Fuel Scarcity Looms over FG’s Indebtedness to Marketers
Written by Taiwo Adediran on April 20, 2015
Oil marketers, under the auspices of Major Oil Marketers Association of Nigeria (MOMAN), have decried the government’s inability to disburse the outstanding payments due to its members for the import of petrol under the Petroleum Subsidy Fund scheme, warning that it could lead to another round of fuel scarcity if not promptly resolved.
It is understood that the purpose of the scheme is to ensure the reimbursement to marketers of agreed and verifiable costs of delivery of petrol to the consumer which are in excess of the market price (Under Recovery).
Similarly, the scheme ensures the repayment of any excess of the market price over the costs incurred by marketers whenever this occurs (Over Recovery).
In a letter addressed to the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, and obtained by an online news medium, Freedom Online, the association, through its Executive Secretary, Mr. Thomas Olawore, stated despite previous assurance from the government to reimburse marketers the Under Recovery due to them as verified by the Petroleum Products Pricing Regulatory Agency (PPPRA), the government has till date failed to honour its agreement.
The letter read: “At the previous meeting, you empathised with the marketers and committed to full restitution provided these were verified by the Petroleum Product Pricing Regulatory Agency (PPPRA). You also assured marketers that they would be fully reimbursed for the interest (incurred due to the late payment) and foreign exchange (Forex) differential elements of their Under Recovery within 30 days of the meeting. Furthermore, you committed to immediately issuing Sovereign Debt Notes (SDNs) for the outstanding Under Recovery with full payment on or before the 28th of April, 2015.
“Regrettably, despite your above commitment and assurances, the industry to date has only received approximately N30billion in Forex differential claims out of the N100billion owed. In the same vein, only N345billion has been received in core subsidy payments covering payments up to Q2, 2014. Specifically only three companies out of the six MOMAN companies received payments for Forex differentials and no company, MOMAN or DAPPMA (Depot and Petroleum Products Marketing Association) has been paid interest charges on delayed payments.”
The letter noted that as at March 31, 2015, the total amount due to marketers based on all claims verified by the PPPRA is in the region of N270 billion but revealed that only N200 billion was earmarked for them in the 2015 budget, this according to MOMAN constituted a ”great cause of concern” for her members.
Similarly, MOMAN enumerated that the delays in the payment of the verified sums has ensured the marketers cannot fulfill their financial and non-financial obligations, notwithstanding this, they have continuously supplied adequate petroleum products into the country especially during the just concluded general elections. Olawore warned that the marketers who are currently experiencing “commercial hardship” as a result of cash flow constraints caused by these delayed payments and compounded by devaluation of the naira, higher inflation, and increase in lending rates might unfortunately down tools if this impasse is not resolved.
The consequences would include a significant scale down in petroleum products supply into the country and MOMAN members being left with no option but to streamline overhead costs and workforce “in the very immediate future.” Consequently, the body requested the federal government to urgently redeem the understanding that it had of about the plan to implement the terms of the petroleum subsidy fund scheme by doing the following:
• PSF outstanding receivables – that the Ministry of Finance issues authorised marketers whose cargoes have been cleared by PPPRA with Sovereign Debt Notes for immediate payment of outstanding principal sums.
• Additional Burdens – that all ancillary burdens such as interest and forex differentials incurred by the marketers as a result of the late payment be immediately reimbursed. • Sanctity of the PPPRA guidelines – that the relevant government agencies vested with the authority to administer the PSF scheme honor the sanctity of the Sovereign Debt Notes and the 45 days payment deadlines. It, however, pleaded that the minister should quickly intervene as the next five working days are crucial to members’ capacity to continue to operate.