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N100bn subsidy debt threatens petrol supply

By on June 7, 2013

The country may soon be thrown into another round of petrol scarcity if the Federal Government does not pay the N100bn subsidy arrears it owes major and independent marketers responsible for 67 per cent of fuel imports into the country.

As a result, the oil marketers have cried out about their inability to continue to import petrol into the country due to non-payment of the N100bn subsidy claims meant for the first and second quarters of this year.

With a daily petrol consumption of 38.298 million litres, analysts have warned of an impending scarcity of the product if the N100bn subsidy debt is not paid.

Our correspondent gathered on Thursday that the marketers were struggling to meet their obligation of importing 67 per cent of the country’s daily fuel demand amid non-payment of their subsidy claims by the Ministry of Finance.

Though the Federal Government had in the 2013 budget earmarked N971.138bn ($6.15bn) for subsidy payment, it was gathered that no marketer had been paid for petrol imports carried out between January and May this year.

The Executive Secretary, Petroleum Products Pricing Regulatory Agency, Mr. Reginald Stanley, who confirmed this, disclosed that none of the importers had been paid from the subsidy budget.

“There has been no payment for any marketer importing petroleum products in 2013. This is caused by delays in the payment of subsidy claims by the Federal Ministry of Finance, resulting in interest as foreign exchange differential claims request by marketers,” he said.

In view of the non-payment of subsidy claims and rising bank interest rates, the marketers had threatened to halt fuel importation if the Federal Government continued to hold back paying subsidy claims on fuel imported so far.

The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, confirmed that the Federal Government owed the marketers about N100bn, adding that the money was outside the interests the marketers would have to pay their banks.

“The Federal Government owes oil marketers N100bn and this represents the main claims without interest,” he said.

He explained that almost all the marketers had received payments for 2012 subsidy claims, but lamented that no payment had been made in 2013.

Against this background, Olawore warned that it might become impossible for the marketers to continue to import petroleum products without being paid.

The MOMAN boss described the payment delay as a “throwback to last year’s experience when the government delayed subsidy payment on fuel cargoes brought in for two quarters and the companies incurred huge losses largely due to rising bank charges.”

With tight liquidity and bank loans hard to come by now, Olawore insisted that oil marketers might not be able to place orders for cargoes any further.

He said, “It is true that the Ministry of Finance has not paid us. They have paid 2012 claims to almost all the marketers. All what we have imported in 2013 has not been paid for and this is the sixth month of the year.

“Not that we sat somewhere and concluded that we would stop importing fuel, but because the banks are asking for their money plus interest, it may, therefore, become difficult for us to continue importing without being paid.”

An official of NIPCO Plc, who asked not to be named, confirmed that the oil company had been paid twice this year, but clarified that the payments were for petroleum products imported by the company in 2012.

He also confirmed that the company had not received payment for its 2013 first and second quarter subsidy claims.

The PPPRA issued petrol import permits to 32 companies in the first quarter, with the Nigerian National Petroleum Corporation getting the highest allocation. The remaining 31 companies, comprising major marketers and independents, shared 67 per cent.

The companies include Aiteo Energy, Ascon Oil, Avidor Oil and Gas, A-Z Petroleum, Bovas, Conoil Plc, Dee Jones Petroleum and Gas, Dozzy Oil and Gas, Folawiyo Energy, Fresh Synergy Limited, Forte Oil Plc, First Deepwater Discovery Limited, and Gulf Treasure Limited.

Others are Heyden Petroleum, Ibafon Oil Limited, Integrated Oil and Gas Industries, IPMAN Refining and Marketing Limited, Mobil Oil Plc, MRS Oil & Gas Limited, MRS Oil Nigeria Plc, NIPCO Plc, Northwest Petroleum & Gas Limited, Oando Plc, Obat Petroleum Limited, RainOil Limited, Rahamaniyya Oil Gas, Sahara Energy Limited, Shorelink Oil Limited, Swift Oil Limited, Techno Oil Limited and Total Nigeria Plc.