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Scarcity: FG to clear N375bn fuel subsidy arrears month end

The Federal Government yesterday took steps to avert another round of fuel scarcity in the country, when the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, pledged to ensure that outstanding fuel subvention owed to petroleum marketers are paid by the end of November.

The Minister gave the assurance at a meeting with members of the Depot Owners and Petroleum Products Marketers Association (DAPPMA) and Major Oil Marketers Association of Nigeria (MOMAN) in Abuja, where she explained she was already in talks with the Minister of Finance on the issue.

A reliable industry source who spoke exclusively to Daily Sun on the sidelines of the 32nd Annual International Conference and Exhibition of the Nigerian Association of Petroleum Explorationists (NAPE), which ended in Lagos yesterday, put the total subsidy arrears at a staggering N375 billion.

The source disclosed that subsidy arrears owed petroleum marketers as at yesterday stood at N295 billion while interest rate on the amount is about N80 billion.

“You know, as marketers we approach banks for loan support to import this product. And as you know, interest rate hovers between 22 and 25 per cent. The more we delay paying back, the more the interest acrues,” he said.

But Alison-Madueke disclosed that she has already briefed President Goodluck Jonathan on the implications of the continued delay in payment of subsidy to the marketers, adding that she has also scheduled a meeting with the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emiefele, to work out ways of getting the banks from making good their threats to withdraw facility lines from the marketers on account of the debts arising from the delay in settling petroleum subsidy arrears.

Speaking earlier, the Chairman of DAPPMA, Mr. Dapo Abiodun, urged the Minister to intervene to sort out the issue before it degenerates into another round of fuel scarcity in the country.

Also reacting, the Executive Secretary of MOMAN, Obafemi Olawore, on his part stated that already stocks of petrol in the various depots in Apapa, Lagos, are fast getting depleted, urging the Minister not to allow the nation get to the point where products will dry up from the depots first before intervening as such a situation will not augur well for the country, especially at this time of approaching end of year festivities.

However, the petroleum products marketers expressed their gratitude to the Minister, adding that they felt reassured by her promise to ensure that the subsidy arrears are settled by the end of the month.

Recall that MOMAN had in July disagreed with the Federal Government following moves by the latter to discontinue payment of interests and foreign exchange differentials on subsidy claims to the marketers.

The interests and foreign exchange differentials accumulate on unpaid principal loans obtained by the marketers from banks to import refined petroleum products.

MOMAN’s position then was hinged on advertorials by the Federal Ministry of Finance entitled, “Final payment of interest and foreign exchange differential cost claims to oil marketers cleared by the Economic and Financial Crimes Commission and the Special Fraud Unit,” and “Finance Ministry pays N44.1 billion to oil marketers.”

MOMAN had said then that, “it is to be noted that interest claims do not just happen. They are as a result of interest charges on borrowed funds from the banks. This means no importer makes any gain on interest claims.

“Rather, claims made by importers are actual debit notes from the banks, which have always been verified by the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Federal Ministry of Finance before payment is made through the importers to the banks,” MOMAN had said.

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This entry was posted on November 15, 2014 by in Business and tagged , , , .
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