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Jittery Banks failure to Extend Credit the cause of Latest Fuel Shortages

By on February 24, 2012

The Independent Petroleum Marketers of Nigeria (IPMAN) and the Major Oil Marketers of Nigeria (MOMAN) have blamed the reduction of fuel supply in the country on the failure of banks to provide Letters of Credit to petrol importers.

Petrol importers who are responsible for the supply of approximately 50% of the Nation’s consumption, have had a hard time convincing banks of their ability to meet their credit obligations. Banks have suddenly become jittery as a result of the subsidy probe instituted by the House of Assembly. The concerns of the banks center on if government will continue to pay subsidy or not.

Speaking yesterday before the Senate Committee on Petroleum (Downstream), Mr. Obafemi Olawore, the Executive Secretary of MOMAN explained the state of affairs.

He said, “We have some challenges. As a result of all these probes in the National Assembly and uncertainties created by these enquiries, there is little confidence in the financial institutions to assist marketers to import.

“Anytime we leave the game to the Nigerian National Petroleum Corporation and the Pipelines and Products Marketing Company alone, there will always be a problem. As at today, confidence is low in the banks. Banks are shunning sovereign debt notes from some of the marketers, who are unable to import like they used to do and it is because the banks are scared.”

Representing the Minister of Finance before the committee, the Director-General of the Budget Office, Mr. Bright Okogu, stated that the Federal Government had made a provision of N 888 billion in the 2012 budget for subsidy payments.

The Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Mr. Reginald Stanley disclosed that there was about 9 days of supply located in the country’s strategic reserves.

Also Mr. Olawore stated that six major oil marketers were importing a total of 180,000 metric tones of Petrol to arrive the country in March.