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Marketers, banks groan under unpaid N500bn subsidy slaim

By on September 20, 2015

Federal Government’s failure to meet its obligations on petrol subsidy claims, which has accumulated to over N500 billion is putting pressure on the marketers and the banks, THISDAY’s investigation has revealed.
THISDAY gathered that the current administration had not made any subsidy payments as against the sporadic payments of its predecessors. The last time marketers were paid was in March 2015 and that was for deliveries made in October 2014.
Investigations at Ministry of Finance revealed that the main reason for non-payment of subsidy claims was the massive reduction in government revenues as a result of the slump in oil prices and the belief by the Buhari government that there was still a large amount of waste in the administration of the subsidy payments.
A marketer who declined to be named declares: “This long period of non-payment is a real threat to the health of the financial system, the companies involved in petroleum products importation and to whom subsidy payments are owed and the sustenance of uninterrupted and stable supply of petroleum products to the country.”
The CEO of a major oil marketing company said: “The government is putting companies in a position where they will fail because it is not meeting its obligation. We are keeping a subsidy system that we obviously have difficulty maintaining and which we are maintaining at the expense of the operators. The issue is that these operators are now dying. This could lead to another round of defaults in the banking sector and a devastation of the downstream marketing sector.”
Industry operators disagree with government’s thinking that there is still a high level of fraud and waste in the administration of the subsidy scheme. They argue that sanity and legality and due process had returned to the scheme in the last two years.
Another oil marketer said: “Any notion that payments are being withheld for reason of corruption and fraud are a mere excuse to cover the real issue of a cash crunch.”
An Independent marketer/Jetty owner agrees, stating that majority of major and independent marketers believe strongly that the importation and sale of petrol should be deregulated like diesel: “We know that for now, government policy is still a regulated price regime for petrol. But we are urging government, to honour its obligation to make subsidy payments, especially as non-payment is causing great harm to the downstream sector and the economy.
“If the reality of the nation’s finances is such that payment is an issue, then the government should come up with a structured debt note that forms part of the liquidity of the banks and give both the financial and downstream sectors much needed respite urgently,” he said.

 

[ThisDay]