Marketers of petroleum products have decried the non-payment of N120 billion arrears of subsidy to its members, stressing that under the Petroleum Support Fund (PSF) approved guidelines as amended, the Petroleum Products Pricing Regulatory Agency (PPPRA) is obligated to pay marketers the differential between the landed cost of the products and government-approved pump price within 45 days.
The marketers are also demanding interest for delayed payment, as well as foreign exchange differentials, saying the demands arose from the failure of government to adhere strictly to the provisions of the PSF-approved guidelines of 45 days.
Executive Secretary of Major Oil Marketers Association of Nigeria (MOMAN), Mr. Femi Olawore, said in a statement yesterday that the major marketers were being owed N94.7 billion out of the outstanding N120billion.
He stated that out of the N190 billion initially owed the marketers, only N24.04 billion and N9.13 billion for Batches R, and S respectively, have been paid, while N36 billion owed under Batch T were paid partly.
Olawore stated that no marketer or importer would allow himself to be embarrassed by banks threatening to sue or report defaulting marketers to government financial agencies.
He insisted that any payment made after 45 days would affect the marketers' liquidity position and their ability to pay their suppliers, adding that this ultimately affects the supply of products.
Quoting from the subsidy guideline, Olawore said it (subsidy) "will apply when the landing cost of products based on import parity is in excess of the approved PPPRA ex-depot price for the product".
He acknowledged the fact that the Federal Ministry of Finance has brought transparency and sanity into the payment of subsidy claims.
"However, it is to be noted that interest claims do not just happen. They are as a result of interest charges on borrowed funds from the banks. This means no importer makes any gain on interest claims. Rather, claims made by importers are actual debit notes from banks, which have always been verified by Petroleum Products Pricing Regulatory Agency (PPPRA) and the Federal Ministry of Finance before payment is made through importers to the banks," he said.
According to him, "The 45-day payment cycle was arrived at by the following stakeholders: PPPRA, Federal Ministry of Finance, Central Bank of Nigeria (CBN), Department of Petroleum Resources (DPR), Major Oil Marketers Association of Nigeria (MOMAN), Independent Marketers Association of Nigeria (IPMAN), Depot and Petroleum Products Marketers Association (DAPPMA) and commercial banks."
Olawore noted that it is very strange to read the claims by the Federal Ministry of Finance that interest and foreign exchange claims shall not be honoured again when the ministry has just paid part of November 2013 imports.
"In other words, part of November, all of December 2013 and January to June 2014 are still outstanding. Who bears the interest charged by banks? In rudimentary finance, interest on loan shall always arise when the principal sum remains unpaid. Therefore, as long as banks charge marketers interest for loans so long shall we make claims for restitution when the Federal Ministry of Finance still owes the principal sum," he said.
He urged the federal government to pay all outstanding principal sums immediately and subsequently pay all claims within 45 days to prevent interest and foreign exchange differential arising.
Olawore also reminded the Federal Ministry of Finance that scarcity of petroleum products does not just happen but takes months, adding that this is why it is difficult to clear.