23 July 2014, Lagos – The Major Oil Marketers Association of Nigeria and the Federal Government are on the warpath following moves by the government to discontinue payment of interests and foreign exchange differentials on subsidy claims to the marketers.
The interests and foreign exchange differentials accumulate on unpaid principal loans obtained by the marketers from banks to import refined petroleum products.
MOMAN’s position was hinged on recent advertorials by the Federal Ministry of Finance entitled: ‘Final payment of interest and foreign exchange differential cost claims to oil marketers cleared by the Economic and Financial Crimes Commission and the Special Fraud Unit,’ and ‘Finance Ministry pays N44.1bn to oil marketers’.
Speaking on the development, the Executive Secretary, MOMAN, Mr. Obafemi Olawore, commended the government for bringing transparency and sanity into the payment of subsidy claims through the Ministry of Finance.
He, however, said, “It is to be noted that interest claims do not just happen. They are as a result of interest changes on borrowed funds from the banks. This means no importer makes any gain on interest claims.
“Rather, claims made by importers are actual debit notes from the banks, which have always been verified by the Petroleum Products Pricing Regulatory Agency and the Federal Ministry of Finance before payment is made through the importers to the banks.”
According to him, although the Federal Government has paid N44.1bn to the marketers, the grand total of subsidy arrears owed was N190.56bn.
Out of this amount, he explained that major oil marketers were owed N94.157bn.
The MOMAN executive secretary said, “The general public needs to be told how and why importers make claims on interest and foreign differential costs.
“Under the Petroleum Support Fund’s approved guidelines as amended, the PPPRA is obligated to reimburse oil marketing companies within 45 days the loss incurred by them arising from the differential between the landed cost of the product and the government approved pump price.
“Specifically, subsidy, according to the guidelines, will apply when the landing cost of a product based on import parity is in excess of the approved PPPRA ex-depot price for the product.”
Olawore maintained that the 45-day payment cycle was arrived at by the:PPPRA, Finance ministry, Central bank of Nigeria, Department of Petroleum Resources, MOMAN, Independent Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association and the banks.
He explained that the interest and forex issues had remained unresolved because of the failure to adhere strictly to the dictates of the PSF approved guidelines of 45 days.
Olawore said, “No marketer or importer will allow himself to be embarrassed by banks threatening to sue or report defaulting marketers to government’s financial agencies. Any payment made after 45 days affects our liquidity position and our ability to pay our suppliers, which ultimately affects the product supply situation.
“Our prayer is simple. Pay all outstanding principal sums immediately, and subsequently pay all claims within 45 days to prevent interest and foreign exchange differentials from arising.”
– The Punch