Fuel scarcity: FG pays marketers N100bn

Written by on March 4, 2015

Minister of Finance, Dr. Ngozi Okonjo-Iweala

Minister of Finance, Dr. Ngozi Okonjo-Iweala

The Federal Government on Tuesday expressed concern over the long queues of motorists at petrol filling stations in Lagos, Abuja and other parts of the country, stating that a Sovereign Debt Note of N100bn had been issued by the Debt Management Office to settle part of the subsidy arrears owed oil marketers.

The Minister of Finance, Dr. Ngozi Okonjo-Iweala, confirmed the issuance of the SDN through a statement issued by her Special Adviser on Communications, Mr. Paul Nwabuikwu.

The minister sympathised with Nigerians whose lives were being disrupted by the scarcity of petrol and said the government was working hard to end the scarcity within the shortest time possible.

Specifically, she said an agreement had been reached with the marketers’ union that N100bn out of the outstanding N185bn subsidy debt be paid.

The minister said as part of the agreement, the government would not only pay the costs that the marketers had incurred, but also the interests and foreign exchange differentials.

In order to facilitate the payment, the minister said the Central Bank of Nigeria had given approvals for banks to issue letters of credit to oil marketers.

The minister said that contrary to speculations, the queues were not caused by payment issues, adding that the government paid the marketers a total of N320.8bn from the Excess Crude Account in two instalments last December.

Meanwhile, officials of the Nigeria National Petroleum Corporation and heads of some subsidiaries under it did not appear before the Senate Committee on Petroleum (Downstream) on Tuesday to defend their agencies’ 2015 budget proposals.

The Chairman of the committee, Senator Magnus Abe, lamented that by their action, they had deprived Nigerians an opportunity to know the reasons for the current fuel scarcity and possible way out.

But the Executive Secretary, Petroleum Products Pricing and Regulatory Agency, Mr. Farouk Ahmed, told the senators that the scarcity currently being experienced across the nation was caused by the two rounds of devaluation of the naira carried out by the CBN in November last year and last month.

Ahmed told the committee that the devaluation caused huge confusion in the oil sector as the agency did not know the naira exchange rate to the United States dollar to be used for payment of marketers who imported fuel.

He said the marketers could not deliver the cargoes of fuel expected from them because they were not sure of the exact delivery cost, adding that the old template used for paying them was no longer realistic.

Ahmed said the PPPRA had to seek the advice of the CBN before it could eventually draw up a new template.

He, however, stressed that the crisis had been resolved as the Budget Office on Monday approved the payment of the outstanding bills that the marketers were being owed.

The non-appearance of the NNPC management before the committee prompted Abe to read the riot act to the corporation.

Abe said, “We invited the NNPC to come and defend their budget. They didn’t show up. They don’t even have the respect to give any response to the invitation. We are directing the clerk to re-invite the NNPC, Department of Petroleum Resources, Pipelines and Products Marketing Company and all the refineries.

“All of them must appear before this committee on Thursday. All of us have our roles in the constitution. The letter should contain a strong warning that NNPC must never repeat this before the committee.

“The NNPC has never agreed to bring its budget for discussion. This is the same problem we have every year. I am disappointed that after we agreed on this issue last year, we are still back to it.”

Meanwhile, hundreds of motorists besieged the few petrol stations that sold the product in Abuja and Lagos on Tuesday.

The Independent Petroleum Marketers Association of Nigeria and Major Oil Marketers Association of Nigeria said they would resume the importation of petroleum products by the weekend.

The marketers, it was gathered, decided to resume importation following the Federal Government’s promise to pay up the subsidy arrears owed them as well as the accumulated interests on the loans they took from banks to import, and the foreign exchange differentials.

A former Chairman, IPMAN, Western zone, Mr. Olumide Ogunmade, told one of our correspondents in a telephone interview on Tuesday that some members of the association were expecting to receive their consignments by the end of this week.

He said the banks had agreed to honour the payment advice of the marketers.

Two members of MOMAN, who pleaded anonymity, said product cargoes were being expected.

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