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Emeka Obidike is the Secretary General/Chief Executive Officer, Lubricants Producers Association of Nigeria (LUPAN). At a lubricants conference organised by Argus in South Africa last July, Obidike highlighted the efforts being made by the Nigerian Government, in association with LUPAN, to tackle sub-standard products, counterfeiting and other industry malpractices.
In a paper he presented at the event, he disclosed that the Nigerian Government loses over $3 billion to counterfeiting/faking of lubricants annually, just as he maintained that the hydra-headed problem has become a major challenge for lubricants producers in Nigeria.
He explained that the enormity of the problem is such that lubricants producers now undercut each other by indiscriminately selling base oils to unauthorised dealers in a bid to sell off their products and make profits, with the sole aim of avoiding production costs.
This practice, according to him, is a smart way of avoiding high production costs and the attendant taxes and levies by government regulatory agencies, difficulty in securing licenses and permits as well as unfavorable policies, indiscriminate issuance of permits by agencies and high cost of importation of raw materials (Base Oil and Additives).
Explaining that in Nigeria, the combined total installed capacity of existing blending plants, if operating at full capacity, is over 600,000 metric tonnes per annum, he however lamented that the current total blending capacity is just about 350,000 metric tonnes per annum.
He also lamented that most African countries blends 60 percent of their base oil while the rest goes into the market unblended.
According to him, products are said to be substandard when they don’t meet standards and regulation set by the relevant monitoring bodies.
He listed such practices to include faking/counterfeiting such as imitation of the colour, name or illegal packaging of preferred brand; packaging plain unblended base oil and selling it as blended lubricant; blending below set standards (mixing colorants with base oil or not putting the right amount of additives); importation of low quality base oil; outright sale of base oil in plastic bottles (unlabeled, unpackaged); blending in drums instead of plants (manually); importation of substandard finished.
These substandard products, according to him, are usually sold for less, thereby creating unfavorable market situation for genuine products.
He listed the consequences of such practices to include regular breakdown of machineries, closure of existing plants, increase in unemployment rate, increasing cases of accidents, environmental pollution, economic loss to the nation, hampers technology transfer and general development in the Industry.
Obidike said in Nigeria, there are several government agencies responsible for monitoring and regulating the lubricant industry to ensure compliance. He listed such agencies to include the Department of Petroleum Resources (DPR), which is the statutory body saddled with the responsibility of granting licenses to intending blenders for the operation of blending plants and import of petroleum products in Nigeria, amongst which is base oil. Other agencies, according to him, include the Standards Organisation of Nigeria (SON), which is saddled with the enforcement of standards and products specification.
He also listed the Petroleum Products Pricing Regulatory Agency (PPPRA), which is responsible for price control of petroleum product in Nigeria. He however said that, on the issue of tackling substandard products, the first two agencies play more active and vital role.
According to the LUPAN chief, between 2010 and 2011, stakeholders in the lubricant sector made several efforts to sanitise the industry, including placing series of adverts in various national newspaper to enlighten the public of dangers of patronising substandard lubricants.
“Also, between 2003 and 2004, the Standards Organisation of Nigeria (SON) and the Department of Petroleum Resources(DPR) sought intervention of stakeholders to sanitise the industry and some level of success was recorded but sustainability remains a snag for such initiatives,” he said.
“On individual levels, the DPR has on occasions embarked on market sanitisation, by inviting companies to make presentations of their operating license, product branding and packaging, evidence of quality control amongst other requirements.
“On the other hand, the SON also commenced monitoring at seaports, airports; taking samples from vessels, paying visits to plants and taking samples for testing, as well as random sampling and testing on the open market.”
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He disclosed that in order to stem the tide of substandard products in the Nigerian lubricant sector, “we support more aggressive approaches by regulatory agencies including: adverts in newspapers; sponsored articles in mainstream newspapers; newspaper editorials; road shows; posters and bill boards in strategic positions; radio adverts in all languages and vernacular, in particular the local variation of English language; TV adverts and mini TV series sponsored by agencies and regulatory bodies on their own or in collaboration with the private sector; message branded T-shirt targeted at lubricant users from car owners, machine operators to mechanics; Periodic publications that meet the standards of certain agencies or that are certified; Sponsorship of talk shows on the issue; appearances in key local radio phone in programs; monitoring and enforcement team comprising government agencies and operators.”
He however suggested ways in which government could tighten industry practice and regulation, saying regulatory bodies must step up their act as watchdogs in the sector, adding that this should be done by stimulating collaboration and cooperation among regulatory agencies, especially in the issuance of permits and clearance for the importation of base oils, noting that in some countries, it is imported as a petroleum product and also a chemical, and as such permits are issued by different agencies.
He also said that base oil should be strictly monitored right from the point of entry to the point of blending, to curb sales of base oil in the open market, stressing that only licensed blenders should be authorised to import base oil.
Obidike also said he would like to see more collaboration with law enforcement agencies, more parliamentary support by way of legislating on how to penalise act of counterfeiting and prosecuting offenders, stressing that importers/manufacturers should be held accountable for every base oil sales and production by making record of same in a chart.
Obidike listed the benefits of tightening industry practice to include boosting employment generation, encouragement of technological transfer and development, reduction in environmental pollution an degradation, reduction in motor accidents as well as checking capital flight.
The LUPAN chief executive also highlighted inappropriate handling of waste oils as one of the industry malpractices. “Waste oils are one of the major contributory factors to environmental degradation. Most people that handle waste oils are illiterates (some auto technicians) and educated but unenlightened technicians. Some of these oils are sold for re-use in heavy duty vehicles, or in some cases even passed off as raw crude. Oil recycling lessens the likelihood of used oils being poured on the land and in waterways, thereby polluting the environment,” he disclosed.
He however said that recycled motor oil can be used as fuel in blast furnace or plant boilers while suggesting that the government can create a special unit to handle oil collection in the waste disposal department of the Federal Ministry of Environment.
“To this extent, special receptacles could be created (just as is done with medical waste) for collection of such oils.The above option is also open to the oil marketers who are the primary contact of the auto mechanics. Oil marketers can embark on – the – spot education on the hazards of waste oil spillage, during their supply rounds to shops and garages. Customised receptacles can be made and supplied to garages or kept by the wayside,” he also recommended.
He also suggested the use of the media (audio, plant & visual) to create awareness and educate the public on the hazards of waste oil spillage even as he said advised on the siting of waste oil collection stations in strategic areas of town.
Speaking on current practices of handling used oils and potential of re-refining in Africa, Obidike said in some countries, such oils are gathered to be combusted as fuels, or recycled for general lubricant applications or for automotive, industrial and heavy duty application, or introducing additives with the appropriate detergent and antifriction qualities.
“As earlier stated, the government can, through its environmental agencies, contain the situation of waste oil collection as the main issue is recycling.
“The government can encourage private individuals to engage in the business of waste oil recycling by making the venture attractive by means of offering varied incentives such as: pioneer grants; tax free periods for pioneer companies; intervention funds disbursed through industrial development banks; business friendly economic policies,” he said.
Obidike said in Africa, there is a large working arena for any corporate body that wants to venture into the business of waste oil collection, especially when measured against the steady growth of industries thus making the viability of waste oil recycling very attractive.
By Olaolu Olusina
- An abridged version of this article was first published in the September 2015 edition of Lubezine
(www.lubesafrica.com)
