N200bn subsidy debts: Nationwide fuel scarcity looms

Pump price may hit N200 per litre

By LOUIS IBA
The possibility of a hike in the pump price of petrol looms large in Nigeria as most depots and retail outlets in the country say they are running out of stock. Already in some parts of the country the pump price of petrol has gone up to about N160 per litre, as against the government regulated N97 per litre, and industry sources say prices per litre could hit N200 and above in the days ahead, not just because majority of retail outlets are running out of stock, but a stiff resolve by four oil marketers’ cartel to shut out supply to press down the demand for the settlement of outstanding debts totalling about N200 billion.
The huge debt is specifically owed importers of petrol by the Federal Government (under the fuel subsidy scheme), and the marketers say the debt has stalled their operations, with a threat to the security of jobs of about 400,000 workers. According to Ikem Ohia, secretary of the Depot and Petroleum Products Marketers Association (DAPPMA), the debt had inhibited the continuous import of petrol, and with the government resorting to the state firm, the NNPC, as sole importer of the product, supplies to depots owned by private investors was waning with every passing day.
“We sincerely hope that the government is not relying on a sole supplier for the whole country, because this approach has failed in the past,” Ohia warned. “Petrol queues will appear with attendant chaos and socio-political backlash.” But the Federal Government has swiftly refuted the debt claims of the marketers, saying it had issued Sovereign Debt Notes amounting to N42.666 billion to 31 oil marketers. Paul Nwabuikwu, senior special assistant to the minister of Finance, said between April and May 2012, 14 oil marketers, with claims of N17 billion, were fully settled through the issuance of Sovereign Debt Notes and other relevant documentations.
Nwabuikwu, however, said the strike proposal by the marketers position amounted to a cheap blackmail…and he placed the blame at the doors of some of the marketers, who are currently being probed by the Aigboje Aig-Imoukhuede Presidential Committee for fraudulently enriching themselves through the fuel subsidy scheme. Further payments to these marketers would be determined by the outcome of the probe.
Said Nwabuikwu: “Against this background, it is clear that the strike is instigated mainly by marketers, who were indicted by the Aig-Imoukhuede Committee, which investigated fuel subsidy payments. Their obvious intention is to blackmail the Federal Government in order to escape sanctions for the crimes they have committed. Nigerians should not be deceived by their antics. “Payments to marketers, whose claims have been verified, will continue to go on in a consistent and structured way, which protects the best interests of the country.” He also urged marketers who have genuine issues to raise, regarding their claims, to come forward for discussions or clarifications.
Oil marketers have, however, debunked the government stance as faulty. What they got was ‘a paltry N21 billion’, which they viewed as insufficient to offset their debts. The marketers spoke under the aegis of five unions, and they have issued a 7-day ultimatum to the government to repay the N200 billion debts, and warned that if government failed to meet the deadline, the possibility of scarce petrol for consumers should not be ruled out. “We understand that a paltry N21 billion has been earmarked for the outstanding payment every month for the private sector,” the marketers said. “Where does this lead us in loan repayment and interest charges. N21 billion can only pay for claims for seven cargoes of 30,000 metric tonnes, against 26 cargoes per month at 35 million litres per day consumption.
Are we not deliberately planning for scarcity?” The marketers queried. Of note, however, is that even before the expiration of the marketers deadline, consumers of petrol in Abuja and neighbouring states of Niger and Nasarrawa have started experiencing a crisis in supply of the product. While most filling stations visited by Daily Sun were shut down, long stretches of queues were seen in the few stations still dispensing products, and most fuel attendants interviewed said the ugly trend was part of the planned protest against the maltreatment of marketers by the government, among them the N200 billion debts and an insistence by the NNPC that the marketers pay a Bulk Purchase Agreement fee of N100,000 before being supplied fuel.
In Abuja pump price of petrol has already hit the N200 per litre mark anticipated in the weeks ahead, a development that has also seen an increase in the cost of public transportation within the city. Enock Kanawa, secretary of the Jetties and Petroleum Tank Farms Owners of Nigeria, said: “Member companies are under the threat of being driven into extinction due to the non-payment of the huge sum of legitimate money due to them that have been verified under the Subsidy Scheme by the government.”
The collapse of the nation’s four refineries had forced the country into net importation of petroleum products. Initially, it was the NNPC solely importing, but private marketers were licenced to import, to close an existing gap (created by the NNPC as a monopoly) which was responsible for scarcity in various parts of the country. Marketers financed the importation on behalf of the government with loans borrowed from banks, and they are compelled to sell the petrol at a regulated price of N97 per litre. compared to the landing cost which usually goes up to about N140 per litre.