Oil Marketers Demand Payment Of N400 Billion Subsidy Debt Owed Them By The Federal Government Which Has Also Ruled Out Possibility Of Reduction In The Pump Price Of Petrol Despite Drop In Global Oil Price
Federal Government yesterday dashed hopes cutting the pump prices of petroleum products as oil marketers in the country swooped on it for payment of outstanding N400 billion subsidy arrears inherited by the present administration.
At a meeting yesterday with the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, key marketing groups in the nation’s fuel market demanded immediate payment of the outstanding subsidy arrears to enable them to meet the imminent demand rise associated with yuletide season.
At the meeting, NNPC whose earnings plunged by 67 percent in the first half of the year, ruled out reduction in retail prices of various petroleum products in the country despite the clear over-recovery at the pumps.
The UNION reports that NNPC and sister Petroleum Products Pricing and Regulatory Agency (PP- PRA) had at the peak of high crude oil prices justified high retail prices of imported fuel in the country on knock-on effect from high crude oil prices at the international market.
Platts Market analysts who visited Nigeria recently had listed high refining margins and low pump prices of refined petroleum products across the globe as the major economic benefits of the falling prices of crude oil.
They said low crude oil prices and associated slide in the prices of refined petroleum products had raved up profits and prosperity of industries and citizens respectively, pointing at fuel affordability and rising demand as necessary drivers for investment in the industry.
The analysts who hosted global oil market observers at a seminar at Eko Hotel, Lagos, described the retention of high pump prices in Nigeria and other West African countries as anomaly.
In its campaign promises, the All Progressive Congress (APC) had chided the defeated Peoples Democratic Party (PDP) led government of retaining high pump prices petroleum products despite sharp fall in the prices of crude oil in the market.
The APC sailed on promises of huge social charity packages for the masses to success at the polls. Thus, expectations of cheaper fuel in the country under the prevailing crude oil price slump were high when the APC won the presidential elections last May.
Last night the spokesman of NNPC, Mr. Ohi Alegbe, debunked reports in some social media of a purported reduction in current pump price of petrol from N87 per Litre to N57, describing the report as false.
He advised members of the public to ignore expectations of fuel price reduction, noting that the price of petrol remains N87 per litre.
A source at the corporation however confided in The UNION that government was actually over-recovering from the market, adding that margins at the pumps would be used to augment the revenue gaps created by acute fall in crude oil prices.
He said the cyclical nature of the crude oil market also implies that government must observe the export market for signs of low price stability before cutting local pump prices to reflect the global market realities.
Asked why government was not following the trend in other countries, our source explained that adjustment of fuel pump prices in Nigeria is a major economic phenomenon that carries huge social interests that are not easily controlled. He said once the price is reduced it might not be easy to raise again without contending with social opposition.
Leaders of the market groups that met with NNPC also supported retention of the pump prices to enable
government muster enough funds to offset outstanding N400 billion subsidy arrears to them.
Some of the leaders who spoke separately with The UNION said payment of the outstanding arrears would be critical to fuel supplies during the fast approaching yuletide period.
Mr. Ohi Alegbe, in a statement said the agreement on imminent payment of the subsidy debt was a major outcome of the meeting, saying it was a major step towards ensuring zero fuel queues throughout the country ahead of the forthcoming yuletide and beyond.
He said the key downstream operators reached a consensus to work together to eliminate all obstacles that could hamper the free flow of petroleum products across the country.
Dr. Kachikwu told the marketers that “government is willing to do everything possible to ensure that members of the public do not go through any form of hardship in accessing petroleum products particularly PMS.”
He promised to work with other relevant government agencies to fast
track the payment of the outstanding subsidy debts, promising in the interim to arrange for a meeting with the relevant creditors (bankers) to ease off pressure on marketers and extend the credit lines.
He noted that several financing mechanisms are being explored to offset the commitment to oil marketers. “In future we may explore some creative means to prevent backlogs.’’
Speaking on behalf of Major Oil Marketers Association of Nigerian (MOMAN), Mr. Femi Olawore, who is the Secretary General of the group pledged the readiness of the marketers to work with government to keep the fuel market wet.
Mr. Olawore called on Dr. Ka- chikwu to facilitate the institution of a special committee to verify and authenticate the current national PMS consumption figure of 40 million litres per day.
Also Chief Dapo Abiodun, Chairman of Depot and Petroleum Products Marketers Association (DAPPMA) urged NNPC to sustain improved services at various PPMC product loading facilities.
– Sopuruchi Onwuka