Despite meeting for several hours yesterday, the Federal Government and the Major Oil Marketers Association of Nigeria (MOMAN) failed to agree on government’s indebtedness to members of the association.
But the disagreement notwithstanding, the oil marketers assured Nigerians that filling stations will start to dispense fuel nationwide in a matter of days.
The acute fuel shortage eased yesterday in Lagos as many filling stations sold product to motorists.
Leading representatives of the Petroleum Products Pricing and Regulatory Agency (PPPRA), the Minister of Finance, Dr. Ngozi Okonjo-Iweala met with oil marketers, led by MOMAN’s Executive Secretary, Mr. Obafemi Olowore.
Also at the meeting were Central Bank of Nigeria (CBN) officials led the Governor of the apex institution, Mr. Godwin Emefiele and owners of fuel depots.
At the end of the meeting in Abuja, both parties could not give a consensus figure on the exact amount outstanding after the payment of N154 billion by the Federal Government at the weekend.
The government and the marketers had disagreed on the subsidy claim balance, which Dr. Okonjo-Iweala maintained, was N131 billion but the oil marketers put the balance at N200 billion.
The minister noted that it will be difficult to get the exact amount of debt owed the marketers because of what she called the “rolling”nature of the business.
According to her, the outstanding claims will be paid even after the assumption of office by a new government.
Her words: “The understanding reached with the marketers, is that all the outstanding debts owed will be paid based on claims processed by Petroleum Pricing Products Regulatory Agency (PPPRA).
“This is a rolling business and there is no one definitive figure. Even as we talk today by the time we leave, the Executive Secretary of PPPRA may have cleared some more Sovereign Debt Notes and as we speak, the Executive Secretary of PPPRA has been clearing and certifying payments and that is why it is really not a fixed sum.”
She urged Nigerians not to “get fixated to that particular amount because once they keep supplying fuel to the country, there will always be something to pay and government is a continuum.”
The minister was suggesting that the incoming administration might have to continue with the policy after President Goodluck Jonathan leaves office on May 29.
Also speaking, Olawore told reporters at the end of the meeting: “What we are saying is this; there is a figure of N200 billion and there is another figure of N131 billion or so. First, we must get it clear. At what point did we pick that figure”?
“If I’m going to calculate, I will end with what I have supplied today but it depends on the figure that the PPPRA has sent to DMO (Debt Management Office) and the DMO has to scrutinise and send it to the Coordinating Minister for the Economy (CME).
“So, my documents have not passed the process so that is why there is this disparity,” the MOMAN chief said.
Unending crisis
Since 2012, the administration of President Jonathan has repeatedly bowed to pressure from oil marketers and those who benefit from the attendant petroleum products subsidy.
But at no time has the confrontation between the Federal Government and oil marketers been more pronounced than since the fall in prices of crude oil at the international market.
The fall was imminent for about two years, following the discovery and commercial mining of shale oil, particulary in the United States (U.S.) and in some other countries, a development that reduced the quantity of crude oil being exported by Nigeria and which rubbed off on the nation’s revenue and its ability to meet certain financial obligations.
The government’s inability, or lack of foresight to adequately read the signs and plan ahead the devastating outcome and based on the subsidy agreement it reached with oil marketers on the importation of finished products boxed the Federal Government into a tight corner.
The government was had always struggled to fulfill its obligations to the marketers, who often refuse to import fuel and create scarcity at the filling stations as a way of forcing government to meet their demands.
But it was learnt the desire by the oil marketers to get paid their subsidy claims before May 29 largely accounted for the latest round of scarcity.
Only last week, the Federal Government bowed to pressures from oil marketers and coughed out N156 billion from its indebtedness to the marketers. But MOMAN said it got N154 billion.
The ministry of finance, which was caught in the web of the lingering crisis, said the payment was “in line with the Federal Government’s commitment to prioritise payment to marketers despite dwindling revenue.
The latest payment, Paul Nwabuikwu, spokesman for the finance minister, said has two components. The first, he said, “consists of the cash backing of the N100 billion IOU which the marketers were given in March while the second is N56 billion in interest payments for the marketers according to the Petroleum Pricing Products Regulatory Agency (PPPRA) template.”
Despite the payments, Nwabuikwu disclosed that “a balance of N98 billion certified by PPPRA as the amount owed the markers,” was outstanding.
Nwabuikwu described the payment as “the latest in a series of significant payments made to the oil marketers within the last five months.
“These include over N300 billion in two installments in December last year and N31 billion in interest differentials recently. In all, oil marketers have received over N500 billion within the past five months.”
Nwabuikwu added that while making the payment, Dr. Okonjo-Iweala had appealed to oil marketers “to appreciate the efforts being made by the Federal Government to meet up with their payments and reciprocate with some understanding of the situation for Nigerians, who had suffered enough from the biting fuel scarcity.
“She urged the marketers to sustain the distribution and supply of fuel to end the suffering of Nigerians at fuel stations.”
He quoted the minister as saying that “the Federal has made maximum effort, in spite of the well-known fact that the fall in oil prices has significantly reduced national revenues, to prioritise payments to marketers.
“For the sake of Nigerians who are bearing the brunt of fuel scarcity, the marketers should reciprocate in the spirit of dialogue and cooperation in which we have always tried to engage them.”
But the oil marketers cried foul at the weekend, insisting that the Federal Government was owing them N200 billion and not N98 billion as claimed by the finance ministry.
The counterclaim threw the country into extra days of excruciating fuel scarcity that nearly crippled economic activities across the country.
The twist forced the Federal Government to accuse MOMAN of blackmailing and holding it to ransom. The minister, who spoke in Abuja on Sunday, denied claims that it was owing oil marketers N200 billion.
It was the disputed figures that triggered yesterday’s parley between her and the oil marketers in Abuja. But both parties could not resolve the dispute.
The marketers however agreed to sell their products to help alleviate the masses suffering.
Before the meeting, Dr. Ngozi Okonjo-Iweala, put government’s indebtedness to the marketers in the neighbourhood of N131 billion based on Petroleum Products Pricing and Regulatory Agency’s (PPPRA) template.
Interestingly, the new figure of N131 billion was not in the press statement released days earlier by the ministry which said the oil marketers were being owed N98 billion.
There were no clarifications by the ministry on how the additional N33 billion crept into it, except that the minister described fuel importation as a rolling business.
The minister blamed the raging fuel shortage on the activities of a group of cartel determined to hold the nation by the jugular.
She expressed surprise at their attitude of the marketers, stressing that “they were more liberal in times past even when their outstanding was in the region of N2.3 trillion.”
The minister said: “It has become a situation where we have a cartel that can ground the nation to a halt at will. I strongly suggest that the nation has to do something about it.
“It has been very stressful for four years, trying to cope with a group that controls a very important sector of a nation and they are small enough to organise themselves.
“This means that they can hold the nation to ransom anytime they want. And that is what is happening. I remember when I came back as finance minister on August 17, 2011; the first thing that confronted me was this scandal of subsidies.
“By then, more that N1 trillion had already been paid. And we went through that whole thing and since then we cleaned up, restructured and trimmed down.
“You see that the amount we have been paying year by year diminished substantially to about N971 billion a year down from the N 2.3 trillion in 2011.
“We brought it from N2.3 trillion to about N971 trillion that has been in the budget each year. So, we made very substantial restructuring and changes to the whole process that brought the amount down for the nation. But yet we have to deal with this problem and the whole country has seen us trying our best struggling.”
According to her, “oil marketers are a small cartel that are into no risk business based on the template negotiated with PPPRA a long time ago which factored in exchange rate differential, profit margin guarantee, a situation she said leaves them with absolutely no risk.
She went on: “The template that governs their business is designed to cover all their costs plus a profit margin. That is PPPRA template which I have quarreled with for quite some. So, it is really no risk business for them. Or very little risk. I am not saying there is no stress. Of course, they have stress. But the risks are all covered by the template that was negotiated with PPPRA long ago. And it is actually that template that we have been quarreling with.
“That template says that they must be paid exchange rate differentials, interest rates, profit margin quarrantee plus the principal amount they spent in the business. Based on that, the government is taking a full risk of their business according to this template.
“Even when we have revenue shortfall, any interest that accrues has to be paid by government. That is what was negotiated.
“So, they are in a no risk business and we have been pleading with them that if that is the case at least, supply Nigerians with the fuel because at the end of the day the government is still paying for all of this. Why are you making Nigerians suffer? Why these long queues?”
On the difference in amount owed, the minister explained yesterday that the balance has increased to N131 billion based on the last figures obtained from PPPRA. She said the figures constantly changed based on offloading of products.
Dr. Okonjo-Iweala lamented: “It has become a situation where we have a cartel that can ground the nation to a halt at will. I strongly suggest that the nation has to do something about it.
“It has been a very stressful four years, trying to cope with a group that controls a very important sector of a nation and they are small enough to organise themselves.
In March, the Federal Government agreed to pay the N30 billion exchange rate differentials owed the petroleum products marketers over the last couple of months so as to expedite resolution of an earlier the fuel scarcity.
The payment was different from the N185 billion debts owed the marketers which the Federal Government also agreed to offset with the issuance of the Sovereign Debt Note (SDN) by the Debt Management Office (DMO).
But Dr. Okonjo-Iweala said yesterday that the Federal Government has addressed all contentious issues with the marketers. She listed such issued to include foreign exchange rate differentials for which N6 trillion will be paid to mitigate the losses of the marketers.
She informed that the Federal Government was in talks with the marketers in the last 10 days.
The minister said: “President Goodluck Jonathan wants Nigerians to know that his administration is working on the situation and is aiming to resolve the issue in the shortest possible time.
“At the Federal Executive Council meeting, the issue was discussed in terms of pushing forward and making sure things get back to normal.”
She urged the marketers to be patriotic in their dealings with the government as the issue affects all and sundry, even as she commended Nigerians for their patience.
The minister suggested that the incoming administration may have to take a firm stand to check incessant lockdown by oil marketers over payments for imported products or renegotiate fresh terms with for the government to have room to deliver on its electoral promises.
Credit Facilities
In his own remark, Central Bank of Nigeria (CBN) Governor Godwin Emefiele said the apex bank had met with banks and oil marketers to resolve all the contending issues associated with credit facilities.
Emefiele stated that in the last one week, over $500 million worth of Letters of Credit had been opened by banks on behalf of the marketers.
He called on any marketer who is experiencing delays in their Letters of Credit to alert the CBN, promising to step in and ensure amicable resolution.
Olawore, who spoke for the marketers, stated that long queues will disappear for filling stations in a couple of days, as the marketers had moved 495 truckloads of fuel to Lagos, Abuja and environs.
According to him, massive movement of fuel have been transported in the last three days, while three of its members have imported three cargoes of petrol based on the agreements reached with the CBN and the finance ministry.
His words: “Major marketers moved 132 truckloads of fuel to Lagos, while 87 truckloads were moved to Abuja, and this is exclusive to the quantity moved by the NNPC, independent marketers and other marketers.
“No fewer than 137 trucks were moved to Lagos, while 139 trucks were moved to Abuja. You can see that the amount we moved to Abuja was far more than the quantity we moved on Monday. It normally takes between three and four days to transport fuel from Lagos to Abuja; hence we believe the queues will ease off by weekend, latest.
“Our actions are deliberate, to ensure that the queues vanish and normalcy returns. I want to tell Nigerians that tougher days are over; normalcy is expected to return pretty soon.”
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