A Review of the Nigerian Energy Industry

Fuel marketers threaten to shut operations in two days

25 July 2012, Sweetcrude, LAGOS – LAGOS — THE Depot and Petroleum Products Marketers Association of Nigeria, DAPPMA, Tuesday, threatened to shut its operations within 48-hours if government failed to pay outstanding subsidy claims to marketers.

Mr Dapo Abiodun, president of the association, gave the ultimatum in a telephone interview with the News Agency of Nigeria (NAN) in Lagos.

Abiodun said government’s failure to pay all verified and outstanding subsidy claims would force the members to suspend supply and distribution of petroleum products nationwide.

“We are not fighting government but what we are saying is that government should pay all our outstanding subsidy claims which have affected our operations.

“If after 48-hours government fails to effect payment, we, the members of DAPPMA are going to put our operations on hold nationwide pending when it is paid,” he said.

Abiodun said that banks were charging marketers about N1.80k as interest on a litre of petrol per month due to non-payment of the subsidy claims by government.

He said that it costs members about $30 million to import 30,000 tonnes of petrol, adding that non-payment of subsidy had resulted to huge debts from funds borrowed from banks.

According to him, the bank loans used to finance importation of petroleum products have continued to accrue interests over and above the 45 days.

He said also that the decision of Federal Government to suspend indefinitely all verified and outstanding subsidy payments since January had exposed its members to financial crisis.

He added: “Our members have been exposed to harsh effects of the devaluation of the naira.

“That will make it impossible to fully repay the outstanding dollar denominated loans when eventually payments are made by the Federal Government.”

Abiodun said the situation had made it imperative for marketers to demand also the payment of all accrued interests over and above the contractual period.

He said that the association was not against the ongoing investigation of the 2011 subsidy claims by marketers but requested for the full payment of 2012 subsidy claims so far.

“We have subjected ourselves to the various panel investigations but nothing came out of the reports. Government doesn’t have reason to hold payment of claims when marketers duly imported products.”

Meanwhile, Wole Ademolekun, the General Manager, Operations at the Petroleum Products Pricing Regulatory Agency, PPPRA, said they would not join issues with marketers on the subsidy payment.

“As an organisation, we don’t comment on this. We have seen advertisements, we have seen so many things but we don’t comment on such.

“Even what you have said now, it’s not accurate but we don’t want to join issues with them. It was JEFTON, now DAPPMA that went and placed an advertorial. Everybody is making a statement and we don’t want to join issue with them,” he said.

NAN reports that the Jetty and Tank Farm Owners Association of Nigeria, JEFTON, on Monday embarked on indefinite strike over the non-payment of subsidy claims.

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  • While we do not subscribe to threats, we also note that the government hardly acts expeditiously on its contractual obligations, leaving its partners very little option. We advise the government to come alive to its responsibility by discharging its obligations to the marketers, while equally urging the marketers to exercise restraint.