It is a classic case of the accuser becoming the accused as oil marketers in the downstream sector, in a bid to force government to honour its commitment, have cried out, accusing the federal government of deliberately defrauding marketers under false pretext.
The marketers have accused the federal government of awarding them with the licence to import petroleum products into the country and compelling them to sell the products to Nigerians at a regulated ex-depot price (lower than the landing cost of the cargo).
Not stopping at that, the federal government not only refuses to pay the subsidy element due to them in a timely manner but also refuses to acknowledge the interest and foreign exchange differential losses incurred by marketers as a result of long delayed payments.
According to some of the marketers, who spoke to THISDAY recently but preferred not to be named, what the government was doing is tantamount to fraud under Section 419 of the country’s Criminal Code Act, which states: “Any person who by any false pretence, and with intent to defraud, obtains from any other person anything capable of being stolen, or induces any other person to deliver to any person anything capable of being stolen has committed an offence.”
The guidelines for the administration of the Petroleum Support Fund (PSF), the marketers pointed out, states clearly that petroleum marketers be paid within 45 days of submitting complete and verified documents to Petroleum Product Pricing Regulatory Agency (PPPRA).
But unfortunately, the government has never kept faith with the stipulated time frame. Instead, payments take several months to be processed and even when processed, payment face further delays, which could last several months.
“In all that time, interest is building on the loans with which the products were imported into the country,” explained one major marketer, adding that the delay was crippling their businesses.
“We have a situation where our shareholders are suffering just like bank shareholders who are also bearing the brunt of the risk taken by the banks as a result of the facility given us. They cannot be made whole until government pays us,” he said.
THISDAY investigations also showed the summary of the PSF import cycle as proposed by the guidelines, which was as follows: The marketer is issued with a quarterly licence to import petroleum products; the marketer imports and delivers the product to a depot location approved by Department of Petroleum Resources (DPR); discharge is monitored and signed off by PPPRA operatives, DPR, government appointed external auditors as well as industry consultants; marketer submits complete and verified documents to PPPRA; PPPRA processes the documents by verifying, batching and issuing the marketer with a Sovereign Debt Statement (SDS) for all approved transactions; marketer presents the approved SDS to CBN who presents them with a Sovereign Debt Note (SDN) in turn; marketer gets value for the SDN within 45 days of submission of complete and verified documents to PPPRA.
“Notwithstanding the above sequence, the government perennially fails to promptly make good their contractual obligation to pay marketers the subsidy element of their claims against PPPRA.
“Subsidies have historically been paid by the government sometimes in excess of 180 days from due date,” another marketer added.
Due to these delays, oil marketers consequently end up with massive exposure to commercial banks that support their trading as they are faced with mounting bank interest charges and exposure to foreign exchange fluctuations due to delays.
Another sour point of constant friction, the marketers lamented, is “while the guidelines provide for the payment of subsides, they have no provisions for treatment of accrued interest and exchange rate fluctuations.
“This is notwithstanding the recommendation of the stakeholders committee constituted in 2010 (that brought about the introduction of the SDS and SDN) that marketers be paid interest incurred on outstanding PSF receivables that have been paid after the 45 days prescribed by the guidelines.
“Worst of all is that these delays have whittled down the efficacy of the SDN introduced in 2010 as a negotiable short term sovereign instrument designed to meet negotiability and liquidity criteria.
“Regrettably, due to the delayed and unpredictable nature of issuing and liquidating the SDNs by the government, the negotiability and liquidity characteristic of the SDN has been lost as the commercial banks have refused to discount SDNs for marketers.
“Furthermore, these delayed PSF receivables have negatively impacted marketers who have over the years, made significant investments in infrastructure to support the federal government in guaranteeing efficient and effective distribution of petroleum products within the country, as the delayed payments and continued excessive exposure to commercial banks puts them in the red, making it difficult to recover fixed costs.
THISDAY investigations further revealed that the amount batched but not paid was about N145,774,279,859.67. The breakdown of which is as follows: Batch D N32,898,428,758.27; Batch E N32,005,884,035.88; Batch F N29,467,038,868.91; Batch G N27,017,928,196.61; and Batch H N24,385,000,000.
Penultimate week, petroleum products marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) threatened to halt fuel importation owing to continued delay in the payment of their outstanding subsidy claims.
The marketers, comprising Conoil, Oando, Forte Oil, Mobil Oil, Total Oil Plc and MRS, who currently import about 45 per cent of petrol consumed nationwide, also resolved to embark on massive downsizing of their members of staff as a cost-cutting measure.
Information from This Day was used in this report.