FG OWES MARKETERS N220BN

The Federal government owes importers of
petroleum products over N220 billion claims under
the Petroleum Support Fund, PSF. As a result, the
marketers said they may not be able to adequately
supply products during the Yuletide season unless
the debts are cleared. The Executive Secretary of Major Oil Marketers
Association of Nigeria (MOMAN), Mr Obafemi
Olawore, told Vanguard that they are being owed
“mainly this year’s imports plus interest charges
and fixed fluctuations.” He also said that the outstanding subsidy pay
increased as a result of delay in the payment of
verified claims and principal sum, unbearable bank
interest rate and foreign exchange differentials. According to him, the development has put
importers at cross roads as they do not have
money to continually import petroleum products
for the consumption of Nigerians. Olawore further warned that the development may
launch the country into another round of fuel
scarcity if nothing is done to offset the outstanding
claims of the marketers. He wondered why marketers are being owed such
huge amount despite their efforts in ensuring that
the country is not in short supply of petroleum
products. The Federal government had recently
established a Technical Working Committee of
Stakeholders on Delayed Payment of PSF Subsidy Claims of Marketers, to quicken the payment of
subsidy to importers. The Committee’s recent report said the interest rate
regime provided for financing in the Petroleum
Products Pricing Regulatory Agency (PPPRA)
template is indexed to the 45 days payment cycle in
the PSF Agreements. It stated that marketers are debited by their banks
on additional days of non-payment of subsidy
refunds which is usually a minimum of 22 percent
and can go as high as 25 percent. This, it said, resulted in huge exposures of the
marketers on transactions carried out. The report said the prevailing reality is that the
essence of the sovereign instruments has been
defeated by the prolonged delay in payment of
marketers’ claims. “The unfortunate reality today is
that the Sovereign Debt Notes (SDNs) which are
supposed to be redeemed immediately upon maturity now stay unredeemed for an additional 21
days or more. Out of the 271 transactions for
marketers in 2013 for instance, 132 are yet to be
paid; while indebtedness range from 50 days to
200 days for transactions that were funded based
on a provision of 45 days’ financing cost.” The report also stated that marketers demanded
the immediate payment of all their outstanding
arrears plus interest and forex differentials for all
delayed payments. According to the report, “The 45 days credit cycle is
sacrosanct and should be respected by all parties
for all due debts going forward. In the interest of all
parties, these issues should be resolved speedily in
view of the fast approaching fourth quarter and
yuletide season which are characterized by increased demand for petroleum products by
Nigerians”. The report stated that given the fact that
the PSF dwells on the principle of restitution,
reimbursement under the scheme on the old naira
exchange rate is inimical to sustaining products
supply to the system.

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