Forex differentials: Controversy delays payment of $1.2bn subsidy debt

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…Petroleum marketers debt to banks hit $2bn

By Samuel Ibiyemi

Following failure of the Central Bank of Nigeria (CBN) to pay subsidy arrears and foreign exchange differential of $1.2 billion, the debts being owed  banks in Nigeria by petroleum marketers have increased to $2billion. The subsidy debt represents collation of subsidy figure certified by the auditors of the Federal Ministry of Finance as debt owed petroleum marketers in order to ensure abundant supply of premium motor spirit ( PMS).

The Chairman, Depot and Petroleum Marketers Association ( DAPPMA) Prince Dapo Abiodun announced that the huge debt by petroleum marketers have resulted in the take over of several assets belonging to his members by the Assets Management Corporation of Nigeria ( AMCON) and Nigerian banks.

The failure of the federal government  to pay huge subsidy arrears figure according to him made it impossible for petroleum marketers to finance importation. “ Unfortunately,the depots cannot be purchased because of downstream challenges which successive past administrations as results of threat of  industrial Action by oil workers.

Prince Abiodun warned  that seizure  of fuel depots belonging to members of the association by banks will not solve the problem except there is collaboration by all stakeholders to ensure the payment of marketers. He disclosed that the debt figure is responsible for non participation of marketers in fuel importation since the return of subsidy following increase  in crude oil price above $50 per barrel in October 2016.  “ Our inability to participate in fuel importation made the Nigerian National Petroleum Corporation ( NNPC) to be responsible

He blamed devaluation of Naira for the misfortunes of marketers owing banks because most  of the debt were incurred when the Exchange rate of Naira to Dollar was N190. “ Now that exchange of Naira per Dollar is between N305 and N310 per Dollar, the cost of financing fuel importation is now beyond the reach of DAPPMA members,” he said.

However, he said that the CBN had been making forex available  but insisted that the payment of outstanding subsidy payment would provide opportunity to settle banks. He lambasted  government’s agencies in the maritime sector for insisting on payment  for services in Dollars purchased by marketers in the black market.” It is unfortunate that Nigerian Ports Authority will collect Dollars bought by marketers and later sold them to banks without consideration of special forex rate for petroleum marketers.

In order to reduce downstream challenges, Prince Abiodun called for the deregulation of downstream secto.

The Executive Secretary of Major Oil Marketers Association of Nigeria ( MOMAN) Mr Obafemi Olawore had disclosed recently that the Federal Government was still owing members over N600 billion.

The Federal Government had on January 28, ordered immediate payment of N150 billion to Petroleum marketers “If marketers continue to lay off workers, soon the unions will soon swoop down on us and begin another crisis.”

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