A Review of the Nigerian Energy Industry

Govt owes us $1bn – Oil marketers

14 May 2015, Lagos – The signs that the worsening fuel scarcity may last longer than expected came clear Wednesday when Major Oil Marketers Association of Nigeria (MOMAN), importers and storage companies said the federal government was yet owing them more than N200 billion ($1 billion) in subsidy payments.

Fuel scarcity persists
Fuel scarcity persists
The members of MOMAN, which include Total SA, Oando Plc, Forte Oil Plc and Exxon Mobil Corp’s local unit, are owed about 40 per cent of that amount as at the end of March, with more costs incurred since then, the executive secretary, MOMAN, Thomas Olawore, told Bloomberg.

This revelation has led to the chaos in the oil industry which has had ripple effect in other sectors of the economy.

The traffic snarl caused by the legion of tankers seeking to load petroleum product in Apapa for instance has caused incalculable discomfort to motorists in Lagos.

Yesterday, the Association of Nigeria Licence Customs Agents (ANLCA) said the nation was losing about N5 billion daily on account of the traffic lockdown on the Apapa-Oshodi expressway.

A “recent meeting” with the Coordinating Minister for the Economy and Finance Minister Ngozi Okonjo-Iweala “was not conclusive,” Olawore said in an interview in Lagos.

“Something must be done” about the outstanding amount following the government’s payment of N154 billion last month, he said.

Nigerians have faced long queues for fuel in recent weeks across Africa’s biggest crude producer and economy, which relies on imports to meet more than 70 per cent of domestic needs. The government guarantees cheaper fuel by subsidising gasoline, paying marketers the difference between the landing price of oil and the fixed domestic price.

“A large part of that amount — about N159 billion — is made up of forex differentials claimed by the marketers,” a spokesman for the minister Paul Nwabuikwu said.

“As the minister has said, there is need to verify this huge claim,” he said.

Nigeria, which announced last week that it had already borrowed more than half the amount it budgeted for the full year, is struggling to deal with a drop of 38 per cent in the price of crude in the past year.

Nigeria’s President-elect, Muhammadu Buhari, will take over from President Goodluck Jonathan on May 29, causing anxiety among creditors in the downstream industry that the new government may take longer to remedy the funding shortage, Olawore said.

The Head of Research and Chief Economist for Africa at Standard Chartered Bank, Razia Khan, last week predicted that Nigeria’s weakening fiscal buffers as a result of the sustained low oil price might result in a current account deficit in the country’s balance of payments this year.

Khan, who said this during a session with select journalists in Lagos, also forecast that the country might also raise capital from the international debt market by the second half of the year to meet some of its obligations.

The economic analysts stressed that policy makers in the country failed to effectively utilise the opportunity created by the high crude oil prices in the past years, adding that it would be difficult for the country to rebuild fiscal buffers in a low oil price environment.

While calling for the removal of fuel subsidy, Khan said: “It takes away resources from the poor and rewards those who consume more fuel, which are mostly wealthy Nigerians. So, just from a perspective of having a tax regime that isn’t regressive, there are very serious reasons for the eradication of that subsidy.”

Meanwhile, ANCLA has estimated that over N5 billion is being lost daily in revenues to government agencies because of the Apapa-Oshodi gridlock.

Dr Farinto Kayode, National Press Secretary, ANLCA, said at a media briefing yesterday that the gridlock along Oshodi- Apapa Express Way, Wharf Road, Marine Brigde, Ijora and Orile was becoming unbearable.

He said: “You will recall that this great association some years back, envisaged that port users will have challenges on that road and advised against siting of tank farms within the ports area, especially along the port access roads, from Ijora to Apapa Wharf up to Tincan Island and towards Mile 2.

“But all our suggestions were ignored by the federal government under the administration of former President Olusegun Obasanjo who went ahead to give approval that tank farms be situated around Nigeria’s busiest ports.

“This greedy, singular and callous act of executive recklessness has brought economic loss in terms of manpower and loss of valuable time to both the rich and poor.

“Commercial activities are gradually being grounded as the uncivilised and uncultured attitudes of most of the tanker drivers have become unbearable. They park their tankers indiscriminately thereby blocking the highway causing pains and discomfort to other road users.”

The association, however called on the incoming administration of Major General Muhammadu Buhari( rtd) to find a long lasting solution.

The Vice-President-elect, Professor Yemi Osinbajo, had during the electioneering promised to look into the Apapa traffic situation, adding that the new administration would relocate the tank farms in and around the port environment to somewhere around Lekki-Epe Express Way.

Farinto, warned that if nothing is done, “we may have no other option than to withdraw our services from the ports in order to compel the federal hovernment to live up to her constitutional responsibilities to the citizens”.

He described ANLCA as the largest association of customs brokers, saying: “We say unequivocally that this traffic gridlock is totally unacceptable to us.
“Hence, we call on the federal government and Lagos State Government, as a matter of urgency, to organise a vibrant task force officer to monitor the various outlets into and outside the ports and caution all the tanker drivers.”

– This Day

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