N256.2bn debt threatens fuel importation

There are indications that the nation may be heading for another fuel scarcity few weeks to the May 29 handover to the incoming Muhammadu Buhari administration, as the Major Marketers Association of Nigeria (MOMAN) has threatened to stop importation due to government’s inability to pay N256.2 billion debt.

The Executive Secretary of MOMAN, Obafemi Olawore, while briefing journalists in Lagos said that the Association might not be able to import petroleum products again as a result of the debt.

He said, “MOMAN is finding it difficult to continue its operations. The debts are rising. MOMAN is fed up with stock today, no product tomorrow. Soon we may have to rely on NNPC for supplies. This could be a problem because NNPC has issues with its suppliers over debt also.”

Olawore painted a grim picture of the situation thus, “The industry is bleeding. Our suppliers are at our neck. As at April 22, what we have in our Apapa depots will only last for three and half days, which shows that our members are finding it difficult to bring in products. Presently, we are being owed N256.2 billion.”

Giving a breakdown of the amount, he said that in February, the government paid marketers N100 billion subsidy claim through post-dated Sovereign Debt Note (SDN), which is expected to mature by the end of April. Prior to that, the government was indebted to the tune of N315.8 billion.

“If you deduct the N100 billion from the N315.8 billion, you will have N215.8 billion.

“Besides, the Petroleum Products Pricing Regulatory Agency (PPPRA) had earlier approved Batches T and U for last quarter of 2014, for payment which amounted to N30.5billion.

“In 2015, we also have Batches A and B for the products imported by MOMAN which have been approved by PPPRA but had not been paid.

“This also amounted to N9.7 billion. So the money put together is N256 billion,” he said.

Olawore also explained that the banks did not help matters, as they have refused to honour the post-dated SDN, while transporters are spoiling for a showdown because MOMAN owes them about N20 billion.

The Central Bank of Nigeria (CBN) last week told banks to get tough with bad debtors. Also, in the 2015 budget passed by the House of Representatives, no provision was made for subsidy.

Earlier in April, MOMAN had written a letter to the Minister of Finance stating the position of the association as regards the debt. In the April 13 letter, titled, potential drastic reduction in the operations of the downstream sector, which was signed by Olawore, MOMAN stated that the Minister assured marketers that they would be fully reimbursed for the interest (incurred due to the late payment) and foreign exchange differential elements of the “under recovery” within 30 days of the February, 2015 meeting.

MOMAN further stated, “Regrettably, despite your above commitment and assurances, the industry to date has only received approximately N30 billion in FOREX differential claims out of N100 billion. In the same vein, only N345 billion has been received in core subsidy payments covering payments up to Q2.

“Specifically, only three companies out of the six MOMAN companies received payments for FOREX differentials and no company, MOMAN or DAPPMA has been paid interest charges on delayed payments.”

The letter further stated, “As of March 31, 2015, the total amount due to marketers based on all claims verified by PPPRA is in excess of N270 billion. We are aware that the amount allocated to petroleum subsidies in the 2015 budget is N200 billion. This is a great cause of concern to our members.”

MOMAN requested that the Minister ensured the sanctity of the PPPRA guidelines, which stated that the relevant government agencies vested with the authority to administer the petroleum subsidy fund scheme honour the sanctity of the sovereign debt notes and the 45 days payment deadlines.

MOMAN had been at the forefront of deregulation of the oil and gas industry. Last January, when the Federal Government reduced the pump price of petrol from N97 to N87, the association advised the government to take advantage of the lower crude oil price to deregulate the downstream sub-sector of the oil and gas economy.

“Adequate margin is what we expect to afford us to pay salaries, expand business outlets and be able to continue in business.

“This is the best time for government to deregulate. It will be incumbent on marketers to demonstrate to Nigerians that the price can go up and down according to market forces, ” he added.

Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.