The Ministry of Finance says the regime of tightened payment process, which was introduced in order to bring sanity to subsidy arrangement, is yielding positive results but fuel marketers claim the corresponding delay brought about by the system is putting them under severe pressure from their banks, reports Festus Akanbi
Sometimes last month, the media was regaled with the petition forwarded to the Federal Government by some major oil marketers over an alleged delay in the settlement of N65 billion fuel subsidy debts. What turned out to be an alarm attracted the attention of economic players who felt the cry of fuel marketers could be a precursor to another round of fuel scarcity with its attendant strains on the overall economy.
But a source in the Federal Ministry of Finance, directly responsible for subsidy payment, is insisting that the ministry has been alive to its responsibility as far that payment of subsidy claims is concerned, explaining that marketers’ complaints were borne out of impatience and their failure to come to terms with the decision of the ministry to be firm and thorough in handling subsidy claims these days.
The Marketers’ Worry
The marketers, including Mobil, Total, MRS, Forte Oil and Conoil, speaking under the aegis of the Major Oil Marketers Association of Nigeria, MOMAN, said the delay in the settlement of their subsidy bills had affected their operations.
They said the delay had led them to a point where they could not import petroleum products anymore. In a letter recently to the Minister of Finance, Dr. Ngozi Okonji-Iweala, Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, and Executive Secretary, Petroleum Products Pricing Regulatory Agency, PPPRA, Mr. Reginald Stanley, MOMAN urged the Federal Government to clear the outstanding debt.
The association also urged the government to respect the 45 days window for settlement of subsidy bills as agreed upon with the fuel importers.
MOMAN Executive Secretary, Mr. Timothy Olawore, had said “The implication of the non-payment of our claims is that it is affecting our bottom line and this will lead to a reduction in petrol importation and eventually the downsizing of workers.”
Olawore argued that the majors were not out to blackmail government, noting that the banks were no longer willing to extend credit facilities to enable members import fuel.
The tone of the message did not change when THISDAY confronted a leading independent marketer, Managing Director/Chief Executive, Rainoil Limited, Mr. Gabriel Ogbechie, who lamented that late payment of subsidy was affecting the operation of fuel marketers.
He explained: “One area that we would like government to do more is the payment of subsidy claims. You would recall that when the SDS (Sovereign Debt Statement) structure was put in place, it was such that government was supposed to pay subsidy claims after 45 days.
“A situation where you do not get your money or your finance cost which is more than double, on time and there is no place in the template where you can put that additional cost of finance, poses some kind of challenge.
“I understand the Federal Ministry of Finance should ask questions but before, once you got your Sovereign Debt Statement from PPPRA (Petroleum Price Regulatory Agency) and you take it to the Debt Management Office, within 24 hours you get your SDS and you get value within a week when you take it to the Central Bank. So government needs to look at this very seriously because it is one of challenges we players in at the downstream face”.
Federal Ministry of Finance Explains
While the marketers were complaining of delay payment, the finance ministry last month announced that it had released N48 billion as payments to 25 oil marketers to cover verified subsidy claims. The ministry, in a statement signed by Paul Nwabuikwu, Special Adviser to the Coordinating Minister for the Economy and Minister of Finance, said with the release of the funds, the Federal Government had paid a total of N240.5 billion to fuel marketers in 2013.
According to the ministry, before the latest payment, a total of N192.50 billion in verified claims had been settled this year.
Nwabuikwu listed the 25 oil marketing companies to include Aiteo Energy Resources Limited, Ascon Oil Company Limited, Conoil Plc, Dee Jones Petroleum & Gas Limited, Dozzy Oil And Gas Limited, Forte Oil Plc, Fresh Synergy Limited, Gulf Treasures Limited, Integrated Oil and Gas Limited, IPMAN Investment Limited, Masters Energy Oil and Gas Limited, Mobil Oil Nigeria Plc, NIPCO Plc, Oando Plc, Rainoil Limited, Sahara Energy Resources Limited, Swift Oil Limited, Techno Oil Limited and Total Nigeria Plc.
Others are Bovas & Company, Heyden Petroleum, MRS Oil Nigeria Plc, Rahamaniyya Oil And Gas Limited, Obat Oil & Petroleum Limited and Shorelink Oil and Gas Services Limited.
However, a competent source told THISDAY at the weekend that the delay in the payment of the funds already approved by the Finance Ministry was caused by bureaucratic bottlenecks at the Central Bank. According to the source, the sovereign debt notes approved for the marketers were lying fallow that the apex bank due to the failure of those responsible for their processing to do what they were supposed to do until the intervention of the finance minister recently.
Okonjo-Iweala had announced a new petroleum subsidy payment which she said was put in place to help stem leakages in subsidy administration.
The ministry, according to her, audited N1 trillion in subsidy and found N232 billion questionable. She noted that so far, the ministry had recovered about N14 billion.
In its quest to tighten the payment process, the Petroleum Products Pricing and Regulatory Agency has been able to reduce the number of oil marketers from 143 to 32.
But MOMAN secretary explained that why the ministry could not be blamed for tightening the process in order to close the door against dubious marketers, there is need for the federal government to revisit the complaints of the marketers in view of the dangers the delay poses to their business.
The Waiting Game
Faulting the claims by the ministry that it had been making payments to marketers, Olawore said what the ministry had paid so far was peanut.
He lamented that even the payment hadn’t materialised into cash, saying what had been given the marketers so far was a piece of paper, not money.
The MOMAN official said all the payment listed by the ministry were for 2012, saying marketers had imported substantial volume of fuel this year and they had not been paid at all.
Banks Interests Surge
He lamented that while the payment was being delayed, banks interest rates were piling up.
“Interest rate is going on. Banks are charging high interest rate. Government should do everything possible to ensure the marketers are promptly paid.
Now we are in August, we should solve this problem so that it won’t lead to fuel scarcity in the Christmas period in December,” Olawore said.
He said the PPPRA, which is a government agency, had already verified all the fuel import, adding that if they had any question, they should direct them to the PPPRA and that all the fuel brought had been inspected.
According to him, government should as a matter of urgency pay the principal amount and interests on the delay given the fact that banks that facilitated the fund used by the marketers are breathing hard on them for higher interests.
Information from This Day was used in this report.