Members of the Depot and Petroleum Products Marketers Association (DAPPMA) have declared their intention shut down their facilities and lay off staff from 1 July. The association reached the decision at a meeting over the weekend.
DAPPMA said its members have been groaning under massive debts totaling $2billion accruing from fuel subsidy payments and the accompanying foreign exchange and interest rate differentials being owed them by the Nigerian government.
These, said DAPPMA, has put its members under unbearable pressure from financial institutions in the shape of threats of liquidation of their businesses and assets on account of mounting interest payments and effects of devaluation arising from the protracted non-payment of subsidy claims.
The situation, DAPPMA added, has manifested in members ‘ inability to meet operating expenses due to the devaluation of the naira from N197 to N285 and later to over N305 to $1 between 2014 and 2015 as well as that accrued during the subsidy regime.
It has equally yoked members of the association with a baggage arising from banks’ unwillingness to provide fresh credit because they have overshot prescribed sectoral limits. Banks, explained the association, have also refused to refinance existing loans.
In addition, DAPPMA complained of the stifling dominance of the Nigerian National Petroleum Corporation (NNPC) of the product importation and distribution processes, which they said are to the advantage of a few inclined towards sharp practices and who regularly connive with NNPC officials.
DAPPMA similarly complained that its members have been rendered incapable of using the assets in which they have invested huge resources, including tank farms, as a result of their poor cash flow made worse by banks’ reluctance to fund transactions because of their already huge existing obligations.
“Despite several meetings and promises, including an earlier one with the Chief of Staff to the President, which was followed by the audience granted by the acting President to downstream operators on the 23 and 24 May, after which the acting President directed the Minister of Finance to settle all verified claims within two weeks, the operators have not been able to get what is due to them as they believe that the government is beginning to take them for granted,” the association said.
It explained that this arose from the fact that the market has witnessed a relatively even supply of petroleum products in recent times.
DAPPMA, however, stated that its members and other independent marketers have been crucial in ensuring adequate product supply to the North from the Niger Delta despite the congestion in the Apapa Axis, Lagos, which has hampered product supply. This, the association claimed, is because its members and others have considerable storage capacities.
Another complaint made by the association is related to foreign exchange allocations by the NNPC, which it described as lopsided and injurious to its members’ well-being. This, DAPPMA explained, has rendered over 198 tank farms and depots redundant. DAPPMA added that NNPC’s intervention has ignored market realities and remains opaque.
“We are actually tired of the antics of NNPC, which has resorted to sharp practices in all aspects of petroleum product supplies and yet, incurring a huge subsidy bill with taxpayers monies,” said DAPPMA.
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