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Unpaid petrol subsidy claims rise to N291bn

By on June 5, 2015

As queues of motorists continue to grow at filling stations a week after the intervention of the Senate, oil marketers on Wednesday said they were still being owed over N291bn subsidy claims, denying that they were saboteurs.

The Executive Secretary, Depot and Petroleum Products Marketers Association, Mr. Olufemi Adewole, in a statement made available to our correspondent, noted that the Senate committee’s meeting with major petroleum industry stakeholders successfully persuaded the Petroleum Tanker Drivers Association, Nigeria Union of Petroleum and Natural Gas Workers and the National Association of Road Transport Owners to call off their strike on Monday May 25, 2015 and resume loading of fuel from the various depots that had stock.

He said, “It has become necessary to state the fact that depot owners and other fuel importers under the ‘petroleum support fund scheme’ are still being owed billions of naira in unpaid subsidy reimbursement, interest on delayed payment and foreign exchange differentials.”

Adewole said this much was expressed to DAPPMA and the Major Oil Marketers Association of Nigeria by the former Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, in her letter to both associations, a copy of which, according to him, she also released to the Senate committee for reference.

He however said the letter did not state the timeline for the re-verification exercise which the minister instituted on the amount she disputed and also did not state the expected date of payment which ‘PSF’ participants had been clamouring for in all the meetings held with Okonjo-Iweala since February 2015.

“It would be gross injustice against participants in the ‘PSF scheme’ who actually render a social service to the nation by importing petrol at international rate and sell below cost price at the behest of the Federal Government to be accused of being saboteurs just because they asked to be refunded the difference between the landing cost of the imported petrol and the local selling price in line with the agreed conditions of participation.”

“It should be noted that this is the first time since the establishment of the PSF scheme that marketers will not have ready and easy access to fuel import loans as it is also the first time that commercial banks will notify importers that based on CBN regulations, importers have attained their credit ceilings with their various banks and would have to make some refunds on the existing loans to the sector prior to being funded for petrol imports; unfortunately the expected refund to the banks is yet to be carried out by the Federal Government.”

He said due to debts owed transporters by marketers, who had been experiencing serious financial stress due to outstanding debts owed them by the Federal Government as a result of petrol imports under the petroleum subsidy scheme. The PTD-NUPENG and NARTO had at various times protested non-payment of their freight charges by withdrawing their services

“Hence, it is unfortunate for anyone to insinuate that marketers are blackmailers holding the nation to ransom via a strike about which they know nothing,” Adewole said.

“DAPPMA’s initial assertion on petrol importers and marketers who participate in the petrol subsidy scheme and are therefore entitled to subsidy reimbursement is based on the widely circulated payment list from the Federal Ministry of Finance, which was published in several newspapers.”

He said the publication detailed payees and other ‘PSF scheme’ participants even when there was no payment due to them and the name of Capital Oil and Gas Industries Limited was conspicuously missing, adding that “further investigations have confirmed that the company is indeed being owed an undisclosed amount which however cannot be confirmed to have been added to the figure released by the former minister of finance. “

‘Depot owners and marketers, as patriotic Nigerians, had always advocated the need to remove fuel subsidy, which only benefits foreign refineries where the product consumed locally in Nigeria is being sourced.

The Federal Government should fully deregulate the downstream petroleum sector as the Nigerian economy cannot continue to sustain the subsidy regime. Funds released after the removal of subsidy can be utilised for infrastructural development and job creation as addition to jobs already created by DAPPMA members.

Meanwhile, following the lingering petrol subsidy crisis that has bedevilled the downstream sub-sector of the petroleum industry, stakeholders in the industry have expressed hope of a likely deregulation of the sector by the incoming government.

Also, some oil marketers have maintained that one of the best decisions that can be taken by the All Progressives Congress-led government, concerning the downstream sub-sector and its many woes, is to deregulate the sector and allow market forces to drive demand, supply and price of petroleum products, especially Premium Motor Spirit.

This is coming at a time when petroleum and financial experts have described the current petrol subsidy regime in the country as unsustainable, given its impact on the national economy and the Nigerian people.

There has, therefore, been the fear that the new government of President Muhammadu Buhari, will overhaul the entire process and probably discontinue the subsidy programme.

Not sure that the status quo will be sustained, oil marketers insist that arrears owed them in the light of the prevailing subsidy programme be settled so that business losses can be minimised in the case of the new government discontinuing the scheme.

To this end, the President, Nigeria Association for Energy Economics, Prof. Adeola Adenikinju, stressed the need for the Federal Government to discontinue subsidies on petrol consumption, saying the country should look into subsidising production of petrol and other petroleum products locally.

He emphasised that it was more economically viable for government to encourage businesses that wanted to invest in local refining of crude oil.

The Professor of Economics at the University of Ibadan called for a cost-benefit analysis of the current subsidy regime on account of the scheme’s operation for some years now and the whole objective of the scheme.

In view of the falling oil prices and its attendant challenges on economies, he said the global energy market was fast changing and Nigeria could not be isolated in the scheme of things.

“We need to find out if the scheme is achieving its objectives. It is not. We need to ask if it is cost-effective. It is not also. We need to explore other policy options that are available to the country. There should be a transition from consumption subsidy to production subsidy. This is because subsidising consumption means supporting other economies where the product is refined to our detriment,” he explained.

He said it was very pressing that the country phased out subsidy because of its huge negative impacts on the country’s foreign reserves, exchange rate, inflation and the budget.

He said the country should begin to look at how to phase out subsidy on petrol, given the economic realities on the ground, which were largely unsustainable.

The Chairman, NUPENG, Lagos Zone, Alhaji Tokunbo Korodo, in a telephone interview with our correspondent, said the cause of the current scarcity was the fear being nursed by marketers over what the approach of the new government would be on the subsidy scheme.

Korodo, who anticipated that deregulation of the downstream sector could be the next line of action by the new government, said the body language of the APC-led government would not encourage the petrol subsidy scheme which had hitherto been ridden with fraud cases.

He had earlier told our correspondent that, “The incoming government had made it clear that there won’t be any room for corruption.”

Some members of the APC have identified deregulation as the most viable option to end the perennial scarcity of petroleum products caused by the delay in the payment of subsidy claims, saying that the controversy over subsidy claims had always caused the country embarrassment by fueling perennial scarcity of petrol and inflicting untold hardship on the people.

The Executive Secretary of Major Oil Marketers Association of Nigeria, Mr. Thomas Olawore, had hinged the inability of the marketers to pay on the huge subsidy claims owed the marketers by the Federal Government.

Despite the payment of N154bn to the marketers, who in turn made a part payment to NARTO, the scarcity has persisted, grounding economic and social activities in the country.

Indications recently emerged that some marketers of refined petroleum products, who were not sure of the new policy direction of the President Buhari-led All Progressives Congress government concerning the oil sector, had resorted to stockpiling the products.

Three marketers, who spoke to our correspondent this week, had expressed optimism that the new government would look towards deregulating the downstream subsector of the petroleum industry.

It was gathered that the marketers believed that stockpiling petroleum products ahead of a likely deregulation would boost the value of the products when eventually they were made available to consumers after the subsector might have been fully deregulated, which automatically would result in petrol and kerosene being sold for higher prices.

Commenting on the development, a former Chairman of the Independent Petroleum Marketers Association of Nigeria, Western Zone, Mr. Olumide Ogunmade, said it was normal for the marketers to be apprehensive of possible changes that could come with the new government.

Ogunmade, who said the marketers as well as other Nigerians were expecting a change in policy as far as the current petrol subsidy programme was concerned, said, “Nobody expects the new government to continue with the status quo.”

He said with the depleted treasury inherited by the new government, among other challenges, its decisions could be pragmatic given the realities on the ground.

Marketers, he said, would likely take precautions so that they would not be caught unawares.

“We don’t know the policy of the new government, but we are expecting a change,” Ogunmade emphasised.

 

[Punch]