The Nation Newspaper

Tag: Subsidy

  • PENGASSAN seeks NNPC’s reimbursement for oil subsidy payment

    PENGASSAN seeks NNPC’s reimbursement for oil subsidy payment

    The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has called on the Federal Government to reimburse the Nigerian National Petroleum Corporation (NNPC) for the expenses it incurred on payment of subsidy to marketers.

    Arising from its National Executive Council (NEC) meeting in Warri, Delta State,  PENGASSAN said  the NNPC had continued to shoulder the responsibility of providing products to close gaps  created by the withdrawal of other marketers owing to the non-payment of subsidy claims from 2015 to 2017.

    In a communique by PENGASSAN President Comrade Francis Olabode Johnson and General Secretary Comrade Lumumba Okugbawa, the union said the extra burden absorbed by the NNPC was depleting its finances and hampering the effective discharge of its statutory obligations.

    The senior staff trade union, therefore, called on the government to reimburse the huge payments made within the period under review.

    It expressed worries over the delayed payment of subsidy and debts  owed oil marketers, urging the Federal Government to come to the table to resolve the differences as this would help to avert loss of jobs in the oil and gas industry.

    On the Petroleum Industry Bill (PIB), PENGASSAN praised the 8th National Assembly for breaking the jinx of passing into law the Petroleum Industry Governance Bill (PIGB), but called on the lawmakers to expedite action on the Petroleum Industry Administration Bill, the Petroleum Industry Fiscal Bill and the Petroleum Host Community Bill to enable the PIB deliver full benefits of the intended Oil and Gas reforms.

    The Association demanded that the legal framework in the bill should allocate a percentage of the production by International Oil Companies (IOC)’s operating in Nigeria for refining in the country through a policy that would compel them to build Refineries in Nigeria.

    “This is in support of the proposal of the Federal Government as announced by the Honourable Minister of Petroleum (State), Dr Ibe Kachickwu at the last Nigerian International Petroleum Summit (NIPS) in Abuja,” it stated.

  • NNPC: petrol subsidy now N26 per litre

    NNPC: petrol subsidy now N26 per litre

    •Fuel crisis to end in two days, says Baru

    Petrol is being subsidised to the tune of N26 per litre, Nigerian National Petroleum Corporation (NNPC) Managing Director Maikanti Baru said yesterday.

    According to him, the landing cost of petrol (PMS) is N171 per litre;  it is being sold at the pump at N145 per litre – a difference of N26.

    Baru told reporters in Abuja that the consumption of PMS had risen to over 50 million litres per day, due to hoarding and diversion.

    He said the product was being smuggled across the borders because of the price disparity that exists between Nigeria and the neighbouring countries.

    Baru said the Cost, Insurance and Freight price of PMS is $620 per metric tonne, adding that at N305 to a dollar, the landing cost translates to N171 per litre.

    The Federal Government has approved preferential and speedy treatment for vessels carrying petrol, to end the lingering scarcity, according to the NNPC boss.

    The Navy, Nigerian Ports Authority (NPA), Customs and Excise and the Nigerian Maritime Administration and Safety Agency (NIMASA) are said to be expediting the clearance of fuel vessels and anchorage services to facilitate speedy product transfers to various depots, including during weekends and public holidays.

    The NNPC helmsman noted that President Muhammadu Buhari was deeply concerned about the fuel crisis and had ordered all stakeholders, including security agencies, to ensure a speedy resolution of the situation.

    The NNPC, he said, has begun a 24-hour loading and sales operations at all depots and its mega stations across the country.

    “Major marketers were also advised to carry out 24-hour operations, most of who have been complying. This has increased load-out from the depots significantly and continuous sales at the filling stations nationwide,” Baru noted.

    He affirmed that in addition to the regular supply circle, the NNPC had programmed the delivery of additional 300 million liters in December 20l7 and January 2018 to beef up national reserves to 45 million litres per day, well above the normal consumption requirement of between 27 and 28 million litres per day.

    He added that in the last two weeks, the national truck-out capacity had strengthened up to an average of l,500 trucks, about 52 million litres per day, which, he explained, was higher than the normal consumption of 850 trucks per day.”

    The NNPC boss said at present, 13 vessels, with an average capacity of 650 million litres, were discharging the commodity at ports across the country, noting that three vessels with the commodity were coming in before the end of the week, bringing the combined quantity of the product in depots to 814 million litres of petrol till the end of the month.

    He added that 14 shuttle tankers, with a combined capacity of 187 million litres of the commodity, would be discharging the product at various destinations across the country in the next three days.

    In addition to the importation of the product, Baru noted that the Port Harcourt and Kaduna refineries were contributing about one million litres per day and 2.8 million litres per day of PMS. He said since the fuel crisis began, both refineries had contributed about 61 million litres.

    To ensure the speedy resolution of the crisis, Baru said the NNPC had activated the ‘Fuel War Room’, comprising NNPC, Department of Petroleum Resources, DPR, Petroleum Products Pricing Regulatory Agency, PPPRA and Petroleum Equalisation Fund, PEF.

    The team is coordinating all interventions for supply and distribution of PMS nationwide. With the support of security agencies, the team is already working round the clock to ensure a speedy resolution of the current fuel situation.

    With all these measures, Baru said, and if full compliance is achieved, the crisis would end within the next two days, adding that efforts were in place to ensure that the crisis did not go beyond this week.

    Baru also accused black marketers of sabotaging efforts to end the fuel crisis, stating that most of the peddlers permanently put their vehicles on queues at petrol stations, and after purchasing, discharge the products into containers and return to join the queues.

  • DisCos lament delay of N100b subsidy, others payment

    DisCos lament delay of N100b subsidy, others payment

    •Call for cost effective tariffs

    The power distribution companies (DisCos) are seeking the payment of N100 billion subsidy owed them  by the Federal Government to improve their infrastructure.

    The firms said the government, during the privatisation in 2013,  promised them N100 billion to cushion the effects of increased tarrifs on their operations, adding that four years later the government was yet to fulfill its promise.

    They also seeking the payment of debts owed by the Ministries, Departments and Agencies (MDAs).

    The Association of Nigerian Electricity Distributors (ANED) Executive Director, Research and Development, Mr Sunday Oduntan, said the development became necessary to change obsolete infrastructure.

    He said the DisCos inherited  old facilities from  defunct  Power Holding Company of Nigeria(PHCN), adding that the problem was affecting the distribution of electricity in the country.

    He said the payment of  the subsidy and debts  would help the firms in strengthening their operations.

    He accused the government of breaching some of the agreements it reached with the investors during privatisation, urging it to fullfill its promises to move the sector forward.

    Oduntan said: “By not paying the N100 billion subsidy, MDAs debts among fulfilling other things, it promised, the government has breached the terms of the agreement binding the investors and the Bureau of Public Enterprises(BPE)/Federal Government.’’

    ANED, Oduntan said, has pleaded with the government to assist in building infrastructure for operators in the sector, adding that the government was yet to attend to salient issues that affecting the industry.

    He said the DisCos are facing problems, such as poor collection, illiquidity, shortage of meters and other equipment, adding that the development has resulted in low optimal performance for energy distributors.

    Shortfall, Oduntan said, has become a permanent feature in the industry, as operators across the value chain are experiencing one losess or the other.

    The ANED’s director said power firms are either experiencing technical or operation loss, stressing the problem has reached a level, which they (power firms) cannot continue to bear.

    He said the DisCos are unable to recoup their investments as their customers (individual and government) were not ready to pay for the energy consumed.

    He explained that despite that the DisCos charge customers N30.80 per kilowatts of electricity instead of N80, customers do not pay their bills promptly, adding that this was frustrating the companies’ efforts to  invest.

    He said any increase in the generation of electricity would lead to a corresponding increase in the DisCos’revenue.

    He said DisCos were better off when there is an increase in power generation, pleading that the government  fulfill its promise, by fashioning modalities for the power generation companies (GenCos) to increase their output.

    He said when GenCos increased their output, electricity supply would increase.

    Oduntan also lamented the shortage of gas which, according to him,  has crippled operations in the sector. He blamed attacks on gas  pipelines for this problem.

    Another area, which Oduntan said, is a source of concern to the power firms is energy theft.

    He said the rate, at which consumers steal electricity, was becoming alarming, stressing that  those who engage in this were yet to stop, despite power fines to impose fine on them, among other penalities.

    He said the DisCos has over  five million customers, when they took over the assets of PHCN in 2013 and that if the 11 utilities’firms were metering, about 100,000 customers yearly, they would have served them in five years.

    He said estimated billing was introduced as an interim measure to assist consumers to use electricty and pay for it.

    On the complaints against estimated billings, Oduntan said it was not introduced by the DisCos to make money, but to assist customers to pay.

    Efforts to get the Nigerian Electricity             Regulatory Commi-ssion (NERC) to comment on the issue proved abortive, as a text message sent to its Public Relations Officer, Mike Faloseyi, was not replied.

  • We’ve provided fuel without paying N1.3tr subsidy, says Fed Govt

    We’ve provided fuel without paying N1.3tr subsidy, says Fed Govt

    President Muhammadu Buhari yesterday hit back at former President Goodluck Jonathan, saying his achievements are neither lies nor propaganda.

    The former President last week alleged that the government had been running on lies and propaganda.

    Buhari also reminded the former president that unlike during his regime, when t between N800 billion and N1.3 trillion was paid out yearly as “petrol subsidy” without making the products available even at regulated prices, his  Administration had not been paying any subsidy, yet the product is available and queues disappeared from filling stations.

    Speaking at the Nigeria Governors’ Forum (NGF), Conference for media handlers of state’s chief executives, the President, represented by Minister of Information and Culture  Lai Mohammed, said: “Those who accused this Administration of ‘propaganda and lies’ in the fuel supply sector, for example, did not tell Nigerians that whereas they paid between 800 billion and 1.3 trillion Naira as ‘subsidy’ yearly in their time, without making the products available even at regulated prices, this Administration is not paying any subsidy, yet all products are currently available at competitive prices and fuel queues are now history.

    “In their time, they paid subsidy of 3.7 billion Naira DAILY in 2011; 2.2 billion Naira DAILY in 2012 and 2013, and 2.5 billion Naira DAILY in 2014, all for products that were never available.”

    Describing disinformation and fake news, as ”evil twins” in the public space, the president said that  they have become potent weapons in the hands of opposition, expressing worry that they will be the biggest obstacle as the 2019 general elections.

    He said, “Let me be straight: This is the most difficult time for anyone to find himself or herself in your position. Why? Because in addition to working with a tight budget, you face the double tragedy of disinformation and fake news, buoyed to a large extent by the advent of Social Media. Never before have these ”evil twins” of disinformation and fake news permeated the public space as they have now and, make no mistakes about it, they have become potent weapons in the hands of naysayers. Sadly, they will be the biggest obstacle facing you from now till the 2019 general elections, whether you believe it or not.

    “In recent days, you have all seen the dangers posed, not just to you but even the general public, by those who have chosen to deploy disinformation and fake news as a weapon of choice. First, they created unnecessary panic in the society by claiming that Monkey Pox resulted from the Federal Government’s deliberate injection of people with the virus in certain states. We had hardly dispelled that when they claimed that the military, which is going beyond the call of duty to support the civilian populace, has been injecting school children with Monkey Pox, forcing many parents across a number of states to withdraw their children from school for days. Imagine the implication of this on the affected children’s education and health.

    “Now, the disinformation is that ahead of the forthcoming election in Anambra, the government has been providing IPOB uniform to some people to cause mayhem, so they can in turn blame IPOB, and that many roads leading to Anambra will be closed before and after the elections, hence they advised Anambra residents to stay at home and not come out for the election. This is all disinformation, pure and simple. There is no such plan.

    “Now, going hand in hand with disinformation and fake news is the new strategy of the naysayers to label the achievements of the government of the day as ‘propaganda and lies’ in order to discredit them. It is for you, at your level, to use concrete facts to showcase the achievements of your principals. Nigerians are brilliant and discerning, and won’t be taken in by such deliberate denigration. But they also need facts and figures.

    “For our Administration, our achievements are there for all to see. We are delivering in the broad areas that formed the plank of our policies: Security, fight against corruption and the economy, which includes the massive provision of infrastructure, ease of doing business and agriculture, just to mention a few.”

    He added: ”Those who accused this government of ‘propaganda and lies’ also said we have not achieved anything in the power sector. Comment is free, facts are sacred, as they say. When this Administration assumed office on 29 May 2015, available power on the grid totalled 2,690MW, transmission capacity was around 5,000MW and distribution capacity was 4,000MW.

    ”As at 4 September 2017, the available power that can be put on the grid was 6,619MW; the transmission capacity was simulated at 6,700 MW (up from 5,000 MW in 2015) but the distribution capacity was 4,600 MW, which was what was put on the grid. On September 12, 2017, production of power reached an all-time level of 7,001MW,” he said

     

     

     

     

    President Buhari said it is an irony that those who presided over a budget of 18 billion Naira for roads, 5 billion Naira for power and 1.8 billion Naira for Housing in 2015 are now accusing those who spent 198.25 billion Naira on roads, 91.2 billion Naira on power and 71.559 billion Naira on housing in the following year of non-achievement?

     

     

     

     

     

     

    ”Because of the increased spending in these areas, the massive debts owed to contractors are being settled so they can recall workers who were laid off and re-open closed work sites. As a matter of fact, during the implementation of the 2016 budget, we paid 103 construction companies executing 192 projects, and they, in turn, employed 17,749 people directly and 52,000 people indirectly in works.

    ”So far this year, 47.169 billion Naira has been paid to 62 contractors working on 149 projects to continue work on roads and bridges and keep people at work. Similar payments are being made to supervising consultants and to contractors in Housing and Power Sectors of the Ministry,” he said.

    The President also said highlighted the achievements that have been recorded by his Administration in the area of the Economy, wondering whether it is ‘propaganda and lies’ that headline Inflation has now fallen for the eighth consecutive month; that foreign exchange reserves are up to $32 billion, from $24 billion a year ago: that oil production is at nearly 2 million barrels per day and that Home-grown School Feeding Programme now being implemented in 17 States is benefiting more than 3 million public primary school children and more than 30,000 cooks across 20,000 schools.

    He said close to 200,000 youths are now benefiting from the N-Power Programme, which recruits unemployed graduates to work as teachers, agricultural extension workers, and health extension workers; that the Government Enterprise & Empowerment Programme (GEEP), which provides micro-credit to farmers, traders, and artisans, now has in excess of 1 million beneficiaries, with women accounting for 56% of that number, and that at about $1.8 billion, the capital inflows in the second quarter of 2017 were almost double the $908 million in the first quarter.

    ”If our achievements are based on ‘propaganda and lies’, as they claim, why is our agricultural revolution achieving so much success: We have commissioned the 120,000 MT per annum WACOT Rice Mill in Argungu, Kebbi State. We have commissioned the 60,000 MT per annum Edo State Fertilizer Company Limited. What about the commissioning of OLAM’s 750,000 MT per annum Integrated Poultry Facility in Kaduna State? Do you know that 15 moribund Fertilizer Blending Plants have now been revived and in operation across Nigeria, under the Presidential Fertilizer Initiative, creating 50,000 direct jobs and 70,000 indirect jobs?” the President asked.

    He said when the Administration assumed office in 2015, Boko Haram was active in at least 10 states, could stroll into Abuja at a time and target of their own choosing to cause maximum havoc, in addition to holding territories and collecting taxes.

    ”Today, Boko Haram has been so degraded that it lacks the capacity to carry out any organized attack, while also increasingly losing the capacity to even attack soft targets. Importantly, Boko Haram no longer holds any territory. The same vigour is being used to address the herdsmen-farmers’ clash, kidnapping for ransom and other crimes,” the President said.

    He said the biggest challenge facing government information managers is how to project the achievements of their principals against the background of worsening cases of disinformation and fake news, adding that the best way to tackle the problem is to remain focused, refuse to be distracted or intimidated and also to use facts and figures to counter the purveyors of disinformation and fake news.

  • N720b subsidy arrears: PENGASSAN alerts on impending mass sack

    N720b subsidy arrears: PENGASSAN alerts on impending mass sack

    The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has called on the Federal Government to settle all debts allegedly owed oil marketers to avert job losses.

    The union said it believed that the payment would engender growth of not only the downstream sector, but all sectors in the industry and develop the economy.

    The senior staff trade union made the call against the backdrop of the threat by the marketers to embark on massive retrenchment of their  employees, if the government refuses settle the over N720 billion subsidy arrears.

    The debts, according to the marketers, are among the outstanding subsidy owed importers of petroleum products, accrued interest on loans from banks and exchange rate differentials, which made them halt importation of refined petroleum products, leaving only the Nigerian National Petroleum Corporation (NNPC) as sole importers.

    A statement signed by the PENGASSAN National Public Relations Officer, Mr. Fortune Obi, urged the government to verify  the claims by the oil marketers and ensure quick settlement of genuine debts.

    “The government should try to separate the genuine claims by the importers from spurious ones and pay them accordingly because we will not like to be engulfed in the mistakes of the past where briefcase marketers milked the nation through dubious subsidy claims.

    “A situation where the workers in the industry bear the brunt of the government failure to honour its obligations as part of the importation deal will be unfair and unacceptable to our Association.

    This is against the President Muhammadu Buhari administration’s major policy of job creation,” Obi said.

    He said as much as PENGASSAN would support any move by the government to end subsidy regime and spurious claims by the marketers, it was also canvassing  the payment of debts that could hinder the downstream sector’s growth and attract investments into the sector.

    Obi noted that in the last five years, workforce in the downstream sector, especially the marketing sub sector, depleted by over 70 per cent, adding: “most of them were thrown into the already over-bloated labour market.”

  • ‘Oil subsidy scammers nurturing vandalism, militancy, crude oil theft’

    The oil subsidy scammers, who benefitted immensely from fake importation of petroleum products are nurturing vandalism,  militancy, crude oil theft and the unwarranted disruptions in the sector, to the level being witnessed, especially in the Niger Delta.

    The disclosure was made yesterday in Port Harcourt, the Rivers State capital, by the Convener of the Second Edition of the Save Nigeria Oil and Gas Industry (SNOAGI) Roundtable, Dr. Brown Ogbeifun.

    The roundtable was organised by the African Initiative for Transparency, Accountability and Responsible Leadership (AFRITAL).

    Project SNOAGI was launched last year, as a veritable platform for bringing stakeholders together to interact, brainstorm and make prescriptions on how to improve the efficiency of the oil and gas operations, thereby assisting government in bringing sanity to the sector.

    Ogbeifun said: “Most of the motherless US Dollars,  British Pounds, Euro and Naira found in wardrobes, farms and soak-away pits are definitely primary or secondary products of mismanaged oil funds, which might explain why the oil industry has witnessed gross underdevelopment.

    “The revelations emanating from the Malabu oil deal, the brazen cash withdrawals from oil money accounts to pursue non-value addition to the good of our hydrocarbon development are indeed very sad.

    “There is no doubt that there has been lack of investors’ confidence in the oil industry, as policies and laws that would have protected their investments are not seriously addressed.

    “The issues of over regulation through multiple regulatory agencies, multiple taxation, global and local oil politics have made it an intractable possibility for Nigeria to reach it’s optimum productivity.”

    The convener also stated that Nigeria was ripe enough to be self sufficient in producing all the necessary derivatives from crude oil.

    Ogbeifun noted that compounding the parlous state of the oil and gas sector came the sabotaging of the pipelines by the militants, which he insisted almost crippled operations in the sector.

    He said: “Paradoxically, we export our crude oil and create refining capacities for other economies, at the detriment of the Nigerian state. Why must we continue to export our mineral resources in exchange for finished products in the oil and gas industry?

    “Our leaders have consistently displayed lack of political will to drive the transformation imperatives to a logical conclusion. That is why we are still talking of the Petroleum Industry Bill (PIB), 17 years after it started its journey.

    “No country treats its critical reforms the way we do. Not passing the PIB has led to losses in trillions of naira, loss of investment opportunities, inability to realise our optimum capacity utilisation and the inability to end gas flaring, which was to have ended in 2008.

    “The PIB might not be a perfect document, just as it is all over the world. All we need is an enduring dialogue process and the will of steel by government to drive the process to its logical conclusion. No matter the drawbacks, the PIB contains many sections that would have greatly enhanced the hydrocarbon potential of Nigeria.”

    The convener also stated that mediation was very effective in the resolution of knotty conflicts, while pleading that the ongoing dialogue process between top officials of the Federal Government and Niger Delta militants/leaders should be sustained.

    He noted that while government was seeking solutions to all the challenges in the Niger Delta, all parties should sheathe their swords,  show good faith and respect for one another, declaring that no meaningful development would take place in an atmosphere of chaos and anarchy.

    Ogbeifun added that the pronouncements of the Federal Government’s top officials on the setting up of modular refineries in the Niger Delta and the open confession that the crude oil and gas-rich region deserved a better deal, showed that there were still honourable men in the corridors of power in Nigeria.

  • Senate panel seeks subsidy removal, price deregulation

    Senate panel seeks subsidy removal, price deregulation

    How can the  domstream oil sector be sanitised? It is by the removal of subsidy and total deregulation of fuel price says the Senate Committee on Petroleum Resources (Downstream).

    According to the committee’s chairman, Senator Marafa Kabir Garba, the refineries are not working because some people are making a killing from subsidy.

    Subsidy retention he said, would lead to job losses and also inhibit the building of indigenous capacity and expertise.

    Garba told The Nation that the sector  would grow when the twin problems of  subsidy and non-passage of the Petroleum Industry Bill (PIB) were solved.

    He said: “What the downstream requires is total deregulation and the passage of the PIB that is under consideration at the moment. We are currently considering the governance aspect of the PIB, which will deal with the regulatory aspect of the oil industry. We intend to make it like a one-stop shop where investors can have  easy access to the industry without the multiplicity of bodies that regulate the sector.

    “We will strengthen the Department of Petroleum Resources (DPR) and make it stronger, such that investors will walk in and go out from there with all they require as far as the petroleum industry is concerned.

    “The laws governing the oil industry are old and archaic. These contributed to the failure of a lot of things that pertain to the industry. That informed the decision of the government to introduce the PIB, but after several Assemblies of the National Assembly, the bill has never seen the light of the day. Discussions, deliberations go on for four years without success. But this National Assembly said it is determined to do it. We are giving it a different approach, we have broken it into parts – the Governance, Fiscals and Community/Socials. The Governance Bill will see the light of  day in the next few weeks, either at end of this month or early next month (April). From there, we will go to the fiscals that relate to monetary aspect of the industry, and from there, we go to the community and social issues.

    “As far as the Senate is concerned, we are doing everything possible under the leadership of Senate President Bukola Saraki, who took it upon himself and promised Nigerians that this time around the bill will be passed. Once that is done, the downstream sector will have a breathe of life.”

    On passage of the three parts of the PIB, Marafa said: “We will be able to pass the three parts of the bill before end of the year God willing. The Fiscal aspect has gone through the first reading, so it is coming up for second reading and if that is done, in the next three to four months, that aspect will be passed. Before we pass the Fiscal aspect of the bill, the community aspect would have gone through the first reading. We will give it all the necessary attention it requires.”

    On the resistance to removal of subsidy and total deregulation of the downstream by labour and civil society groups, Marafa said as a nation, we had to make deliberate and precious decision on what we intend to achieve, adding that just a few days ago, the Senate ordered investigation into the subsidy matter again.

    He said: “The the Nigerian National Petroleum Corporation (NNPC) alone collected over N5 trillion on subsidies from 2006 to 2015. The labour and civil society, among others, should come and let all stakeholders reason together on what fuel subsidy is all about. What value do Nigerians get from the subsidy compared to the amount of money that goes into it? If you combine the subsidy collected by NNPC with that of major and independent marketers, among others, it totals about N9 trillion in a scope 10 years, which is over and above our national budget.’’

    He continued: “Does the common man really get the right value from subsidy? If such huge funds were sunk into other sectors such as health, agriculture, roads, railway systems, would it not have benefitted the common man more? It would be better and with more value addition. The labour will always fight for increased salary for workers but where is the money? Subsidy on diesel aspect of petroleum products was removed and heaven didn’t fall.

    “Also, it is regulation that is keeping our refineries from working because people are feeding fat from subsidy. The same issue applies to the power sector, as long as people continue to import and Nigerians continue to buy generators, it will be difficult for the power sector to work. If you check the cost of the number of generators we buy in Nigeria, it is enough to generate enough electricity for the country. But because we as a people are sentimental about full deregulation of the downstream, we continue to lose by exporting value and jobs through export of our crude oil, import and subsidy of refined petroleum.”

  • Fed Govt owes oil marketers N300b subsidy

    The Federal Government is owing oil marketers N300billion in oil subsidy, Group Chief Executive Officer (GCEO), Forte Oil Nigeria, Akin Akinfemiwa, has said

    Akinfemiwa spoke before the Hon. Abdullahi Mahmud Gaya-headed House of Representatives Adhoc committee investigating alleged huge debts and criminal,act of sabotage by major oil marketers in connivance with  Products Pipeline Marketing Company (PPMC).

    He told the investigative hearing committee that his firm is being owed N13.8 billion and owes PPMC N5.9 billion from the oil lifted.

    He said:  “From our records, as at January 31, out indebtedness was to the tune of N5.995 billion . But we’re being owed N13.8 billion from subsidy. This is part of the over N300 billion the government is owing different oil companies.”

    The Forte Oil boss said government is however trying to,settle the debt.

    He said: “So far, the government, led by the Chief of Staff to the president invited us to a meeting with other stakeholders to address two issues. One was to continue petrol supply and two was for Federal Government to pay its debts.

    “Under the debts, a committee was set up to settle them. The total stands at over N300 billion. Right now, we can’t even do much, but we don’t want a situation where there will be queues in the country.

    “If you look at the N13.8 billion, we’re the ones being owed about N8 billion. We have also written to the Senate in recent times where we asked them to assist us with the payments of subsidy. The banks are not even borrowing as at now. We even paid about N5 billion as at the end of December.”

    In line with the mandate given the committee by the House, which is to recover the huge debts oil markers owe the government, the committee  wanted to know how and when the N5.9 billion Forte Oil is owing the government would be paid

    Bode Ayorinde, a member of the committee said: “ From this paper, you’re owing N5.955 billion. Did your agreement give room for debts? What’s the circle of the debts? What is the security for the debts? What is the interest agreed to be paid on outstanding debts? Do you sell on credits to those who buy from you?”

    Henry Nwaoba, also a member of the committee said in order to verify Forte Oil’s claims, t here is need to,have the details of the company’s credit dealers.

    “Do you have bank loans taken to assist you do retail business?” He asked.

    Akinfemiwa told the lawmakers that there was a 15 days debt payment agreement on oil lifting.

    He said: “Even if you lift N500 billion worth of oil, you need to pay within 15 days. Ideally, we should have reviewed the agreement terms after the fuel price increase from N87.5 to N145.”

  • Petrol Subsidy back, FG in dilemma how to keep paying difference

    Petrol Subsidy back, FG in dilemma how to keep paying difference

    Petrol subsidy is back. The Nigerian National Petroleum Corporation has been offsetting for months the difference between the landing costs of petrol and the pump price.

    In series of interviews with knowledgeable players in the sector, NAN can report authoritatively that the landing costs per litre of petrol is higher than the price Nigerians pay at the pump.

    According to a source, who is a staff of the Ministry of Petroleum Resources, government being a listening one has been quietly bearing the differential.

    “The landing costs hovers around N160 to N165. The marketers buy from us and so the government bears it because it feels it will be unfair to make the consumer pay the difference.

    “With the current recession, the government will not want to burden the people with a price hike,’’ the source said.

    Both the NNPC and the government are also concerned by the recent smuggling of petrol across the porous Nigerian borders to Chad and Niger, where a litre of petrol goes for over N400, compared to Nigeria’s N145.

    A staff of the Petroleum Products Pricing Agency (PPPRA), who also preferred anonymity, said the marketers had no moral right to divert fuel meant for the people.

    “For now Forex is a big issue,’’ the source said adding that “but the NNPC sells virtually everything it imports to them. So no marketer has any right to divert fuel.”

    “If indeed the product is being sold for N400 in Niger Republic like you said, the Nigerian marketer has no right to look there.

    “This is because NNPC is paying the difference just because it wants every Nigerian to have easy access to the white products.

    “The fluctuating foreign exchange has not helped matters, but even the marketers cannot complain because government bears the brunt of the whole thing’’, the source reiterated.

    However, a source at the NNPC fears that government may find itself overburdened by the subsidy as the economy is still caught in a web of recession.

    “Soon the government may not be able to pay the price difference again because it runs into billions of naira”, said the source.

    “Recall that at a workshop last year, an engineer with the corporation had said partial deregulation was unreasonable, he was right.

    “The solution is full deregulation. Let the consumer feel it once and for all. This politics of walking around the problem won’t help at all’’.

    On May 11, 2016 the Federal Government, through the PPPRA, had announced a new petrol regime of N135-N145 from its previous price of N97, which was heavily subsidised.

    This increase led to various economic emergencies that affected all sectors and since Nigeria operates an oil-dependent economy, the impact was felt on external reserves, exchange rate, gross domestic product and inflation rate.

    The Minister of State for Petroleum, Dr Ibe Kachikwu, had at the time said he would prefer to use the word liberalization rather than deregulation.

    Kachikwu ‎said the major plan of the Federal Government was to stop importation of petroleum products in the long term.

    The global oil benchmark, Brent crude, which was trading around $41 per barrel when the petrol price was increased, is now $55.64 per barrel. (NAN)

  • A new subsidy regime?

    A return to the corruption-sodden subsidy on petroleum products is frightening

    Are plans afoot to surreptitiously reintroduce the iniquitous fuel subsidy regime? This is a question urgently begging for answer from the Federal Government and its relevant agencies. Experts and public analysts have suggested that the rise in price of crude oil in the open market from which Nigeria is benefitting at the moment, and the unimpeded depreciation of the Naira against the major currencies tend to suggest that some moves may soon be made to effect changes in the fixed price of  Premium Motor Spirit (PMS), a frightening prospect, and, in the alternative, a reintroduction of subsidy that was so abused by independent marketers under the Jonathan administration.

    We note that the Nigerian National Petroleum Corporation (NNPC) has denied any imminent increase in the price of petrol. But, we equally note that the corporation said nothing about the return of subsidy. We call on the Minister of State for Petroleum Resources who is also the chairman of the NNPC, Dr. Ibe Kachikwu, to make full disclosure. It is not enough to declare that the country has in stock products that could last 38 days.

    Simple economic calculation suggests that a lot has changed in the market since the current price regime was fixed in May 2016. At the time, crude sold for below $45 per barrel, while government explained that it based the new price on an exchange ratio of N285 to the dollar. Today, the dollar is officially pegged at N305 and the price of crude oil has climbed to $55. The immediate consequence of the development is that the independent marketers have withdrawn their participation. The NNPC, therefore, is now the sole importer of the products. On previous occasions, the arrangement had led to shortfalls in the market.

    It is unhelpful that government seems to have ignored the outcry of the marketers that its unwillingness or inability to meet its commitment to them in terms of money already expended in importing the product is crippling their business.

    Government should realise that there are two sides to every mathematical equation. The fact that the country’s foreign reserve is receiving a boost owing to favourable market conditions suggests that the lid on price may have to be removed. The only antidote to this is to get the local refineries working optimally. We therefore call on the minister to make full disclosure on the state of the refineries and what has become of the plan to co-locate private refineries within their premises.

    Nigerians have suffered a lot and had looked forward to better life when President Muhammadu Buhari came into office in May 2015. However, pleading unanticipated economic downward spiral, the president and his team said things would slowly improve. Nigerians are crying over inflation, unemployment and socio-political instability.

    Ahead of a possible re-jig of the Federal Executive Council, we call on the president to take another look at his economic team. We agree with those who have pointed out that there are no hard–nosed economists in the team. Many of those handling and superintending key economic institutions are lawyers or accountants. This should change in the months ahead as we approach the mid-term mark of the administration. Nigerians would appreciate, too, timelines for key promises of the government. Following a very slow take-off, the government is yet to gain full momentum. There is no time to waste.

    One sector that is considered key to any recovery plan is the petroleum sector, both the upstream and the downstream. This is no time to play games. We note that in the same way that the officials are insisting now, they had given the people fake assurance in May last year, only to suddenly spring a new price regime. Nigerians have shown understanding and would be willing to make sacrifices if only they are fully briefed and shown a credible economic plan, complete with timelines and appropriate cushion. Their resilience, however, should not be taken for granted.