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Oil marketers beg Nigeria to pay $2b subsidy arrears

Oil marketers have appealed to Nigeria to hasten payment of over US$2 billion subsidy arrears to save their assets from being taken over by banks.
The marketers, under the aegis of Major Oil Marketers Association of Nigeria (MOMAN), made the call in Lagos.
Members of the association include Independent Petroleum Marketers Association of Nigeria (IPMAN); Depot and Petroleum Products Marketers Association (DAPPMA) and Independent Petroleum Products Importers (IPPIs).
The Executive Secretary of DAPPMA, Mr Olufemi Adewole, urged the government to lessen the bureaucratic process involved in the payment process.
According to him, the inability of federal government to pay the debt had resulted in massive job losses in the oil and gas industry, which has affected the marketers’ operation.
Adewole said that 60 per cent of marketers had been forced out of business, as banks had taken over their depots, assets and properties due to their inability to pay back monies borrowed.
He added that many marketers were forced out of business, while others are presently struggling to survive due to the unpaid subsidy arrears.
Adewole also said that the development has been threatening investment in the downstream sector.
“It has had very adverse effects on our operations. I am aware of two depots that have been forcibly taken over by banks because they got injunctions from the courts.
“They did so the moment they heard that National Assembly has approved payment to marketers. Unfortunately, as at today, Sept. 27, the money is yet to get into our accounts.
“Another challenge we have is that many of the marketers had to lay off more than 90 per cent of their staff because of financial challenges.
“Although, few of them are still operating, but not in good number with just about three to four staffs,” he said.
Similarly, the Chairman of South-West Chapel of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), Mr Tayo Aboyeji, said that loading activities had been bad at most private depot.
Aboyeji attributed the situation to the inability of the marketers to import petroleum products.
He said that most drivers had been lamenting low patronage from private depots due to non-payment of marketers’ subsidy arrears, among other factors.
Aboyeji said the situation had made some depots to convert workers into contract staff.
“Government should find a way to pay the marketers and deregulate the sector to allow more players into the industry.
“When the downstream is fully deregulated, more marketers will engage in importation and it will help tanker drivers in their businesses because of the financial challenges,’’ he said.
However, he regretted that the government, as against paying part of the money in promissory note and cash, may pay only in promissory note.
Adewole frowned at the prospect of having to go back and discount the promissory note in the bank.
“This means we are losing, because the money had been delayed and this adds up the interest to be charged on our accounts.
“Although, what was approved to be paid is not the actual amount the government owes us.
“The interest came about as a result of devaluation of naira from N197 to N285 to a dollar,” he said.
Meanwhile, a source, who is an independent marketer, urged government to deregulate the downstream sector.
He said that the deregulation would curb the huge amount of money spent on subsidy.
According to him, marketers have run out of cash and their businesses are gradually going moribund as a result of capital been stocked.
“No marketer can import petrol with the present price differential
“We cannot buy fuel at N174 per litre at the international market and government is forcing us to sell at N145 without paying the differentials.
“That was the reason we are urging the government to urgently embark on full deregulation of the sector to create free flow market and allow government to use the money to develop other sector,’’ he said.

According to him, only the NNPC imports fuel and then use its discretion to allocate products to marketers, adding that if deregulated it will also help government to invest the subsidy money into other sectors.