14 August 2012

Nigeria: Again, Oil Marketers Threaten Strike Over Subsidy Disbursement

Indications emerged Monday that the country will soon experience yet another fuel crisis as major and independent oil marketers have vowed to suspend their operations in days ahead over the continued delay in payment of their fuel subsidy claims by the Federal Government.

Also, alleged plans by government to release only N21 billion monthly for subsidy payment has pitched the marketers against the government.

THISDAY learnt that the marketers under the aegis of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMA), Jetty and Petroleum Tank Farm Owners of Nigeria (JEPTFON) and Major Oil Marketers Association of Nigeria (MOMAN) have resolved to shut down their facilities nation-wide should government fail to commence the payment of their outstanding entitlements.

It was also gathered that the Petroleum Tanker Drivers (PTD) branch of the National Union of Petroleum and Natural Gas Workers (NUPENG), which began a seven-day warning strike Monday by suspending lifting of petroleum products to Abuja, has vowed down tools completely if at the expiration of the ultimatum, government fails to meet its demands.

The drivers, among other things, are protesting the delay in payment of subsidy claims to marketers, which they feared may result in loss of jobs by their members.

DAPPMA and JEPTFON members had last month suspended operations nation-wide to protest government's failure to pay their outstanding entitlements.

The strike was however called off on July 29 following government's assurance that all verified subsidy claims would be paid.

But some of the marketers spoken to yesterday confirmed that they were yet to be paid almost two weeks after government made the promise and that no reason has been given for the continued delay in the payment.

They said aside from the non-payment of their subsidy arrears, they are concerned that government's plan to be releasing only N21 billion monthly for subsidy payment will compound the problem in the fuel subsidy administration.

According to them, Nigeria's daily fuel consumption stood at about 60,000 metric tons (mt) per day, but was reduced to about 35,000 mt, in a move, which according to the Petroleum Minister, Mrs. Diezani Alison-Madueke, was aimed at ensuring transparency and efficiency in the fuel import scheme.

The marketers argued that with the current daily consumption of about 35,000mt per day, it means that about 1,050,000 mt tons of premium motor spirit is consumed monthly, which translates to about $1,050,000,000 monthly at an average price of $1,000 per metric ton.

They noted that the subsidy element, which is about 35 percent, will bring the average amount per month to about $367,500,000 (N60,637,500,000), pointing out that with the new payment method, it will take government almost three months to pay one month claim.

The marketers who vowed to resist the new method of payment, pointed out that it will result in accumulation of subsidy claims, making it difficult, if not impossible for government to pay.

"The implication is that if marketers are not paid for product supplied, they will stop importing. If they stop importing, there will be fuel scarcity and if there is fuel scarcity, commercial activities will be crippled and the economy will be adversely affected", said a marketer.

He noted that the delay in payment of subsidy arrears will result in job cuts as most oil marketing companies may likely lay off some of their staff.

The Presidential Committee on Fuel Subsidy Payment headed by the Managing Director and Chief Executive Officer of Access Bank Plc, Mr. Aigboje Aig-Imoukhede, had in its report noted that both the Nigerian National Petroleum Corporation (NNPC) and the marketers made total claims of N2,109,386,944,946.92 in 2011, with the NNPC claiming N981,734,423,649.56, while the oil marketing and trading companies submitted claims of N1,127,652,521,297.36.

However, the outstanding arrears of 2009 and 2010 subsidies were included in NNPC's claims for 2011.

Of the N981.7 billion claims submitted by NNPC for 2011, the corporation paid itself N764,944,448,471.72 in 2011 by deducting it directly from the cost of crude oil allocated it by the Federal Government.

NNPC also deducted another N210 billion in 2012, leaving N6.78 billion as government's outstanding obligation.

But in 2012, the corporation submitted fresh claims of N310,362,437,515.12 as arrears from 2009, 2010 and 2011, bringing its total outstanding arrears for 2011 to N317.15 billion.

Of the N1.125 trillion claims made by the oil marketing and trading companies in 2011, the Federal Government paid N866,665 billion to the private marketers in 2011, while another N246.171 billion was paid in 2012 as part of the 2011 arrears, leaving a balance of N12.8 billion.

However, in 2012, the marketers submitted additional claims of N54.48 billion as arrears for 2011, bringing their total unpaid arrears to N67.298 billion.

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