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Fuel: Crisis Without End

Posted: Jun 4, 2015 at 1:48 am   /   by   /   comments (0)

 •Again, Marketers Bemoan Poor Access To Credit    

• Insist FG Owes Them N291b Subsidy Payment    

* Abuja Chamber Laments N500m Weekly Loss

By Phillip Oladunjoye (Lagos) and Chibuzor Emejor (Abuja)


Despite the much publicised May 25 agreement between the Federal Government and stakeholders in the nation’s petroleum industry to end the scarcity of petroleum products in the twilight of the Goodluck Jonathan administration, the persistent fuel queues across the country may not end soon.

Oil marketers blame their inability to import fuel, leading to the lingering crisis, on the refusal of commercial banks to extend further credit lines, owing to the huge debt outstanding against them.

For now, the marketers say the Federal Government is not forthcoming on when their over N291 billion subsidy claims would be paid.

A statement by Executive Secretary of the Depot and Petroleum Products Marketers Association (DAPPMA), Olufemi Adewole, on Wednesday in Lagos, said this is the first time since the establishment of the petroleum subsidy fund that marketers would not have easy access to fuel import loans from banks.

“It is also the first time that commercial banks will notify importers that based on CBN (Central Bank of Nigeria) regulations, importers have attained their credit ceilings with their various banks and would have to make some refunds on the existing loans to the sector prior to being funded for petrol imports. Unfortunately, the expected refund to the banks is yet to be reimbursed by the Federal Government,” he added.

Another problem, Adewole recalled, is that due to the mounting debts, petroleum product transporters have at various times protested non-payment of their freight charges by withdrawing their services. It would be unfortunate, he stressed, for anyone to insinuate that marketers are holding the nation to ransom by embarking on a strike. The marketers, he said, knew nothing about the strike.

DAPPMA’s initial assertion on petrol importers and marketers who participated in the petrol subsidy scheme and were therefore entitled to subsidy reimbursement, he stressed, was based on the widely circulated payment list from the Federal Ministry of Finance, which, he said was published in several newspapers.

The publication, he continued, detailed payees and other ‘PSF (Petroleum Subsidy Fund) scheme’ participants, even when there was no payment due to them and the name of Capital Oil and Gas Industries Limited was conspicuously missing.

“However, further investigations have confirmed that the company is indeed being owed an undisclosed amount which however cannot be confirmed to have been added to the figure released by the former (Coordinating Minister of the Economy).

“It would be gross injustice against participants in the ‘PSF scheme’ who actually render a social service to the nation by importing petrol at international rate and sell below cost price at the behest of the Federal Government to be accused of being saboteurs just because they asked to be refunded the difference between the landing cost of the imported petrol and the local selling price in line with the agreed conditions of participation,” he said.

To justify his claim that the Federal Government owes the marketers, Adewole alluded to a letter by former Minister of Finance, Dr. Ngozi Okonjo Iweala, to DAPPMA and the Major Oil Marketers Association of Nigeria (MOMAN), a copy of which she also released to the Senate Committees.

“Aftermath of the Senate Committees’ meeting with major petroleum industry stakeholders which successfully persuaded the petroleum tanker drivers, PTD-NUPENG and NARTO to call off their strike on Monday, 25th May, 2015 and resume loading of fuel from the various depots that had stock, it has become necessary to state the fact that depot owners and other fuel importers under the ‘petroleum subsidy scheme’ are still being owed billions of naira in unpaid subsidy reimbursement, interest on delayed payment and foreign exchange differentials,” the former finance minister was quoted as saying in the letter.

The marketers said the letter did not state the timeline for the re-verification exercise, just as it did not mention any anticipated payment date the ‘PSF’ participants had been clamouring for during their various meetings with the Okonjo-Iweal since February.

“Depot owners and marketers, as patriotic Nigerians, had always advocated the need to remove fuel subsidy, which only benefit foreign refineries where the product consumed locally in Nigeria is being sourced. The Federal Government should fully deregulate the downstream petroleum sector as the Nigerian economy cannot continue to sustain the subsidy regime. Funds released after the removal of subsidy can be utilized for infrastructural development and job creation as addition to jobs already created by DAPPMA members,” Adewole advised.

Meanwhile, the scarcity of fuel being experienced in the country is taking a huge toll on businesses, with the businesses community lamenting their huge financial losses and man-hours.

The Abuja Chamber of Commerce and Industry (ACCI) estimates, for example, that businesses in the Federal capital Territory (FCT) losses about N500 million revenue weekly to the current fuel scarcity.

President of ACCI, Tony Ejinkeonye, who stated this, said the situation has also affected employees’ productivity.

According to Ejinkeonye, “the effect on businesses in the Federal Capital Territory is huge and varied, it has impaired employees’ productivity, shrunk operations, increased costs and engendered staff layoffs.”

He added that the long period spent on queues at filling stations and on getting public means of transport to places of work meant that workers expend their energy in a wrong direction.

He noted that owing to the scarcity and the deterioration in public power supply, especially in the Federal Capital Territory, businesses are losing livelihoods.

“As a result of poor power supply and scarcity of petroleum products, following which many have had to pay above the official pump price, the operational costs have sky-rocketed beyond projections following the associated increased in transport costs.

“These costs are being passed on to consumers and where they are unable to absorb or resist such increases, businesses have had to scale down activities or reduce staff strength to accommodate the said costs.

“Social cohesion and security have not been spared either as many small scale entrepreneurs and artisans who depend largely on thrift contributions have been unable to keep up with their daily contributions,” he said, lamenting that the situation has had severe consequences on business finances not only for members of the chamber but also for the micro financiers and their bigger regular commercial banks.”

He, therefore, appealed to the Federal Government to urgently address the fuel scarcity to ensure a conducive operating environment for businesses to thrive.