Though the problem of subsidy claim has remained a hotly debated issue, a new dimension has been introduced into the whole saga with banks seeking litigation to get a slice of the pie. Ibrahim Apekhade Yusuf and Nduka Chiejina in this report examine the issues
WHO is truly entitled to subsidy claims? Oil marketers or banks? As simple as these questions seem, it defy clear answers. To get to the bottom of the matter, the dramatis personae involved in the whole subsidy saga have gone to the court of law to resolve the jigsaw puzzle.
Genesis of subsidy crisis
A frosty relationship has existed between the federal government and oil marketers as always far as subsidy claims are concerned. It has always been a back and forth argument, with both parties most times disagreeing.
Things came to a head last week as oil marketers embarked on strike. The federal government had last week stated that it paid N156 billion as subsidy but the marketers denied and put the figure at N154 billion.
The Executive Secretary, Major Oil Marketers of Nigeria, (MOMAN), ObafemiOlawore, while speaking with journalists, said marketers collected a post-dated FBN which is about two months old, with N98billion post-dated for the main subsidy and N56 billion for the interest, making a total of N154 billion.
“So, I can confirm that it is only a N154 billion that has been paid out of a total ofN354 billion. We still have N200 billion outstanding,” he said.
According to him, the industrial action was suspended because the minister agreed to meet the aggrieved parties and look at how the balance will be paid.
Olawore, however, said that the action would be resumed if after meeting with government there was no positive response.
Thankfully, the parties reached some compromise.
While giving a bird’s eye view of the subsidy template, Dr Ngozi Okonjo-Iweala, Minister of Finance, said that N145.2 billion had been set aside for payment of subsidy on petroleum products in the 2015 budget.
Okonjo-Iweala gave this hint in Abuja last Tuesday while addressing newsmen on the changes made in the 2015 budget recently passed by the National Assembly.
She said that N100 billion was set aside for subsidy on Premium Motor Spirit (PMS) while N45.2 billion for kerosene.
“I want to clarify some of the information in the media that the National Assembly passed the budget without the subsidy. This is not true.
“I also want to share with you that we have sent in a budget with a benchmark price of 52 dollars per barrel, the National Assembly passed a benchmark oil price of 53 dollars per barrel.
“That is one dollar higher than the budget proposal.
“This generated an extra revenue of N54 billion for the federal government; they retained the production volume of 2.2782 million barrels per day and exchange rate of N190 to a dollar,” she said.
This, she said, was because the interbank rate was at N197, adding that the Central Bank had advised that the exchange rate should be used.
New twist in subsidy saga
As oil marketers and the federal government tried to mend fence, some banks also came into the picture.
One of those involved, Ecobank Nigeria Limited had last week accused the Director General of the Debt Management Office, DMO, Mr. Abraham Nwankwo, of frustrating its move to recover a huge debt allegedly owed it by an oil marketing firm, First Deepwater Discovery Limited.
To get even with the DMO boss, the bank approached a Federal High Court in Lagos last Tuesday urging the court to commit the Director General, Debt Management Office (DMO), Abraham Nwankwo, to prison for contempt of court.
DMO is the federal government agency saddled with the responsibility of processing fuel subsidy claims by oil marketers, as well as the issuance of sovereign debt notes.
Ecobank Nigeria Limited made the appeal before Justice Mohammed Yunusa after accusing the DMO of frustrating its effort to recover debts from an oil firm, First Deepwater Discovery Limited (FDDL).
Justice Yunusa had in a ruling on February 25, directed that the DMO should transfer the outstanding fuel subsidy sum due FDDL into the company’s account with the Ecobank.
The bank had alleged that the oil firm has a cumulative subsidy claim of about N1.8 billion with DMO, with N845 million due for payment, prompting Justice Yunusa to rule that the agency should transfer with dispatch, the said sum into the defendant’s account with Ecobank, in order to offset part of FDDL indebtedness to the bank.
The judge ordered that the DMO should “communicate the PEF/Admin Charges on the balance sum of N1, 020, 451,733.22 to the plaintiff/applicant via the receiver/manager and to pay forthwith, remit or otherwise transfer the entire sum to the first defendant’s account with the plaintiff/applicant.”
Addressing the court on Tuesday, the bank through its lawyer, Kunle Ogunba (SAN), also prayed that one Umaru Abubakar, who is the DMO’s officer in charge of processing fuel subsidy claims by oil marketers, be jailed for contempt.
It claimed that despite being served through the agency’s principal officers on February 27, DMO is yet to take the necessary steps to transfer the said funds, thus, frustrating the bank’s effort at recovering its customers’ money allegedly held by FDDL.
In the affidavit filed in support of Forms 48 and 49, which Ogunba said were already served on Nwankwo and Abubakar, the deponent, Ajibola Ajiboye, alleged that in spite of serving the alleged contemnors with the papers for contempt proceedings they had refused to comply.
While urging Yunusa to take a decisive action and commit Nwankwo and Abubakar to jail, Ajiboye noted, “Contempt of court, being a deliberate disobedience of a court order, is a serious offence, which every court should not allow to go unpunished; this is because treating such an act with levity could lead to total destruction of the entire judicial system and all that the administration of justice stands for.”
But Nwankwo and Abubakar have, through their counsel, S.E. Omoraghon, urged the court to refuse the bank’s prayer for committal order against them.
In a counter-affidavit filed in opposition to Ecobank’s committal proceedings, the Principal Operations Officer of DMO, Sandra Ipigansi, maintained that the alleged contemnors were never served with the papers for contempt proceedings in personal capacities.
Besides, Ipigansi said the issue of disobedience to court order did not arise, because DMO could not have transferred the fund as directed by the court as the agency was never in custody of any subsidy claims by marketers.
According to Ipigansi, the role of DMO in subsidy claims is more or less administrative, while the money is usually kept and claimed from the Central Bank of Nigeria by the concerned oil marketers.
She claimed, “Physical custody of the funds used for the payment of subsidy claims by oil marketers are, at all material times, kept and domiciled with the Central Bank of Nigeria.
“The 2nd defendant and its officers, by their mandate, do not keep custody of funds and do not directly touch funds meant for the subsidy claims payment and therefore lack the capacity to transfer funds to any account as directed by the court, as they do not have custody of the said funds.
“The duty of the 2nd defendant is more or less administrative and limited to the issuance of sovereign debt notes to oil marketers on the advice of the Petroleum Pricing Regulatory Agency, PPRA, after due diligence and other necessary payment procedures.” Ipigansi added that it was strange that a court would order DMO to remit the subsidy sum due to an oil marketer into the bank account of a judgment creditor.
Yunusa has adjourned till 13 May to entertain the committal proceedings and to probably take a decision on the matter.
Many claimants
Findings by The Nation revealed that DMO is caught between a rock and a hard place as Ecobank and six others claimants are pulling it to settle a subsidy payment owed by petroleum products marketers.
The Nation gathered that the claim for payment by Ecobank, against the First Deepwater Discovery Ltd (FDDL) is actually a contest between Ecobank and six other claimants to the same money with each brandishing what they believe is a compelling case against the company.
According to a concerned party to the claims “the case in point is clearly, a subtle attempt to force the DMO to take sides in a clearly very complex and convoluted matter which is currently before a court of law.”
Expatiating, the official who asked not to be named because the case is a subject of litigation, said: “The other claimants to the same monies have also obtained court order/judgment demanding the DMO to pay the same monies to them.”
He added that “it is therefore easy to see why a responsible public official like the Director General of the DMO will exercise due caution in ensuring that the most equitable and appropriate steps are taken to ensure that all competing interests in the case are given due consideration. The same consideration which Ecobank is seeking to achieve for itself is also being claimed by six other entities.”
By alleging that the “DG DMO was frustrating the bank’s move to recover a huge debt allegedly owed it by FDDL’ is indeed misleading because the reports did not tell the entire story.”
The DMO boss, he said, is simply caught up in a web of deceit and intrigues by vested interests bent on making him a scapegoat in a case in which he is determined to ensure that the right thing was done.
Ecobank had claimed that First Deepwater Discovery Limited had a cumulative fuel subsidy claim of about N1.8billion with DMO, out of which it claimed that over N845million was due for payment.
The Principal Operations Officer of DMO, Sandra Ipigansi, had submitted that the alleged contemnors the DG DMO and the DMO officer directly in charge of processing fuel subsidy claims by oil marketers, Mr. Umaru Abubakar, were never served with the papers for contempt proceedings in personal capacities.
Ipigansi said the issue of disobedience to court order did not arise, because DMO could not transfer the fund as directed by the court as the agency was never in custody of any subsidy claims by marketers. Instead, the DMO only issues a Sovereign Debt Note (SDN) assuring oil marketers that the government was owing what has been guaranteed.
According to Ipigansi, the role of DMO in subsidy claims is more or less administrative, while the money is usually kept and claimed from the Central Bank of Nigeria by the concerned oil marketers.
“Physical custody of the funds used for the payment of subsidy claims by oil marketers are, at all material times, kept and domiciled with the Central Bank of Nigeria,” she said.
The DMO she explained does “not keep custody of funds and does not directly touch funds meant for the subsidy claims payment and therefore lack the capacity to transfer funds to any account as directed by the court, as they do not have custody of the said funds.
She noted that “the duty of the DMO is more or less administrative and limited to the issuance of sovereign debt notes to oil marketers on the advice of the Petroleum Pricing Regulatory Agency (PPPRA), after due diligence and other necessary payment procedure.”
Ipigansi added that it was strange that a court would order DMO to remit the subsidy sum due to an oil marketer into the bank account of a judgment creditor.
In the view of analysts, as much as the parties have the right to seek justice in the matter, it is equally important that those who have reduced subsidy claims to a bargaining tool, need to exercise some restrain.
