Fuel scarcity looms as subsidy debt hits N356.2bn

Minister of Petroleum Resources, Diezani Alison-Madueke

Aggregate subsidy arrears owed oil marketers by the Federal Government has been put at N356.2bn.

Out of this amount is the sum of N100bn the Federal Government had made provision for in a Sovereign Debt Note (a post-dated financial instrument), which is expected to mature at the end of April 2015.

However, the remaining N256.2bn comprises actual subsidy arrears for part of 2014 (batch T and U) and 2015 (batch A and B) and the foreign exchange differentials cum bank interests.

This position was disclosed to journalists on Friday in Lagos at a meeting held by the executives of the Major Oil Market Association of Nigeria and Depot and Petroleum Products Marketers Association.

The actual subsidy for the period was put at N40.3bn while the value of the foreign exchange differentials and accrued interest was put at N215.9bn.

Speaking at the meeting, the Executive Secretary, MOMAN, Mr. Thomas Olawore, said as of Thursday this week, members of both association had just three and a half days left for stock to be depleted. This timing, according to him, is expected to lapse by Sunday midnight.

He said members were increasingly finding it difficult to continue importation of petrol for a while now, and that though it was the wish of MOMAN and DAPPMA to continue to import owing to the efforts committed to the exercise, market situation had continued to get tougher.

He said in March/April this year, government made a part payment of N37m for foreign exchange differentials specifically; of which no amount was paid for accrued interests or actual subsidy.

Olawore explained, “We are owed N256.2bn by government in subsidy arrears, but the N100bn post-dated SDN has not been received by us yet.

“As of Thursday, we have just three and a half days for our stock to be depleted, and thereafter, the country would have no choice but to start relying solely on products from the Nigerian National Petroleum Corporation.”

The MOMAN spokesperson said the country would face another round of product deficit if the current situation was not addressed by the government, adding that the NNPC would not be able to meet the huge demand for product in the country alone.

According to him, the total absence of the petrol subsidy item in the current budget calls for worry as marketers do not have an idea yet of how government intends to run the system.

Olawore said, “Some days ago, the National Assembly approved the budget without any provisions for petrol subsidy, and nobody is talking to us.

“We want to know if we should still continue with what we are currently doing. We want to know who will be paying for subsidy on petrol going forward. Ultimately, we want to know who pays for the amount owed us.

“There is an out-going government as well as an in-coming one. Where do we stand? We need to get our money because our suppliers are on our necks.”

In a recent letter from MOMAN addressed to the Minister of Finance, Dr. Ngozi Okonjo-Iweala, the association stated that despite previous assurance from the government to reimburse marketers the under recovery due to them as verified by the Petroleum Products Pricing Regulatory Agency, the government had till to date failed to honour its agreement.

The letter reads in part, “At the previous meeting, you empathised with the marketers and committed to full restitution provided these were verified by the PPPRA. You also assured marketers that they would be fully reimbursed for the interest (incurred due to the late payment) and foreign exchange differential elements of their under recovery within 30 days of the meeting.

“Furthermore, you committed to immediately issuing Sovereign Debt Notes for the outstanding under recovery with full payment on or before the April 28, 2015.

“Regrettably, despite your above commitment and assurances, the industry to date has only received approximately N30bn in forex differential claims out of the N100bn owed. In the same vein, only N345bn has been received in core subsidy payments covering payments up to second quarter of 2014.

“Specifically only three companies out of the six MOMAN companies received payments for forex differentials and no company, MOMAN or Depot and Petroleum Products Marketing Association has been paid interest charges on delayed payments.”