the association?
Otunba Sola Adewumi: The idea of Bunker Traders
Association came up years ago when we had issues with some government
authorities. We felt there is need to bring ourselves together and let people
know what bunkering is all about; because a lot of Nigerians, even government
officials, believe that bunkering is an illegal business. We came together to
educate people and foster unity within some of us that are doing the business.
Bunkering is
all about fueling a vessel. It’s like you take your car to a gas station and
you buy fuel there. (But) there is no gas station at sea. There are people that
specialize in selling this kind of product. It is the fuel you use in running
the machineries of vessel; that is what we call bunkering.
And you know
that Nigeria is notorious with products that are not good; we don’t keep
standards. So we have to bring ourselves as an association so that people will
know that if you want real quality products, these are the people you can talk
to; because they have an association and they have a name to protect. They are
easily traceable.
A lot of
people in this country sell crude oil as bunkers and the resultant effect is
not always palatable. They damage the ships and that involves a lot of millions
of naira (Nigeria's currency)
Our
association is just to regulate, when I say regulate, it’s just to bring
ourselves together to know the real operators that are the practitioners, people
that are the professionals in the job, that you can contact if you have to do
that kind of activity in Nigeria.
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| Photo credit: Marineinfobox |
Clickhealth: You have almost answered my next
question which would have been to give us an idea of what bunkering really is,
and you have just said it’s all about fueling…
Otunba Sola Adewumi:
…refueling vessel. Bunkering is
an act, and bunker is the fuel the vessel is using to run its engine. When you
supply that vessel you are doing bunkering. That’s the difference between
bunker and bunkering. Bunker is fuel.
Usually to
run a ship, we have intermediate fuel oil and marine gas oil. Marine gas oil is
almost similar to the one you call diesel, while intermediate fuel oil is
heavier oil. Most of the big vessels use intermediate oil. Like I said earlier,
the act of supplying that oil from the supplier to the user is what we call
bunkering.
Clickhealth: in other words bunkering has
nothing to do with oil theft and vandalism?
Otunba Sola Adewumi: That one is oil vandalism; people
just misuse the word bunkering. That one is not bunkering. Bunkering is the act
of transferring marine oil from one vessel to the other for the use of their
machineries.
Like I said
when making that Keynote Address at the maiden edition of NCDMB (Nigerian
Content Development and Monitoring Board) Midstream and Downstream Oil and Gas Summit (2022), we turn ourselves
as a laughing stock as far as the business is concerned.
There is an
association, which is the worldwide association, that is, International Bunkers
Industry Association (IBIA) that’s the association of all the bunkering
companies in the whole world. They are the one that came up with all the
bunkering terminologies being used in bunkering. It’s unfortunate that after
defining bunkering, they said, this is the meaning in Nigeria; that bunkering
has to do with oil theft in Nigeria.
Clickhealth: What you said is true. While I was
researching on bunkering I saw in Wikipedia that bunkering is a terminology for
oil theft in Nigeria.
Otunba Sola Adewumi: Why Nigeria; why should our own be
different? Meanwhile, bunkering is a very big business all over the world. It’s
an interesting business, very, very interesting. But the way the people see
bunkering is the problem.
(Shows
reporter an App on his mobile phone that tracks ship on sea) It is what the
Navy is using to monitor the movement of all ships to stop all illegal
activities in the sea. It will receive signal from AIS (Automatic
Identification System, a component of Global Marine Distress and Safety System
(GMDSS). Every ship should have an AIS but when people want to do illegal
activity they switch it off. That’s why Navy would always tell you that it’s an
offence if you switch it off.
Basically
bunkering or shipping is an interesting business but the financial outlay is
always very much. In most cases we can’t cope because banks are not ready to
help anybody here. They are not ready. A lot of people have taken money from
the bank but misused the money; and because of this the banks are not ready to
help anybody.
Clickhealth: This misconception that people have,
what is your organization doing to correct it; because apart from that day you
spoke at NCDMB Summit, even journalist like me thought bunkering is an illegal
business? It was after that day that I began to research bunkering; so what’s
your organization doing to correct this misconception?
Otunba Sola Adewumi: The problem we have in this country
is that when there is a problem people come together. After the problem is
solved they forget about it. Right now, it’s just two or three of us that are
carrying the bag of the association. It’s only when they have problem that they
come together despite the fact that we are doing well, all of us (in the
business); in Nigerian economy.
If you ask
them to pay even common subscription, they won’t pay. In most cases, it is my
Vice President and myself that are financing the activities of the
organization.
In summary
it’s only when we have issues that we come (together); which is not too good
enough. We have tried, we are all private people, and there is a limit to which
you can push people when you know that there is not so much you are gaining
from there. You let it be. One thing people don’t realize is that they stand to
gain more when they are together.
Clickhealth: That’s true
Otunba Sola Adewumi: But that’s the situation we find
ourselves, except the media and pressmen like you help us to publicize some of
the things that we do.
There is so
much business in Nigeria. Do you know how many oil platforms we have in
Nigeria? All these people (platforms) are using oil. It’s the foreigners that
are supplying them. Do you know the amount of businesses we are losing in
Nigeria? We need serious government that can change the activities of the
people that are doing illegal business. These are the people that are creating
problem for us.
Clickhealth: Media men would only key into your
activities when you have it and invite them; or participate in some other
programs and you let them know that you are there. We just took interest in
what you said at the NCDMB Summit we know the prevailing idea about this
bunkering and we owe the public as well as you, the organization, the duty to
inform and educate.
Otunba
Sola Adewumi: (Nods in agreement)
Clickhealth: As a layman in this shipping thing,
do you have bunkering stations along the international sea route for shippers
to make use of if they are running out of fuel or they usually ensure at the
port of departure that the fuel they have would take them to their destination?
Otunba Sola Adewumi: There are some countries that are
regarded as bunkering hub. They take it as real business; and you know that you
can always get fuel there. For instance, Las Palmas, there is a lot of
competition there; you get ship fuel to buy. That’s one of the ideas we have,
to make Nigeria a bunkering hub. But we are having so many issues. The issue
range from individual to government activities.
I can
conveniently tell you that Nigerian port is the most expensive port I have ever
seen in the whole world. (Reemphasized) Nigerian port is the most expensive
port in the whole world. Let’s take, for instance, a vessel that pays average
of $7000 in Lome, if it comes to Nigeria it will pay nothing less than $30,000.
That’s why a lot of people are not interested in using Nigerian port.
Clickhealth: But is government aware of these
issues?
Otunba Sola Adewumi: They cannot tell you that they are
not aware. NPA (Nigerian Ports Authority) will tell you that they are a
different agency and they have target and have to work towards their target.
We have
visited other countries either in the process of buying ship for our business
or delivering products in some foreign port. In Nigeria you will see top
officials of any security agency; they would be there, including LASTMA (LAgos
State Traffic Management Authority). You would be thinking, ‘what are these
people to do with fuel?
The
mentality that anybody that is doing oil business has so much money to part
with is our problem in this country. How will products not be expensive when
you are charging very high amount of port dues? A vessel that is coming to
discharge into the farm tanks, for instance, if they are supposed to pay $10k
and you charge them $40K because you want to meet target, the difference of
$30K do you think they are going to bear it? They are going to spread it on the
products and that’s one of the problems we have in this country.
We usually
load in Lome; even the foreigners that are doing business there feel that the
environment there is more conducive than Nigeria because Nigeria is full of
harassment. People prefer to bunker in Lome than to come to Nigeria. I am sure
that country is making good money as far as bunkering is concerned. They are
harassing us in Nigeria-the security agents. I know that there are many
illegalities in Nigeria but it’s not those people that are being prosecuted.
Clickhealth: What opportunities are in the
bunkering business?
Otunba Sola Adewumi: Opportunities are in the form of
physical supplier or broker. In terms of being a broker we have lost it all in
Nigeria because of our reputation and finance. When you see people that are
doing real brokerage in bunkering they give ship owners credit. We cannot
compete with these Europeans because the interest rate in their region is far
lower than what we charge here; so there is no way you can beat them when it
comes to the issue of brokerage.
The best opportunity, which I think we have in Nigeria, which
some of us are doing, is just to act as a physical supplier. Who are physical
suppliers? There are some people that they only sell bunkers on paper. They are
taking the contract but they are not well represented in the area where the
contract was taken.
Like a ship that sailing from Europe to Nigeria, somebody in
Europe takes that contract but he cannot do it physically. He would contact
people like us to supply on his behalf. We have a direct relationship with the
broker, not the end user. You can just act as a physical supplier because you
don’t have the financial muscle to compete with those people. A vessel we are
loading takes 950 tons, that is one million, three hundred and fifty litres;
and that’s the only opportunity that people like us can take.
Clickhealth: But generally, the opportunities
are there.
Otunba Sola Adewumi: They are there. It’s only the government
has to regulate that market and take out the bureaucracy in the operational
aspect of the business.
In Lome, for instance, if you want to supply a ship, you just
call the Navy and they can give you the green light on the phone but in Nigeria
you to write an application with all the supporting documents to the director
of Marine Services. The director of Marine Services will take everything and send
it to the director of Operations at Abuja. He would check it and if everything
is okay, he would send it to Ship Training and Operations for him to finally
approve. When he approves he would send it to “D” Marine (Director of Marine
Services) and another signal to FOC West, in Lagos, in this instance. FOC West
would release it to Beecroft C.O, it is now from C.O that we get it.
Clickhealth: All these rigmarole for just one
approval?
Otunba Sola Adewumi: Yes! So before you know it the
vessel you even wanted to supply would have left. But what we bunkers do is to
do anticipatory approval.
Clickhealth: You are already giving me the risk
and challenges involved in bunkering business in Nigeria; is there any other
one we can talk about?
Otunba Sola Adewumi: They government should help us as
much as possible to quench the activities of illegal operators. They are giving
Nigeria a bad name, bad image.
When you supply a product that is not good, it can destroy
somebody’s engine. Once it destroys somebody’s engine, where would that person
start from? That’s when you have cases where people invite bunkers to debunker-
that is to remove back, maybe somewhere in Europe, and they end up pumping
those things away. They don’t trust us.
Do you know this project, EKO Atlantic City? We were involved
in the delivery of the products that their dredgers use. Do you know that when
our vessels get to the place they would take sample and send it abroad and seal
our tank there and until they give them the go ahead they would not take the
product from us? That shows the level of confidence people have in us.
Clickhealth: Is there any further area that you
would have loved government intervention? You mentioned business environment,
is there any other specific area?
Otunba Sola Adewumi: Is just for government to regulate
and make the supply of bunker less cumbersome. And you see, at times you don’t
blame them. Everything depends on the integrity of our people.
There was a time the Navy allowed our local authorities to be
giving us approval but people will go and give them money and manipulate it;
but that was not the reason why they decentralized it.
Nigeria as a country we need reorientation. It is not about
bunkering alone. When we have good orientation, it will have impact on business
activities.
Clickhealth: Bunkering in Nigeria, is it mostly
in the hands of local or foreign players?
Otunba Sola Adewumi: It is mixed up but we share very
small percentage of the market.
Clickhealth: So it is mostly the foreigners that
are dominating the business in Nigeria?
Otunba Sola Adewumi: Yes.
Clickhealth: What of entry barrier, is there any
entry barrier or…
Otunba Sola Adewumi: To the business?
Clickhealth: Yes
Otunba Sola Adewumi: Once you are able to meet the
conditions of DPR (Department of Petroleum Resources.) You know in those days
when Nigeria was active in production of petroleum products they give the big bunkering
companies allocation on monthly basis but they don’t give again. You only have
the licence to import your own products and sell. Those licences are being
renewed every three months; why not annually and then monitor our activities?
That’s one of the reasons why I said these government bureaucracy has to be
taken out of the business.
Clickhealth: In terms of finance what should a
new person going into the business be looking at?
Otunba Sola Adewumi: (Laughs heartily) Very difficult
question to answer. Very difficult. What am trying to say is that it depends on
the level of operation. But if you want to be a physical supplier, definitely
you must have a ship that you would use to do the delivery. You can’t do
bunkering without having a ship. You must have a vessel that must be doing the
job for you; otherwise you have to rely on people and you might be
disappointing people from time to time.
And when you talk of time, time is of essence in shipping. If
you waste somebody’s time, it will affect other things. Even when you delay a
ship for 3 hours, it will affect its ETA (Expected Time of Arrival) at the next
port. It will affect a lot of things not to talk of even losing one or two
days. And the cost of these things is always very enormous.
I can’t say this is how much the person would spend. To buy a
ship is not a joke.