Major Oil Marketers Association of Nigeria (MOMAN) and Depot and Petroleum Products Marketers Association (DAPPMA), at the weekend appealed to the Federal Government for immediate payment of over N800 billion outstanding subsidy debt owed them to enable them sustain their operations.
The marketers made the appeal during an interactive session with journalists in Lagos lamented the delay in the settlement of their outstanding subsidy claims even as they noted that interest on loans kept increasing.
Briefing the media at the forum, the MOMAN Executive Secretary, Mr Cement Isong, urged the government to expedite action on the payment of the outstanding debts of fuel imports subsidy arrears owed the marketers, adding that the continued non-payment has severely limited their access to credit, negatively impacted their working capital leading and consequently made it impossible for them to pay their banks and their service providers.
According to him, the major challenge the Nigerian downstream petroleum sector is facing is the non-payment of the long outstanding fuel subsidy to oil marketers.
He explained: “We appreciate the efforts of the National Assembly and the Federal Executive Council in approving payment but the non-payment creates a significantly negative impact on the operational efficiency of the downstream sector of the oil industry, thereby placing a severe strain on its efforts to continually invest in infrastructure and raise industry standards.
“We hope that the debts will be paid in full to the oil marketers as soon as possible” Isong added.
He disclosed that as at August 2018, the debt owed MOMAN members alone stood at over N130.7 billion.
Commenting, the DAPPMA Executive Secretary, Mr. Olufemi Adewole, said the processes highlighted for payment by the government were inimical to the operations of their businesses, adding that based on this, 60 percent of marketers have been forced out of business as banks have taken over their depots due to their inability to pay back monies borrowed to import fuel.
Adewole pointed out further that many marketers were forced out of business, while others were struggling to survive due to the government’s inability to settle the subsidy arrears.
He explained: “The debt 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 the National Assembly approved payment of the debt to marketers. Unfortunately, as at today the money was yet to get into our accounts.”
The DAPPMA chief clarified further that another challenge the marketers were facing had to do with the promise by the government that part of the money would be paid by promissory note and cash.
He expressed some concern that if the government pay only in promissory note, this would mean that marketers will have to go and discount the promissory note in the bank, thereby making them to lose some money because the money has been delayed which will add to the interest to be charged on the marketers’ accounts.
It would be recalled that on October 31, the Senate Committee on Petroleum (Downstream), had directed the Ministry of Finance and Debt Management Office (DMO) to meet with the oil marketers and other stakeholders to agree on the outstanding subsidy debt and report back within one week.
The Chairman of the committee, Sen. Kabiru Marafa, said the oil marketers had earlier submitted a bill of N650 billion but government later reviewed the bill to N429 billion and eventually gave an approval of N386 billion.
However, the N386 billion as approved by the Federal Executive Council (FEC) came with a condition that subjected its implementation to the appointment of an international audit firm that would comprehensively review and ascertain the veracity of the claims by the oil dealers.
Also, the payment was said to be made not in cash, but by a promissory note.
Also, the Debt Management Office (DMO) on October 31, says it has commenced the accelerated implementation of settlement of government arrears through promissory notes to oil marketers.