N65.1bn subsidy debt: Major marketers threaten to halt fuel imports

Fuel scarcity in Delta15 July 2013, Lagos – Petroleum products marketers under the aegis of Major Oil Marketers Association of Nigeria, MOMAN, have 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, have also resolved to embark on massive downsizing of their staff as a cost-cutting measure.

Executive Secretary, MOMAN, Mr. Obafemi Olawore, at a press briefing during the weekend, said the 2013 subsidy claims for major markers stood at about N50 billion, of which only N9.4 billion was paid last month.

The amount, according to him, excluded the huge interest payments the marketers still had to pay their banks.

In view of the delay in paying outstanding claims and rising bank interest rates, he said, it had become very difficult for the marketers to continue imports of fuel.

He explained that for this year’s imports, Forte Oil had been paid only N2 billion, while Total and Mobil received N5.2 billion and N2.2 billion respectively.

The other three major marketers that account for the largest chunk of imports – Oando, Conoil and MRS – have not received any payments for fuel supplied in 2013.

Details of the subsidy outstanding claims by MOMAN members shows that Oando has total outstanding claims of N26.736 billion; MRS, N8.506 billion; Mobil, N8.523 billion; Forte, N7.747 billion; Conoil, N6.357 billion; and Total, N7.221 billion.

The document also showed that Mobil has not been paid all its outstanding claims for 2011 and 2012 imports, while some of the firm’s outstanding interest payments to banks were yet to be settled.

Olawore said the delay in payment of 2012 and 2013 subsidy claims had as at June attracted an interest of N13.1 billion.

The executive secretary noted that the delay in subsidy payments was also causing untold disruption to the operations of major marketers, adding that the volume of products imported by marketers had continued to dwindle.

“Our main worry is that when the issue of Sovereign Debt Notes (SDN) started, it was almost automatic after 45 days. Once you are given the SDN, 45 days after your imports have come in, you go and collect your money from the Central Bank of Nigeria (CBN).

“But these days, sometimes you collect the SDN, three months later and it has not become money. So we want the sanctity of the SDN restored so that the 45-day timeframe that the PPPRA has in its guidelines can be maintained,” he said.
He expressed regrets that the marketers’ inability to pay back the loans borrowed from banks was adversely affecting their businesses.

“Our interest rate is between 20-22 per cent because of the volume of job we do with the banks. So it becomes another burden to carry on with this kind of business.

“Also, if you brought in products when the exchange rate was N156-N157 to the dollar and you had calculated everything based on that particular figure, but by the time you are paid, and you are going to pay back, the exchange has risen, sometimes up to N160-N161, you would have to bear the loss.

“Now the question is who bears all these losses? They are losses we cannot transfer to consumers, because not only is the price of the product fixed by government, the rise in the rate of interest and foreign exchange was not known from the beginning,” he explained.

Last month, the Ministry of Finance announced that it had paid a total of N192,502,279,966.50 as subsidy claims to marketers since the beginning of 2013.

The ministry said of this figure, N135,696,269,214.05 was paid to the marketers in respect of verified arrears for 2011 and 2012 claims, while the balance of N56,806,010,752.45 was paid to 19 marketers in respect of 2013 verified claims for 39 different transactions as at June 10, 2013.
The actual amount owed oil marketers, excluding the Nigerian National Petroleum Corporation, NNPC, as 2013 claims stood at an estimated N120 billion.

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