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Subsidy Debts: Oil Marketers Give FG 7-day Ultimatum

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  • Subsidy Debts: Oil Marketers Give FG 7-day Ultimatum

Oil marketers have issued a seven-day ultimatum to the Federal Government for the payment of all outstanding subsidy debts, including foreign exchange differentials and interest rate component, owed to them.

The marketers, under the aegis of Major Oil Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association of Nigeria and the Independent Petroleum Products Importers, said failure to meet the deadline would force its members to disengage their workers, the News Agency of Nigeria reported on Sunday.

The Legal Adviser, IPPI, Mr Patrick Etim, was quoted as saying that the ultimatum became necessary as all investments and assets of oil marketers were being taken over by banks, while payment of workers’ salaries remained a serious dilemma.

According to Etim, marketers have asked their workers to stay at home from December 1 as salaries of workers could not be paid due to huge subsidy debts owed by the government.

He said the payment of the debts through cash option would prevent the intended mass retrenchment.

“At the inception of the current administration, marketers engaged the government with a view to securing approval for all outstanding subsidy-induced debts handed over to the current administration,’’ he said.

Etim said the current administration paid part of the debts, with a substantial portion of the interest and foreign exchange differential still pending.

The Executive Secretary, DAPPMAN, Mr Olufemi Adewole, confirmed that oil marketers had given the government a seven-day ultimatum.

Adewole also confirmed that the ultimatum letter was served on November 28 to the Debt Management Office; the Minister of Finance; Chairman, Senate Committee on Petroleum Downstream; the Department of States Services and the Minister of State for Petroleum Resources for urgent payment of outstanding subsidy debts to marketers.

He said this became necessary to prevent the industry from imminent collapse.

He said, “We urged the DMO to process and pay marketers in cash for their outstanding forex differentials and interest component claims, together with the amount already approved by the Federal Executive Council and the National Assembly.

“Marketers are not in a position to discount payment on the subsidy-induced debt owed as proposed by the DMO: the expected payment is made up of bank loans, outstanding administration charges due the Petroleum Products Pricing Regulatory Agency, outstanding bridging fund due Petroleum Equalisation Fund (Management) Board and, in a few cases, AMCON judgment debts.

“We urged that the FEC approval payment instrument, the promissory note, be substituted with cash and paid through our bankers to stop the avoidable waste of public funds through these debts accruing interest.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Economy

FG to Restrict Citizens of Certain Countries from Entering Nigeria

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FG Plans to Ban Citizens of Certain Nations from Entering Nigeria

The Federal Government on Monday announced that it would ban citizens of certain countries with high rates of COVID-19 from entering the country to better protect the nation from the ravaging pandemic.

Hadi Sirika, the Minister of Aviation, disclosed this in Abuja during the briefing of the Presidential Task Force on COVID-19.

According to him, this was why the federal government had not reopened commercial international flights into and out of the country.

He said, “On the question about when we are beginning international travels, certainly you are very aware that so many countries had placed ban on countries that we cannot go even from Nigeria.

“Also Nigeria, of course, will place ban on other countries that cannot come in here, because everyone is trying to keep safe.”

He added, “These and many other reasons will make us to be cautious, to study some more and to liaise with all the stakeholders and decide when we will open for international flights.”

The minister said while airline operators are pushing for full operation both locally and internationally, safety remains government priority when making such decisions.

Sirika said, “In aviation, we want to open like yesterday because we are losing money; we are bleeding. But we must stay alive first before we are able to make money.”

He added domestic flight operations at the nation’s airports were being staggered to avoid crowding and better enforce safety rules.

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Economy

Energy Firms Owe Banks N5.59 Trillion -CBN

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Energy Companies Owe Nigerian Banks  N5.59 Trillion -CBN

The Central Bank of Nigeria has said energy firms owed banks N5.59 trillion as of May 2020.

The amount, according to the sectoral analysis of banks’ credit, represents 30 percent of the N18.63 trillion loans advanced to the private sector during the period under review.

A break down of the report shows that oil and gas firms increased their debt by N300 billion from N4.58 trillion in December 2019 to N4.88 trillion. While the power companies owed N705.93 billion, up from N671.45 billion filed in December 2019.

Accordingly, oil companies that are operating in the downstream, natural gas and crude oil refining subsectors owed combined N3.59 trillion as of May, up from N3.42 trillion in five months ago. While those in the upstream and services subsectors owed N1.29 trillion.

Power generation firms and independent power producers increased their total debt to N385.05bn in May from N373.22bn in December, while transmission and distribution firms owed banks N320.87bn as of May as they borrowed N22.64bn in the first five months of this year.

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Economy

NNPC Spends N101.65bn on Petrol Subsidy in Q1 2020

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FG Spends Petrol N101.65bn on Petrol Subsidy in the First Quarter

The Nigerian National Petroleum Corporation (NNPC) said it spent N101.65 billion on petrol subsidy in the first three months of the year.

In its latest Monthly Financial and Operations report released for the month of March, the corporation described the spending as under-recovery.

A break down of the report shows N43.31 billion was spent in January while N20.68 billion and N37.66 billion were spent in February and March respectively.

The amount was spent before the Federal Government halted subsidy in April when global oil prices plunged due to the COVID-19 pandemic.

Speaking on subsidy, the former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said “There is no need for subsidy again because they are using it to make unnecessary demands and this is the corruption that we are talking about. They are also using it to finance corruption too.

“The money that they would have used for other sectors or even send to FAAC is being used for subsidy and we cannot actually quantify its impact on the masses; rather, it is used to enrich a very few.”

Nzekwe urged the PPPRA to ensure subsidy does not return and encouraged the government to liberalise the downstream oil sector in order to allow other marketers to participate in fuel importation.

He said, “The NNPC should not be the only one importing petrol. The downstream sector must not continue like this. Other players should be allowed to play in the space too. The sector should be fully liberalised.

“And it is because the NNPC is the only one importing and almost running everything that makes it simple for it to say whatever it wanted as expenses on subsidy or under-recovery. This should not continue.”

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