Since the discovery of the false subsidy claim made by some marketers two years ago, the Federal Government has adopted measures to enthrone transparency in payment. But the process, marketers believe, is cumbersome and costing them a lot, Samson Unamka reports.
•Fuel supply threatened over marketers’claim
It all has to do with swiftness of the Federal Ministry of Finance in handling the matter. If it acts swiftly, it will avert a fuel crisis. If it does not, danger looms. Why? Because of the payment of the backlog of arrears owed oil marketing companies and importing companies.
All the ministry needs to do, experts say, is to start complying with the 2010 guideline for the administration of the Petroleum Support Fund (PSF), which stipulates payment within 45 days of submitting complete documents by importers to the Petroleum Products Pricing Regulatory Agency (PPPRA).
Downstream sector watchers were unanimous in their contentions that the enthronement of a culture of delayed payments to genuine importers in the last three years has put many marketers’operations in jeopardy.
Marketers are groaning under the huge accumulated bank interest charges which the loans sourced from these financial institutions to import products continue to attract. The foreign exchange differential losses which these marketers are also incurring owing to the government’s snail speed approach to effecting payment is equally mind boggling.
Industry sources last week estimated that over N145 billion is outstanding to marketers and some of the overdue payments are for 2011 and 2012 and some N50 billion as outstanding for 2013.
While the ministry has continued to justify the delay in payment to its resolve to painstakingly verify claims to ensure marketers’ transparency in the wake of the claims claims paid to some unscrupulous companies, observers argue that the approach is hurting importers badly and could be counter productive in the long run.
Most marketers believe that it is wrong for the ministry of finance to hide under the guise of forensic auditing and thorough verification of claims as justification for these delays which have drained them of resources to do their business, made them to incur avoidable huge bank charges and put their credibility and credit rating on the line.
The situation is not that many marketers are finding it difficult to source for funds to import products even when they win allocation from PPPRA, their infrastructure which cost billions of naira, are idle and most of the affected firms are set to reduce their workforce. The companies’inability to source funds to import product could throw the nation into another fuel crisis which a top major marketing company executive last Friday said was inevitable.
Ordinarily, if the ministry and the Central Bank of Nigeria (CBN) comply with the 2010 Guidelines for the administration of PSF, the nation should not find itself in a situation of endless delay in payment for products imported.
The PSF import cycle as laid out in the guidelines states that once a marketer is issued a licence to import products by PPPRA, the marketer imports the volume allocated it, and delivers to a depot approved by the Department of Petroleum Resources (DPR); the product is verified and confirmed by PPPRA, DPR and government appointed external auditors.
The marketer will then submit complete and verified documents to PPPRA which, after verification and batching, issues a Sovereign Debt Statement (SDS) to the marketer. The marketer goes ahead to submit the SDS to CBN, which then issues a Sovereign Debt Note (SDN) to the marketer. Going by the guidelines, the marketer is to get value for the SDN within 45 days of submission of complete and verified documents to PPPRA.
Executive Secretary, Major Oil Marketers Association of Nigeria, (MOMAN), Obafemi Olawore, while fielding questions on a programme on Channels Television, said the government had consistently failed to adhere to this guideline even when the importers/marketers have consistently kept their own side of the bargain.
He wondered why the ministry only pays whenever marketers cry out and threaten to discontinue importation.
Truly so. By August last year, many marketers had discontinued importation of products to protest the accumulated arrears owed them by the government.
At issue was some N100 billion which the Minister of Finance and the Co-coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala was yet to sign off on. Though N888 billion had been earmarked for fuel subsidy in that year’s budget, President Goodluck Jonathan was to later request for an additional N161 billion three weeks to the end of the year which was given expedite approval by the National Assembly, bringing the total subsidy figure for 2012 to N1.042 trillion naira.
Out of the N888 billion initially allocated, some N500 billion had been paid before mid-2012 for the 2011 outstanding. The accumulated arrears due to the oil marketing and trading firms by then had risen to N179 billion.
Following subtle threat to scale down on importation, the ministry paid N79billion, leaving a balance of N100billion.
Before long, another fuel crisis started rearing its head; in parts of the country and Abuja, long queues at the gas stations resurfaced. It spread to Lagos, the nation’s commercial nerve centre.
Initially, the official line was that the development followed vandalism of the major supply channel – the pipelines at Arepo in Ogun State.
It was not long before it became a common knowledge that it was only the Nigerian National Petroleum Corporation (NNPC) and a few marketers that were importing products. Most marketers halted further importation and pressure was brought on government to pay the N100 billion outstanding.
To reverse the trend, Mrs Okonjo-Iweala, who had warned earlier that she would not be stampeded into paying the marketers because she was embarking on forensic auditing of the claims, quickly made more payments. This development also led to the President requesting for additional N161 billion appropriation from the National Assembly to enable the government to meet the marketers’ request.
But the normalcy which the nation has witnessed over the months appears to be under threat again.
By mid-June, this year, the marketers’discomfort with another round of overdue payment from the subsidy support fund had come into the open.
Indeed, the marketers, who import close to 70 per cent of the nation’s fuel requirement, are threatening to halt importation if something was not done about their predicament soon.
At issue again is another N100 billion outstanding for the first two quarters of the year. While the marketers acknowledge that they have been paid twice this year, the payments, according to them, were for last year’s outstanding.
Following their outcry, the ministry released about N48 billion to about 25 oil marketers to cover what it said was the verifiable claims.
