The delay in the release of the fourth quarter 2013 fuel import allocation by the Ministry of Petroleum Resources and the slow pace of processing of the outstanding N168billion subsidy claims have fuelled concerns among the Oil Marketing and Trading (OM &T) companies over the potential effects of these delays on the current stability in the supply of petroleum products across the country, sources learnt.
The N168 billion outstanding subsidy claims, it was learnt, was established by the seven-man pan-industry committee set up to explore ways of addressing the delays in subsidy payment, which submitted its report at the weekend.
Sources gathered that marketers were worried that exactly two weeks into the fourth quarter and about two months after the Petroleum Products Pricing Regulatory Agency (PPPRA) forwarded the marketers’ applications to the ministry after a stakeholders’ meeting, the import allocations are yet to be approved.
Some of the marketers were said to have besieged the PPPRA office in Abuja on Friday for their import allocation but were told that the approval document was still with the ministry.
About 41oil marketing companies were given import allocations by the PPPRA for the third quarter, which ended on September 30.
The PPPRA convened an industry stakeholders’ meeting in August, where notes were compared, positions taken and agreement reached on the need to speed up the process of the release of the fourth quarter allocation in view of the volatility of the period.
One of the marketers said at the weekend that the delay in the release of the allocations could precipitate crisis as the fourth quarter was the most important and most volatile in the downstream business.
“The government should not mislead itself on the current stability in supply. Dry season is about to set in and more people are moving because unmotorable roads will soon be motorable. Christmas season is at the corner and any distortion in supply will snowball into crisis that will spill over to the first quarter of 2014,” he said.
A source at the Ministry of Petroleum Resources, however, said the ministry would soon release the allocations to the PPPRA after thorough verification of the performances of the marketers in the third quarter, stressing that marketers who did not exhaust their previous allocations may be sanctioned.
Also a member of the seven-man committee, which submitted its report to the PPPRA at the weekend said that the committee recommended that the government should pay marketers foreign exchange differentials for delaying subsidy payment beyond the 45 days stipulated under the Petroleum Support Fund (PSF) scheme.
He said the committee also noted that when Sovereign Debt Notes (SDNs) were released to the marketers and not cash-backed at the Central Bank of Nigeria (CBN), it ridiculed the country in the international financial circles because “that paper is supposed to be as good as cash.
“That is why marketers are now calling it Suffering Debt Notes. Sometimes, they carry it for 60 days because when they go to the CBN, they will say that government has not released the money and this is supposed to be a negotiable instrument.”
Sources gathered at the weekend that a group which identified itself as Concerned Nigerians on Uninterrupted Movement Association (CONNUMA) is putting pressure on the government to pay foreign exchange (FOREX) differentials for the delays in paying subsidy.
The Chairman of the group, Alhaji Umaru Musa Abubakar, said that FOREX arose from the difference between the value of the naira at the time of fuel importation and the value at the time of the payment of subsidy.
He said due to exchange rate volatility, the naira depreciates in value relative to the dollar by the time subsidy is paid, resulting to huge loss by the marketers.
The seven-man committee established that marketers were being owed N168billion as subsidy claims.
The committee was expected to have liaised with the Federal Ministry of Finance on how to fast- track payment of subsidy so as to reduce the financial risk exposures suffered by the marketers.
A spokesman of the Minister of Finance, Mr. Paul Nwabuikwu, however, said some of the claims submitted by the marketers were placed under investigation as some of the marketers still explored the loopholes in the system.
He blamed the delays on payment to the detailed scrutiny being carried out by the ministry.
Posted by SirVic for wetopup(News Laboratry)