Following the insistence of the major Oil Marketing and Trading (OM & T) companies involved in the importation of petroleum products that the federal government should pay interest rate for its failure to pay fuel subsidy within 45-day cycle stipulated under the Petroleum Support Fund (PSF) scheme, the government has yielded to their demand, THISDAY has learnt.
This is coming as the Federal Ministry of Finance at the weekend commenced massive payment of the outstanding subsidy to ensure seamless supply of petroleum products across the country during the yuletide.
THISDAY gathered at the weekend that the federal government had also approved payment of interest for late payment of subsidy for the period between January and July 2013.
A source close to the Major Oil Marketers Association of Nigeria (MOMAN), who confirmed this development, told THISDAY that the Petroleum Products Pricing Regulatory Agency (PPPRA) had earlier been directed to compute the interest due to the marketers but no approval was given immediately until recently.
“MOMAN always operates as a pressure group and that was why government directed the PPPRA to compute their interest but they were not paid. But now, the government has approved the payment up to July 2013 and directed that they should be issued Sovereign Debt Notes,” he said.
“The government is enriching the banks by not paying subsidy as at when due because marketers pay interest on loans they borrowed for fuel importation,” he added.
He further stated that the last time the government paid the marketers interest was in 2010 when a total of N19billion was paid as interest.
It was however gathered that the latest clamour for the payment was one of the major recommendations of the Technical Committee on Delay of Payment of Subsidy, which was set up after the recent stakeholders’ meeting with the PPPRA.
The seven-member pan-industry committee was set up in September 2013 to explore ways of resolving the lingering dispute between the Ministry of Finance and the OM &T companies over delays in payment of subsidy.
It was learnt that the committee, which submitted its report to the PPPRA recently, noted that with the introduction of the Sovereign
Debt Notes (SDN), the Federal Government had in 2010 stopped the payment of interest for delaying subsidy.
This, he said, stemmed from the impression that the SDN issued to the marketers after importation was meant to be as good as cash.
But despite the introduction of the SDN, the committee observed that the government has continued to delay payment of subsidy beyond the stipulated 45 days.
In a related development, the Federal Ministry of Finance has also commenced payment of the outstanding subsidy with a target to finish the payment before the Christmas celebration.