Depot and Petroleum Products Marketers Association (DAPPMA) on Sunday said the unpaid subsidy arrears of over N650 billion by the Federal Government posed huge financial challenges to the downstream operations.
DAPPMA Executive Secretary, Mr Olufemi Adewole, told the News Agency of Nigeria in Lagos that the settlement of the debts owed them would save their assets from being taken over by banks.
Adewole said the downstream segment of Nigeria’s petroleum industry was fast becoming unattractive to lending institutions owing to rising debt profiles of its players on account of unpaid subsidy arrears by government.
“This is posing a huge financial challenge to oil marketers and threatening business survival,” he said.
He said that 60 per cent of marketers had been forced out of business as banks had taken over their assets (depots and other investments) due to their inability to pay back funds borrowed.
According to him, aside marketers that have been forced out of business, others are struggling to survive due to the government’s inability to settle the subsidy arrears.
The development, he said, had been threatening investment in the downstream sector.
The DAPPMA scribe said although the federal government had made an arrangement to clear the debts, payment had not been received by marketers.
He said: “It has had very adverse effects on our operations. I am aware of four depots that have been forcibly taken over by banks because they got injunctions from the courts.
“They did so the moment they heard that the National Assembly had approved payment to marketers. Unfortunately, as at today, the money has yet to get into our accounts.
“Some marketers had to lay off more than 90 per cent of their staff because of financial challenges.’’
Adewole, however, said government had promised that part of the money would come as promissory note and cash.
According to him, the information gathered is that government may pay only in promissory note.
“It means you have to go back and discount this promissory note in the bank. This means we are losing because the money has been delayed and this adds up the interest to be charged on our accounts.
“Really, what was approved to be paid is not the actual amount the government owes us.
“The interest came about as a result of devaluation of the naira from N197 to N285 to a dollar,” he explained.
It would be recalled that the Chairman of the Major Oil Marketers Association of Nigeria (MOMAN), Mr Andrew Gbodume, had on Oct. 18, said that over N130. 7 billion was owed to the association as unpaid subsidy arrears.
Gbodume said that the unpaid debts was posing serious financial challenges to the downstream sector coupled with its inability to attract more funds from banks which had yet to get back their loans.
“With the fast eroding goodwill of the sector and inaction of government to effect payment of ‘cleared’ subsidy arrears, most downstream players are currently experiencing contraction of operations occasioned by reduced capacity.
“We appreciate the efforts of the National Assembly, but the non-payment creates a significantly negative impact on the operational efficiency of the downstream sector of the oil industry.
Gbodume added: “We can’t pay salaries and staff reviews in terms of emoluments cannot be done because of this sum owed us.”
He said the current business model in the downstream sector was unworkable and unsustainable, adding that the future system of product supply needed to be looked at.
Tag: Petroleum
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N650bn unpaid subsidy arrears affecting our operations – Marketers
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APGA blames fuel scarcity on corruption, urges Buhari to appoint substantive minister
Dr Victor Oye, National Chairman of the All Progressive Grand Alliance (APGA) has blamed the current fuel scarcity in the country on corruption and confusion in country’s petroleum industry.
Oye said this in an interview with TheNewsGuru (TNG) in Awka while reacting to the situation on Saturday.
He said it was unfortunate that the cartel responsible for the hardship inflicted on Nigerians had not been defeated but were rather dictating the pace in the system.
Oye said there was need for clear delineation of powers and functions of the offices of the Minister of State for Petroleum and that of the Group Managing Director of the Nigerian National Petroleum Cooperation (NNPC).
Oye described scarcity as a seasonal period when the poor suffered so that the rich could be richer, adding that it was beyond the control of filling station operators.
“There are a lot of factors affecting fuel distribution in Nigeria and this bothers on sharp practices in the various agencies involved in the system like the Petroleum Products Pricing
Regulatory Agency, Department of Petroleum Resources and the NNPC.“We hear about corruption is responsible for the problem of fuel distribution in this country,
“what we have now is the consequence of the rot in the petroleum industry, when you keep pilfering a system, there will come a time when the entire system will feel the pressure.
“When we hear about billions of dollars about the size of our External Reserve not being properly accounted for by NNPC, few persons are having money and and houses all over the world without questions about how they made this money.
“There is cartel in the oil industry, as we are groaning now, they are smiling to the bank.
“My definition of scarcity is the time of the year when the poor suffers for the rich to enjoy, that amount you pay on top of N145 per litre goes to the pockets of this cartel or cabals
“I am aware that Buhari said Dr Ibe Kachikwu should end the scarcity as soon as possible but it is not going to be possible.
“We need to know the powers available to the Minister of State for Petroleum and what powers are at the disposal of the NNPC GMD, the conflict between the two offices is accountable for what we are witnessing today,” he said.
The APGA chairman called on President Mohammadu Buhari to reduce the tasks in his hands by appointing a substantive Minister of Petroleum who will supervise the ministry more closely with the capacity to act on policy issues.
“The president cannot handle the position of Minister of Petroleum very close as he would have wished in the light of the numerous things at his hands, that position is sensitive, he needs to hand it over to a professional.
“Buhari is not getting younger, he just recovered from ill health and I am one of his prayer warriors so he should listen to people like us, he should unbundle himself and the system.
” Kachikwu is competent to do the job but they are breathing down his neck, they are not allowing him to work because of reasons I cannot tell.
“The president needs political and will power to fight corruption, if you don’t fight corruption, there is no way you can end fuel scarcity, because some people make millions out of it, it is a seasonal business for them,” he said.
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Petroleum bill to be passed by March, NASS assures
Sen. Donald Alasoadura, Chairman Senate Committee on Petroleum Resources (Upstream), has assured that the Petroleum Industry Governance Bill will be passed latest in March.
Alasoadura said this on Tuesday in Abuja at a plenary to discuss new legislation and policy to transform the oil and gas sector.
The plenary, which held on the margins of the 16th Nigeria Oil and Gas Conference and Exhibition (NOG), had six discussants to proffer solutions on how government policies could develop the oil sector.
According to Alasoadura, the Petroleum Industry Governance Bill will by the end of March, go through its third reading.
The bill seeks to address all governance-related issues in Nigeria’s oil and gas sector.
“Once a bill gets to its third reading, it is as good as being passed. We are expecting the bill to be passed in March or latest by April.
“The Local Content Law will also be properly taken care of.
“We’ve asked for areas of amendment from the Executive Secretary and we’ll be glad to do it.
“’We know we need laws that are in line with international standards. We need an NNPC that will be smooth, commercially oriented, that can run smoothly and make money,” he said.
He said the legislators decided to have only one regulatory body in the sector to ease the process of doing business and attract more investments.
“That it takes time like a year to set up a business in the industry is an aberration.
“We are thinking of when we have a timeline for all businesses to be completed within six months,” Alasoadura said.
Also, Mr Simbi Wabote, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), said the time had come for local content to grow.
‘“Local content brings down costs and this is the time for local content to grow.
“Government is establishing Nigerian Development Bank to fund local content and local contractors that will give genuine Nigerian investors good interest rates.
“The objective is not to seek profit but to help local investors. We will make sure that the bank is helping Nigerian companies,’’ Wabote said.
The Group Chief Executive of Oando Plc, Wale Tinubu, said Nigeria could never have a successful downstream until the sector became fully deregulated.
He further said “the essence of the policy is to drive logic, hence the only way of freeing the NNPC is to pass those policies we seek.
For instance, no country trucks products for more than 1,000 kilometres except in a war. We spend more trucking the products outside the country”.
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Navy seized N420 billion petroleum products in 2016 – CNS
The Chief of Naval Staff, Rear Admiral Ibok Ekwe-Ibas, on Wednesday said the Nigerian Navy seized 810,725 metric tonnes of stolen crude in 2016.
He said the Navy also seized 1,078,104 metric tonnes of illegally-refined diesel and destroyed 181 illegal refineries during the same period.
The Chief of Naval Staff, Ibok Ekwe-Ibas, disclosed the figures in Abuja when he appeared before the House of Representatives Committee on Navy to defend its 2017 budget proposals.
The CNS put the financial worth of the seized crude oil and diesel at N420.1billion, excluding the value of vessels, boats and vehicles it seized.
Mr. Ekwe-Ibas, giving further details of the 2016 operations, said that 38 barges and 263 wooden boats were destroyed.
He added that his officials also impounded 53 boats, arrested 784 suspects, confiscated 145 outboard engines and 135 speedboats.
Other seizures and arrests were, 2,97 drums; 4,753 jerry cans; 27 trucks; 47 vehicles; 15 motorcycles; 139 geepee tanks; and 224 surface tanks.
In addition, the navy chief said that 468 arms and 1,659 ammunition were seized.
Mr. Ekwe-Ibas, a vice admiral, told the committee that the service recorded the achievements from an overhead budget of only N2.5 billion.
“The implication of this is that with improved overhead funding, the service will be able to enhance its operational profile, while proactively deterring, interdicting criminality in the nation’s maritime domain,” he said.
Mr. Ekwe-Ibas, stressing on the poor funding of the Navy, cited the case of the N225 billion voted as capital budget in 2016, out of which only N10billion had been released as of January 31.
For 2017, he said, while the initial capital estimates of the service was N317.6 billion, it was asked to review it downward to N26.7billion being the ceiling given by the Ministry of Budget and National Planning.
He explained that the service proposed to spend N15 billion on fleet renewal this year and another N4.2billion to upgrade infrastructure.
Earlier, in his remarks, Chairman of the committee, Abdussamad Dasuki, disclosed that inadequate funding of Nigerian Navy had resulted in an annual economic loss of N3 trillion by the country.
Mr. Dasuki noted that from the committee ‘s findings, the country lost about $10 billion annually or N3 trillion due to the poor funding of the service.
“The loss of revenue from the inability of the Navy to carry out its duties is enormous and has been estimated to be over $10 billion or N3 trillion annually.
“There is therefore an urgent need to ensure that budgetary allocations to the Nigerian Navy is realistic and allows it function effectively.
“It is in our national interest to do so,” he said.
NAN
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DPR seals filling station in Sokoto for malpractices
The Department of Petroleum Resources (DPR),said it had sealed a filling station in Illela, Sokoto State for allegedly selling petrol above the pump price of N145 per litre.
The Department’s Operations Controller in Sokoto, Mr Mohammed Makera, disclosed this to the News Agency of Nigeria (NAN) in Sokoto on Saturday.
Makera said that, the axed station which belonged to an independent petroleum marketer was also fined N100, 000, per pump.
“ The action was sequel to the raids we have sustained on both independent and major marketers’ filling stations in Sokoto and Kebbi states.
“In Kebbi alone, our officials had visited no fewer than 40 filling stations, and same was done in Sokoto,” he said.
Makera stated that, the department’s personnel would sustain their surveillance activities and raids to the filling stations in the bid to ensure that no unsuspecting motorist is cheated.
The controller vowed to ensure that motorists get value for their money, even as he advised them against panic buying during the yuletide.
” There are adequate supplies of all the petroleum products, so there is no need for panic buying,” Makera said.
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Petroleum products will soon be transported by rail
Plans are underway to transport petroleum products by rail to some parts of the country, Mr Goddy Nnadi, General Manager, Corporate Services, Petroleum Equalisation Fund (PEF), has said.
Nnadi made the disclosure on Sunday in Abuja in an interview with the News Agency of Nigeria (NAN).
“We are moving into something else. Our pipelines are not effective because of age and vandalism and so the emphasis now is moving petroleum products by rail.
“As we speak, members of the committee (looking into the option of using railway to transport petroleum products) are in Lagos to collaborate with Railconnect, a private company and the Nigerian Railway Corporation (NRC).
“NRC has a lot of rail tanks that are lying idle; if you go to Apapa there are lots of these tanks along the rail lines but because nobody bothers to use them they are there.
“If we switch to rail, the pressure on our roads will be reduced,’’ he added.
Nnaji said that in 2005, Oando Petroleum Company tried the rail option to transport petroleum products, but the exercise was not successful.
“I think they are willing to try again. A lot of marketers including Pipelines and Products Marketing Company are collaborating with us.’’
The GM explained that the rail option would not make tanker drivers redundant, adding that it would instead complement their jobs.
He said: “the Nigerian economy is growing and the more it grows, the more you need the rail option. In the next one or two months, we hope to kick-start the project.
“It will not be very fair to say that the country’s rail service is not effective. Trains have been moving from Lagos to Abuja so cargo trains will be useful.’’