Fuel Scarcity Looms Over Alleged Debt of N660bn Reportedly Owed Oil Marketers by FG

Another fuel scarcity is looming in Nigeria – threatening to cut short the steady fuel supply experienced in the country since the Federal Gov­ernment hiked the pump price of petrol from N86.50 to N145.
The imminent scarcity of petrol is being induced by sharp disagreements between the De­pot and Petroleum Products Marketers Association (DAPP­MA) and the Petroleum Prod­ucts Pricing Regulatory Agency (PPPRA) over an alleged debt of N660 billion reportedly owed the oil marketers by the Federal Government.

The amount comprises N500 billion debt on import­ed fuel and N160 billion accu­mulated interest on bank loans.
The oil marketers say the debt is hindering petroleum importation and causing trucks to queue endlessly to load at Dockyard and Apapa depots in Lagos.
While DAPPMA declared that the debt will lead to the re­surgence of fuel scarcity as its members had stopped import­ing petrol into the country, the PPPRA said this was not true.
DAPPMA Executive Sec­retary, Mr. Olufemi Adewole, explained that the debt, cou­pled with the inaccessible for­eign exchange, had forced most marketers to stop importing the product. According to him, marketers owe some Nigerian banks over $1 billion in loans for petrol import.
This situation is said to be compounded by the Feder­al Government which has re­neged on its agreement to pay the marketers or the accumu­lated bank interest on the loans. Right now, “the huge debt owed marketers has eroded our oper­ating fund,” Adewole said.
He said: “We are appealing to government to urgently pay our outstanding debt, which is long overdue. Our banks are threatening to debit our ac­counts at the current forex rate of N360 per dollar as against the N197 per dollar that gov­ernment allocated for importa­tion to marketers. This means that we are the ones subsidis­ing the imports.”
According to him, “the ina­bility to pay or service the loans has not only stalled further im­portation of fuel but is threat­ening the operations of the af­fected banks and the nation’s financial industry at large.
“If government fails to ad­dress these lingering challeng­es on price differential, it’s not only marketers that will go down, the banks will also col­lapse because our exposure with the banks is in excess of $1.95 billion.
“Foreign exchange remains another big challenge. We don’t have forex to import the prod­uct. For now, landing cost on petrol stands at over N145 due to high forex rate, which pos­es serious concern to marketers over the price to sell the prod­uct”.

Adewole disclosed that the marketers were reluctant to import fuel due to the landing cost (at over N145), stating that most marketers now depend on the Nigerian National Petro­leum Corporation (NNPC), which will also determine how much they would sell.
But in a swift reaction, PP­PRA stated “unequivocally” that DAPPMA’s claims were “gross misrepresentation of available facts at our disposal, hence misleading.”
The agency said in a state­ment: “The National Petroleum Products Stock data and import plan currently indicates that the country has two months of PMS sufficiency, hence we want to assure motorists and com­muters alike that the products supply situation is robust and able to cater for the fuel needs of all Nigerians, pending when ongoing challenges are ad­dressed.”
PPPRA added that contra­ry to a widely-held belief on the status of kerosene, the product was fully deregulated.
“We hereby appeal to all Nigerians to remain calm and desist from any form of pan­ic-buying, as we assure of our total commitment to adequate products supply and distribu­tion across the country, in line with our mandate.
“We also appeal to all depot owners to adhere strictly to the subsisting truck-out principle in order to ensure that prod­ucts get to retail outlets across the country in a seamless man­ner. The Agency shall not hesi­tate to apply appropriate sanc­tions where necessary”.
The NNPC is the only entity currently importing the prod­uct and has started perfecting plans to import the first batch of petrol for the first quarter of 2017, which would come under the new exchange rate of N305 set by the Federal Government.
Ordinarily, the first quarter importation allocation ought to have been done last month (De­cember) by the PPPRA but that did not happen as the NNPC no longer has competitors in the importation of petroleum products.