Written by Nduka Chiejina, Abuja and Akinola Ajibade
A major showdown looms today between the Federal Government and major oil marketers over fuel subsidy payment.
Minister of Finance and Coordinating Minister for the Economy Dr. Ngozi Okonjo-Iweala said in Abuja yesterday that the oil marketers “have formed a cartel that can ground the nation to a halt at will”.
She added that “the nation must do something about it”.
The Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN), Mr. Obafemi Thomas Olamwore, said the oil marketers would not back down at today’s meeting.
He told our correspondent last night that they would resist any attempt by the Federal Government to postpone the payment of the N200billion balance being owed them beyond two weeks.
The government, he insisted, must pay up before leaving office.
The outcome of the meeting, Olawore said, will determine whether the strike over the subsidy payment will continue or end.
Olawore denied that marketers were paid N156billion last week. He said N154billion was paid.
He added: “Bidding for importation by the marketers has reduced drastically due to lack of funds. That is the reason behind agitation for speedy payment of the debts owed us. “
The major marketers supply 60 per cent of fuel.
The minister said the government is owing them N131 billion based on Petroleum Pricing Products Regulatory Agency’s (PPRA’s) template.
The minister attributed the fuel scarcity to the activities of a group of cartel determined to hold the nation by the jugular vain. She expressed surprise at their attitude, stressing that “they were more liberal in times past even when their outstanding was in the region of N2.3 trillion.
“It has become a situation where we have a cartel that can ground the nation to a halt at will. I strongly suggest that the nation has to do something about it. It has been very stressful for four years, trying to cope with a group that controls a very important sector of a nation and they are small enough to organise themselves.”
This, she said, “means that they can hold a nation to ransom anytime they want. And that is what is happening. I remember when I came back as finance minister on August 17th, 2011, the first thing that confronted me was this scandal of subsidies. By then, more that N 1 trillion had already been paid. And we went through that whole thing and since then we cleaned up, restructured and trimmed down.
“You see that the amount we have been paying year by year diminished substantially to about N971 billion a year, down from the N 2.3 trillion of 2011. We brought it from N 2.3 trillion to about N 971 billion that has been in the budget each year. So, we made very substantial restructuring and changes to the whole process that brought the amount down for the nation. But yet we have to deal with this problem and the whole country has seen us trying our best struggling”, Mrs. Okonjo-Iweala said.
She noted that oil marketers are a small cartel that are into no risk business, based on the template negotiated with the PPPRA a long time ago, which factored in exchange rate differential and profit margin guarantee – a situation she said, that leaves them with absolutely no risk.
The minister said: “The template that governs their business is designed to cover all their costs plus a profit margin. That is PPPRA template which I have quarrelled with for quite some. So it is really no risk business for them. Or very little risk. I am not saying there is no stress. Of course, they have stress. But the risks are all covered by the template that was negotiated with PPPRA long ago. And it is actually that template that we have been quarreling with.”
That template, Mrs. Okonjo-Iweala “says that they must be paid exchange rate differentials, interest rates, profit margin guarrantee plus the principal amount they spent in the business. Based on that, the government is taking a full risk of their business, according to this template. Even when we have revenue shortfall, any interest that accrues has to be paid by government. That is what was negotiated. So, they are in a no risk business and we have been pleading with them that if that is the case, at least supply Nigerians with the fuel because at the end of the day the government is still paying for all of this. Why are you making Nigerians suffer? Why these long queues?”
Last Thursday, the Federal Ministry of finance said it paid the marketers N156 billion and put the balance at N98 billion. The minister said yesterday that the balance had increased to N131 billion, based on last figure obtained from the PPPRA. She said the figures constantly changed based on offloading of products.
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