ABUJA — The Federal Government has accused oil marketers of undermining efforts to make petroleum
products available to Nigerians, especially at this critical period close to the Presidential polls.
The accusation follows resurgence of long queues in Abuja, Lagos and major cities in the country resulting
from fuel scarcity, a development that has made some retail outlets to indulge in all manner of sharp
practices at the expense of consumers.
The current scarcity, just a few days
to the elections, triggers recall of a
similar experience just before the
initial February 14 date before it was
rescheduled to March 28, during
which motorists queued for long
hours waiting to buy the scarce
IPMAN chiefs, depot operators
summoned to Abuja
As a result, a number of executives of
the major and independent marketers
as well as depot operators were yesterday summoned to Abuja by Director, Department of State Services,
DSS, to explain the reason for the current round of scarcity.
According to one of the parties invited by the DSS, who spoke to Vanguard in confidence, “yes, we have
been in Abuja all day to see the Director-General of the DSS. They accused us (marketers) of sabotage,
and asked us to explain why there are no products when government has paid us.
“We accepted the invitation because we have nothing to hide, and challenged them to prove that we have
been paid. After we explained ourselves, the DSS promised to speak with the CBN Governor, who will in
turn speak with the banks to continue to raise facilities for us, pending when government is able to pay.”
The accusation of sabotage is based on claims by government that it had paid off about N30 billion of the
N264 billion outstanding debts from subsidy reimbursement owed marketers, which the Minister of
Finance, Dr. Ngozi Okonjo-Iweala promised to pay off before the end of March.
Furthermore, no other Sovereign Debt Note, an instrument equivalent to cash used as guarantee for
payment of subsidy has been issued to marketers.
Since more products have been imported, interest rates have risen as well as foreign exchange
differentials, government now owes marketers even more then the N264 billion originally recorded.
Government did not fulfill its promise
However, Vanguard reliably gathered that the Federal Government has not fulfilled its part of the bargain in
paying the N264 billion outstanding debts.
Besides, even the much publicised N30 billion that government claimed to have paid in the first week of
March has not yet been fully paid to all beneficiaries, a development that made banks even more reluctant
to raise Letters of Credit, LCs, to marketers to bring in more products.
According to our source, “part of the N30 billion was only paid last Friday, and even at that not all the
marketers have received the payment.”
Recall that at a crucial meeting late February in Lagos with Okonjo-Iweala, who is also the Coordinating
Minister of the Economy, government promised a phased payment of the N264 billion outstanding subsidy
debts to marketers.
In attendance at the meeting were the Governor of the Central Bank of Nigeria, CBN, Mr. Godwin Emefiele;
representatives of the Major Oil Marketers Association of Nigeria, MOMAN; Independent Petroleum
Marketers Association of Nigeria, IPMAN; Depot & Petroleum Products Marketers Association, as well as
Thereafter, the Finance Minister promised that the outstanding sum will be paid in phases up till the end of
March, but only N30billion was so
far announced to have been paid.
The CBN governor equally directed the banks to raise $500million LCs for marketers to enable them
continue to import products, for which marketers were bolstered to import more thereafter.
Govt now owes more than before
Currently, the Federal government is now owing marketers even more than the previous N264 billion, as
more products have been imported thereafter.
Recall that Vanguard had also exclusively reported an additional N6.5 billion based on the differential
arising from the reduction in the pump price of petrol from N97/litre to N87.
Explaining the increase in the level of indebtedness, our source said: “They, (Government), gave us SDN for
N99billion billed to the end of April and we have been importing since our last meeting with the minister
and CBN governor.
“But the banks are still reluctant to raise more LCs, because if out of N264 billion you give only N99 billion
SDN, that is not encouraging at all.
“We urged them that they should pay everything if it ends by April ending; everything including the subsidy,
bank interests and foreign exchange differentials but they refused, and the banks say they can no longer
Against this backdrop, the marketers insist that they cannot be guilty of sabotage since they have brought
in more cargoes when only N30billion had been paid.
Responding to Vanguard’s inquiry, the Department of Petroleum Resources, DPR, the industry regulator,
could not give the stock level currently available in the country.
The agency, however, maintained: “We have continued to monitor the movement of products, what is
available, where it is going to, to ensure they are used judiciously, and that marketers are not hoarding the
product or selling above the pump price or diverting the product.”
FG cuts second quarter fuel import by 50%
Meanwhile, the Federal Government, yesterday, cut down the importation of premium motor spirit, also
called petrol, by 50 per cent for the second quarter of 2015.
A source in the Petroleum Products Pricing Regulatory Agency, PPPRA, told Platts in Abuja that the agency
had issued permits for the importation of 1.5 million metric tonnes, compared to a permit of three million
litres it issued for the first quarter of 2015.
The PPPRA source also disclosed that the number of import permits for fuel allocation for the second
quarter was reduced to 36 from 42 in previous quarters.
The reduction, Platts stated, was due to requests by oil marketers for lower allocations due to rising import
costs and a government subsidy dispute.
Confirming this development, Mr. Obafemi Olawore, Executive Secretary, Major Oil Marketers Association of
Nigeria, MOMAN, said: “For the second quarter, all major marketers reduced their request for allocation
because even they have stagnated on meeting first quarter allocations.”
Sources told Platts that despite the fact that the Federal Government has paid N100 billion of the total
outstanding subsidy debt, marketers are concerned the debt may continue to mount even on second
quarter imports, particularly as they come after the presidential election set for March 28.
The PPPRA issued permits for around three million metric tonnes of gasoline in the first quarter, which the
agency said at the time was to cover for the nearly absent output from domestic refineries.
It is envisaged that the ongoing turnaround maintenance of the countries ‘refineries will make up for the
reduction in fuel import as it will help bridge the supply gap.
If the refineries fail to take shape by the second quarter, operators told Vanguard that the country might
be plunged into serious fuel crisis.
The operators, who chose not to be named, further stated that if the target set for the refineries were not
met, the NNPC might be forced to rely on its strategic reserves, which it had told Nigerians is capable of
serving the country for about 30 days.
Repairs and maintenance of refineries
The Nigerian National Petroleum Corporation, NNPC, had a couple of days ago, stated that the refining
capacity of all the refineries in the country will grow to 90 per cent by April 2016.
Mr. Ian Udoh, Group Executive Director, Refining and Petrochemicals, NNPC, who stated this, further
explained that the corporation has since last October, engaged the services of local engineers to undertake
a comprehensive repairs and maintenance of the Kaduna, Port Harcourt and Warri refineries, adding that
the contract was expected to last for 18 months, terminating in April. 2016.
He said: “The project started since last October, so we are looking at another 14 to 15 months or early
next year. After then, the refineries should be in a good shape.
“However, it is not going to be a sudden jump in production, it would be gradual. We have ordered a lot of
materials, as the materials comes we install them using our local resources.
“It is an ongoing process that will allow the reliability of the refineries to continue improving across the
period, because most of our problems have to do with reliability of the plant. We can start all of them
now, but from time to time one equipment will fail or some other faults will occur, and we have to shut
down to repair.
“The frequency of shutting down to repair is rather high, but we expect that to gradually diminish until we
have 90 per cent capacity by early next year, given the 18 months schedule that we have set.”