19 February 2015, Lagos – Following the uncertainty about Nigeria’s 2015 general elections, oil marketers are now apprehensive over possible delay in the payment of petrol subsidy arrears by the Federal Government and the cost implications the delay might cause marketers.
The marketers, who are also worried about the further devaluation of the naira, believe that prolonged delay in subsidy payment owing to possible political unrest, will result in compounded interest charges from financial institutions, which will lead to further depletion of profit margins.
A spokesperson for a major oil marketer told our correspondent in confidence that the initial tension started when the Federal Government, through the Ministry of Petroleum Resources, announced the reduction of Premium Motor Spirit (petrol) price from N97 to N87 per litre without proper consultation with the marketers.
Major oil marketers as well as their Jetty owners counterpart had earlier told journalists in Lagos that while the review of the pump price of petrol was the constitutional right of the Minister of Petroleum Resources, no details were communicated to them before the reversal was effected.
The past chairman, Independent Petroleum Marketers of Nigeria (Western zone), Mr. Olumide Ogunmade, told our correspondent on the telephone that the earlier devaluation and imminent devaluation of the naira, were seriously affecting oil marketers.
He said government was shying away from addressing concerns over foreign exchange differentials caused by the devalued naira.
Data from the Petroleum Products Pricing and Regulatory Agency, PPPRA’s website on Tuesday this week showed an over 6.9 per cent increase in subsidy payable by the Federal Government to oil marketers within five days.
The agency put the total cost of Premium Motor Spirit (petrol) at N102.82 per litre for February 16, with a subsidy of N15.82 per litre of petrol.
As of February 9, the total cost per litre of the product was put at N101.79 as of February 9, with a subsidy on the product pegged at N14.79 per litre.
Over three weeks, oil marketers claimed they were owed N250bn by Federal Government in petrol subsidies. The Federal Ministry of Finance recently said the payment of subsidy arrears owed oil marketers was not being neglected, as was insinuated by some oil marketers.
The ministry also stressed its commitment to addressing the concerns of oil marketers as soon as the arrears in question were verified.
The ministry’s spokesperson, Mr. Paul Nwabuikwu, in a telephone interview, confirmed this to our correspondent, saying if there were any payments to be made to oil marketers in form of subsidy arrears, the Federal Government would not fail to play its part.
He said, “I want to emphasise that oil marketers are not being neglected, and efforts are being made to pay them.”
Oil marketers under the aegis of Major Oil Marketers Association of Nigeria and Depot and Petroleum Products Marketers Association on January 20, insisted that the Federal Government was still owing them subsidy arrears of N250bn on petrol for 2014.
The marketers said foreign exchange differentials and accumulated interest from banks added up to N95bn while N155bn was the real subsidy arrears owed marketers.
Nwabuikwu said he could not confirm the N250bn claim of the oil marketers at the moment, but could assure Nigerians that the government would not fail to meet its financial obligations to the marketers.
He explained that in December 2014 alone, the Federal Government paid N300bn to oil marketers as subsidy arrears, saying that on December 2, over N154bn was paid, while over N166bn was paid on December 30.
But some oil marketers, including members of the Independent Petroleum Marketers Association of Nigeria, IPMAN, ave, in recent times, called on the Federal Government to pay subsidy arrears owed them (marketers) since last year.
The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Femi Olawore, had earlier said the news of the N87 reviewed pump price of petrol was surprising to operators, as no details were given by the Federal Government before and after the reversal took effect.
Most of the marketers also claimed that the current oil dealers and marketers’ margin of N4.60 per litre was not adequate, and that they remained committed to seeking an upward review of the margin.
Olawore said for the past two years marketers had been requesting a review of the margin from government, which was last reviewed in July 2007.