The Nation Newspaper

Tag: Subsidy payment

  • N236b subsidy payment saves govt litigation, job losses,

    The Federal Government’a approval for the payment of N236billion subsidy to oil marketers has saved the country from litigation and job losses, the Chief Executive Officer (CEO), Petrocam Nigeria Limited, Mr. Patrick Ilo, has said.

    Oil marketers said they would close shops and sack workers as they were unable to continue in business, service loans obtained from banks, among others, as a result of the government’s inability to pay the arrears of fuel import subsidies put at about N800 billion.

    The Petrocam chief said payment of the debt prevented marketers from closing businesses because of huge interest rates on their bank loans and bankruptcy, among others.

    Petrocam is a South African-based oil trading firm with interest in the Nigerian downstream sub-sector.

    In an interview with The Nation in Lagos, Ilo said the country would have been plunged into serious economic crisis if the government refused pay the arrears.

    He said the government’s agreement averted a major crises, adding that marketers had threatened to go on strike.

    He said the payment of the first tranche and the plan by the government to pay both the second and the third tranche of the debts to the marketers prevented them from carrying out their plan.

    Ilo said: “If the government did not pay the first tranche of N236billion with the promise to pay the remaining two later, many of the marketers would by now have shut down businesses. Also, many of the marketers would have either downsized or stopped operation. Such action would have thrown many people into the labour market.

    “Also, there would be litigation following the decision by banks to sell-off the properties of their clients (the marketers). Once marketers do not have money to service their debts, banks are under obligations to take over their properties used as collaterals.”

    According to him, on their hand, banks would increase their interest rates when marketers go back to them for more loans. “If the government failed to pay the debts owed marketers, marketers would go to banks for more money and this may force banks to increase their lending rates,” he added.

    Besides, there would be drop in the sales of petroleum products as marketers would not get enough to improve their operation,” he said.

    Banks, Ilo said, rely on the Monetary Policy Rate (MPR) provided by the Central Bank of Nigeria (CBN), to determine their lending rates.  Through the MPR,  banks can reduce or increase their lending rates, adding that inability of the government to pay subsidy arrears is an indication that marketers must look for money at all cost for operation and will lose their assets.

    The nation’s oil and gas industry lost more than 6,000 jobs to the turbulence in the global oil industry that started in 2014. This was evident by the closure of businesses of oil service firms and other operators.

     

  • Subsidy payment: Marketers to resume $3b refineries’ financing

    The Independent Petroleum Marketers Association of Nigeria (IPMAN) is to resume financing its $3billion refineries project as soon as the Federal Government finalises payment for fuel import subsidy arrears, the South-west, Zonal Chairman, Alhaji Debo Ahmed, has said.

    He said the development became necessary to fast-track the take-off of the project and reduce dependence on imported petroleum products.

    He said projects abandoned in the wake of the financial and leadership crises that rocked the association would be revisited now that its members would soon be paid subsidy arrears owed them by the Federal Government.

    In a phone interview with The Nation, Ahmed said IPMAN members would get their subsidy payment soon, adding the payment coincides with the resolution of the leadership crisis in the union.

    Ahmed said: “The court recently resolved the leadership crisis that has rocked the association for five, which at the end, the Supreme Court upheld the appointment of the National President, Chief Chinedu Okoronkwo, as the substantive leader of the union. By this, all factional issues have been laid to rest. The resolution of the internal crisis and the planned payment of the subsidy owed the marketers are good omen for IPMAN as they would help in reviving projects that are in a comatose.

    According to him, his members would be paid in either of the last two tranches. “Without doubt, the government would pay members of IPMAN in either the second or the third tranche and when this happens marketers would go to work to finance their projects in the interest of the downstream sub-sector.”

    He said the government paid marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) and Depot and Petroleum Products Marketers Association of Nigeria (DAPMAN)  N236 billion in the first tranche, adding that members of IPMAN would be in the last two tranches.

    On depots repair, he said the 22 depots owned by the Federal Government were being repaired, noting that marketers were waiting for the inauguration of Ilorin Depot by the government this week. He noted that the Ore depot, which is located between Ondo and Benin axis, has been completed.

    The depots, Ahmed said, were in bad conditions, adding that the issue was causing delays in loading petroleum products by the marketers.

    He said the payment of the subsidy arrears was backed with promissory notes, therefore, marketers would be able to load fuel without stress, now that the government has repaired many of its depots. This would help in ensuring distribution of petroleum products across the country, and further prevent scarcity of the products, he added.

    He said the government is transparent on the payment of the arrears, stressing that that would go a long way in boosting their confidence substantially.

    The four refineries owned by the government are working below capacity, a development, which made the government to introduce subsidy scheme.

    Through subsidy the government is able to offset the cost incurred by marketers from importation of fuel.

  • Reps summon Kachukwu, NNPC over subsidy payment

    • Fuel scarcity may worsen over move to scrap PEF

    The Minister of State for Petroleum Resources, Ibe Kachukwu and the Group Managing Director (GMD) of NNPC, Maikanti Baru have been asked to appear before the House Committees on Finance and Petroleum Resources (Downstream) to explain the current subsidy payment on Premium Motor Spirit (PMS) by the Corporation.

    In addition, Kachukwu, Baru as well as the Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Abdulkadir Umar,  are to appear before the House Committee on Finance and Petroleum Downstream to account for the monies expended on the subsidy payment since January 2017 till date. They are to explain the current Petroleum Pricing Regime.

    The decision of the House followed the adoption of a motion of urgent national importance raised by Sunday Karimi  (PDP, Kogi), saying  despite the announcement of the removal of fuel subsidy by the Federal government, the NNPC is still paying subsidy.

    He said there is a need to ascertain the recipient(s) of the latest fuel subsidy since NNPC is the sole importer of fuel into the country.

    He said: “In December 2017, the Vice President Prof. Yemi Osinbajo and Petroleum Minister (State) Kachukwu both admitted that the current landing cost of Petrol is N171 per litre despite the fact that the Federal Government has pegged official rate at N145 per litre at the moment.

    “What this means is that it is the NNPC that is paying for the cost or, deferential of N26 per litre, despite the fact that the Federal Executive has posited that it has removed Petroleum Subsidy and there is no Parliamentary Appropriation for subsidy payment in the 2017 Appropriation Act.

    Meanwhile, the fuel supply  situation may worsen following the National Assembly’s plan to scrap the Petroleum Equalization Fund (PEF), which the marketers yesterday vowed to reject.

    The National Vice President, Independent Petroleum Marketers Association of Nigeria (IPMAN), Alhaji Abubakar Maigandi, said plans were underway for the  lawmakers to abrogate the PEF Act, but vowed that members of his association will not support the removal of the Fund.

    He said a joint committee, comprising members of the Senate and the House of Representatives have  reached a resolution to scrap the PEF as part of the strategies adopted to tackle the reoccurring fuel scarcity in the country.

    He said the marketers are against the move because it would aggravate the persistent fuel scarcity, since it would compel marketers not to sell the products at the official pump prices.

    He said that “it is already in the National Assembly. You know there is a committee on the petrol issue in the National Assembly. They have deliberated on it that they should scrap it. And from all indications they want to pass the resolution to scrap it. But what we (IPMAN) say is that we are not supporting the removal of PEF.”

    A source in the National Assembly, who pleaded anonymity said that the marketers were only raising the alarm on mere imagination and suspicion.

     

     

  • Reps summon Kachukwu, Baru over subsidy payment

    Reps summon Kachukwu, Baru over subsidy payment

    The House Representatives on Wednesday invited the Minister of State for Petroleum Resources, Dr. Ibe Kachukwu, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru and the Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Abdulkadir Umar, to appear before its committees over alleged fuel subsidy payment by NNPC.

    The trio will appear before the House Committees on Finance and Petroleum Resources (Downstream) to explain the current subsidy payment on Premium Motor Spirit (PMS) by the Corporation.

    The lawmakers also advised the Federal Government to make provision for subsidy payment in the 2018 Appropriation Bill, should it deem it neccesary to continue subsidy payment under any guise whatsoever.

    The decision followed the adoption of a motion of urgent national importance presented by Sunday Karimi (PDP, Kogi).

    He noted that despite the announcement of the removal of fuel subsidy by the federal government, NNPC still makes subsidy payment.

    Karimi said there is a need to ascertain the recipients of the latest subsidy payment since NNPC is the sole importer of fuel into the country.

    He said: “In December 2017, the Vice President, Prof. Yemi Osinbajo and Petroleum Minister (State), Kachukwu both admitted that the current landing cost of petrol is N171 per litre despite the fact that the federal government has pegged official rate at N145 per litre at the moment.

    “What this means is that it is the NNPC that is paying for the cost or deferential of N26 per litre, despite the fact that the Federal Executive Council has posited that it has removed petroleum subsidy and there is no parliamentary appropriation for subsidy payment in the 2017 Appropriation Act.

    “It should be noted that earlier in January 2017, NNPC conceded that fuel subsidy has returned because between January and March 2017 alone, NNPC recorded as ‘under recovery’ of N46.86 billion.

    “This trend continued at an increasing rate all through 2017. As at 2017 December, over N300 billion has been expended on petrol subsidy for 2017 alone, this trend continues to date.

    “We are all aware that ‘under recovery’ in downstream petroleum marketing implies that expected open market price of PMS, which includes the cost of importation and distribution of the commodity such as marketers margins, landing costs and freight cost is below the approved retail price.”

     

  • Senate approves N161.6b for subsidy payment

    Senate approves N161.6b for subsidy payment

    The Senate on Thursday approved N161.6 billion supplementary budget for fuel subsidy payment.

    The approval is coming 17 days to the end of the year.

    President Goodluck Jonathan had on Tuesday, asked the Senate to approve additional N161.6 billion for fuel subsidy for the 2012 fiscal year.

    Over N880.3 billion was set aside for payment of fuel subsidy in the 2012 budget.

    Jonathan said that N7.7 billion left of the N880.3 billion will not be enough for subsidy payment for the remaining days of the year.

    The president explained that given the need to maintain a steady flow of petroleum products, especially in the run up to the festive season, it is his hope that the Senate will accord the request expeditious consideration and approval.

    The lawmakers said the approval is with mixed feelings because they have no choice than to grant the request in order not to be accused of insensitivity by Nigerians.

    While some Senators saw the presidential request as a “blackmail” others tagged it a “set up” meant to create friction between the National Assembly and Nigerians.

    Senate President, David Mark, captured the mood of the lawmakers.

    He said, “Whether it is from the opposition or the Peoples Democratic Party (PDP) members, all the contributions are extremely valid and nobody went out of track.

    “There is no gainsaying and it is not a secret anymore to say that there is so much corruption in fuel subsidy management.

    “Whatever system they adopt and I think the nation must take a decision now whether to continue this (corruption) or to stop it.

    “If they cannot eliminate corruption in the industry, then, the other alternative will be to stop the whole exercise of subsidy and we will take the one that is easier and the one that will bring less pain to Nigerians.

    “I thank all of you for taking into consideration the fact that if this is not approved, Nigerians are the ones who are going to suffer.

    “The reason we are in the chambers here is to work for the welfare of the people and anything we can do to alleviate the sufferings of our people would be done and we will continue to do so in the interest of those who have elected us.

    “The nation in my candid opinion must make that decision sooner than later because we cannot carry on like this way.

    “Obviously, they should have anticipated that there was going to be shortfall when they first made this budget at the beginning of the year, but that did not happen, we are now shouldered with the responsibility of this additional approval and we have done so in the best interest of this nation,” Mark said.

    Senator Abdul Ningi in his contribution noted that over N880.3 billion was approved for payment of fuel subsidy for 2012 fiscal year.

    He said that if they turn down the request, the Senate would be seen as hindering fuel subsidy payment.

    Senator Smart Adeyemi also supported approval of the request.

     

  • Jonathan seeks additional N161.6b for fuel subsidy payment

    Jonathan seeks additional N161.6b for fuel subsidy payment

    With just 19 days to the end of the year, President Goodluck Jonathan has asked the Senate to approve over N161.6 billion supplementary fuel subsidy budget for 2012.

    This is contained in a letter Jonathan wrote to the Senate President, David Mark, entitled: “Request for supplementary budget for 2012.”

    The letter dated December 5, 2012 was read by Mark on the floor of the Senate on Tuesday.

    Over N880.3 billion was set aside for payment of fuel subsidy in the 2012 budget.

    Jonathan said that N7.7 billion left of the N880.3 billion will not be enough for subsidy payment for the remaining days of the year.

    He noted that given the need to maintain a steady flow of petroleum products, especially in the run up to the festive season, it is his hope that the Senate will accord the request expeditious consideration and approval.

    The letter reads in part:“The Distinguished Senate President will recall that as part of the 2012 budget framework, a provision of N888.1 billion was made for payment of fuel subsidy for the nation.

    “I wish to intimate the Distinguish Senate of the fact that following the forensic audit carried out, the provision for fuel subsidy in the 2012 budget was underestimated.

    As at now, the sum of N880, 264,243,683.61 billion has been paid out leaving a balance of N7, 735, 756, 316: 39 billion.

    “In order to accommodate the outstanding arrears resulting from the forensic audit exercise and the remaining period of the 2012 an additional sum of N161, 617, 364, 911 billion over and above what was programmed in the 2012 framework is required.

    “Given the need to maintain a steady flow of petroleum products, especially in the run up to the festive season, it is my hope that the distinguished senators will kindly accord this request their traditional expeditious consideration and approval.”