Federal Government, MOMAN disagree on N413b fuel subsidy

A whopping N413 billion was last week approved by the Federal Government for the immediate payment oil marketers’ outstanding claims.

The approval came in the wake of a brewing fuel shortage and stave off another harrowing experience of fuel scarcity.

Barely a week after the approval, the Federal Government and MOMAN are not on the same page over the gesture.

MOMAN, through its Executive Secretary, Mr. Obafemi Olawore, told The Nation on telephone, that foreign exchange differentials and interests on the loans they obtained from banks were not captured in the N413 billion.

Lauding the government gesture, Olawore said MOMAN members’ subsidy claims have not been fully paid by the government.

But Nigerian National Petroleum Corporation (NNPC) spokesman Ohi Alegbe disagreed with the MOMAN position.

President Muhammadu Buhari, he said, approved far above the marketers’ debt portfolio, which he put at about N300 billion.

According to him, the President magnanimously approved the N300 billion thresholds to take care of the members of the Independent Petroleum Marketers Association (IPMAN) and other importers involved in the chain of oil production.

Alegbe said: “The total debt was about N300 billion but to take care of the independents and other importers as well as other costs such as foreign exchange differentials and interests on loans, government approved N413 billion for them.

“Therefore, to say that the amount doesn’t cover the total debts owed the marketers, is just not being fair to the government.”

In February, Olawore said the Federal Government’s indebtedness to marketers stood at N250 billion as at end of 2014. The amount included the debt owed Depot and Petroleum Products Marketers Association (DAPPMA).

Mobil, Oando, MRS, Total, Conoil and Forte Oil are the members of MOMAN.

Olawore said the association had at that time, written several letters and held consultations with the government for payment of their debt. The major marketers also requested for upward review of their distribution margins, which had been fixed at N4.60 per litre since 2007.

The demand for increase in distribution margins, according to Olawore, was to cushion the effect of operational cost on members.

He said the margins have become inadequate because the salaries of employees and the cost of building retail outlets have shot up, adding that the demand for increased distribution margins died with the immediate past administration.

Olawore said: “MOMAN as at end of 2014 was being owed N250 billion in unpaid subsidies. Out of the N250 billion, N95 billion was the cost of foreign exchange (Forex) and interest on loans while the real subsidy for the marketers is N155 billion.

“We have met with the government and they promised to pay but we have not heard from them since then.”

DAPPMA’s Executive Secretary Olufemi Adewole identified soaring interest as the direct impact of the debts’ non-payment.

He noted that the outstanding bill was a little above N200 billion in April when the Federal Government made the last payment, adding that by the end of May, the debt had risen to N291 billion.

The major marketers and DAPPMA members are jointly owed the subsidy debt. Therefore, with the increasing interest on the loan, the debt will by now be well over N300 billion, he added.

IPMAN’s President Chinedu Okoronkwo, however, noted that his members will also partake in the subsidy payment.

The marketers have since May refused to import fuel. They insisted that until the government clears the arrears, they will not import, leaving only the NNPC as the sole importer.

NNPC has capacity to meet 50 per cent of the national demand of estimated 40 million litres per day of petrol.

Alegbe said it would amount to an abuse of the President’s magnanimity if the oil marketers make further subsidy demands.

Besides, he said the disagreement on subsidy had been lingering from the previous government but because the Buhari administration wanted a smooth flow and distribution of fuel, he approved N413 billion.

According to him, government was verifying the 40 million litres daily consumption claim of the marketers, alleging that the figure would have padded up.

He said daily consumption should be about 30 million litres or even less.

NNPC’s Group Managing Director Emmanuel Ibe Kachikwu spoke of plan by the government to pay whatever is due to the marketers every month beginning from next year.

“From next year, marketers will be paid their dues every month and the issue of payment of interest on loans and undue forex differentials would be eliminated,” Kachikwu said in Lagos last weekend.

According to him, government’s target was to cut down fuel subsidy to between 15 and 20 per cent.