President Goodluck Jonathan has directed the Finance Minister, Dr. Ngozi Okonjo-Iweala to pay all outstanding debts to petroleum products marketers in a bid to end the fuel crisis.
Consequently, the Federal Ministry of Finance has directed the Debt Management Office (DMO) to raise a special Sovereign Debt Note (SDN) of N100 billion to offset the claims.
The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, who revealed the move to pay the outstanding subsidy claims in Abuja yesterday said the debt management agency has already raised the sum.
The development has indeed thrown up the country’s real liquidity situation as she grapples to meet contingent commitments like workers’ salaries and contractual obligations owing to the sharp drop in crude oil prices at the international market.
To assuage the oil marketers, the Finance Minister declared that the Federal Government has concluded arrangement with the banks to bear the interest that has built on their loans as well as pay the differential in exchange rate caused by the drastic loss in the value of the naira in the face of the recent devaluation undertaken by the Central Bank of Nigeria (CBN).
The minister yesterday explained that the government was undertaking the initiatives because it was worried by the fuel scarcity and wanted it permanently resolved.
Her words :”Government is very concerned about the fuel queues which have appeared in Lagos, Abuja and other parts of the country. As Nigerians can attest, the Petroleum Ministry and the Nigerian National Petroleum Corporation (NNPC) have worked very hard to reduce the queues to the barest minimum. We sympathise with Nigerians whose lives and business activities are being disrupted by the queues and assure them that we are working hard to end them as quickly as possible.
“The situation is due to a mix of factors, including disruption of pipelines, and logistical issues, and they are being attended to urgently. I want to emphasize that contrary to some unfounded speculations, the queues are not caused by payment issues. As you know, we paid the marketers a total of N320.8 billion from the Excess Crude account in two instalments in December last year. This underscores the fact that we are taking payment of marketers very seriously indeed. We’ve been in constant touch and talking with the marketers, and a week ago, we reached an agreement with them on their core concerns which we have addressed.
“ Specifically, we have taken the following steps:
• reached an agreement with the marketers’ union on the N185 billion balance of their payment;
• paying not only the costs they’ve incurred and their fees but interest and forex differentials;
• DMO has issued SDNs to cover N100 billion out of the N185 billion agreed upon as balance for the next payments; and
• CBN has given approvals for the banks to issue letters of credit.”
Okonjo- Iweala said it has become clear that while the marketers’ union and most members have been cooperative, some of their members are not. The minister who revealed that some of these uncooperative marketers have even refused to open Letters of Credit (LCs) to facilitate their payments, saluted the union and the members who are working hard to end the unfortunate situation. She urged Nigerians to demand from the un – cooperating members what their motives are.
Again she gave more hints on actions being taking to end the fuel scarcity debacle: “ To end this unfortunate situation as quickly as possible, the Petroleum Ministry and NNPC are taking strong action to improve supplies in this election season. I’ve been speaking with MOMAN and they’ve assured me that they are working hard to increase supplies and more are on the way. About 40million litres of product are being distributed in Lagos today. As at yesterday, 86 trucks have come into Lagos and another 86 trucks are heading to Abuja. Other parts of the country are also included in the plans. So, the situation should improve soon. Once again, we wish to express our sympathy with Nigerians for this very unsatisfactory situation and salute their patience as we work hard to end the situation as soon as possible.”
Meanwhile, the Group Executive Director (Commercial and Investment) of NNPC, Aisha Abdulrahman, has assured that the queues will end this week
She stated this in Abuja when the Supervising Minister of Information, Chief Edem Duke led a team of reporters for on-the-spot assessment of the situation in the filing stations. She said the glitch that disrupted fuel supply in the last few days had been addressed, adding that the NNPC now has adequate stock that could last between 20 and 30 days.
Abdulrahman encouraged filing stations to complement NNPC retail outlets by selling petrol for 24 hours in order to clear the queues across the country. She discouraged speculation, panic buying and hoarding because, according to her, the NNPC is flooding the country with petroleum products.
Duke said all the depots across the country were wet with fuel but the queues in the filing stations were a result of speculation and panic buying. He berated the opposition for cashing in on the fuel situation to score cheap political point, assuring that the President Goodluck Jonathan administration would remain responsive to the welfare and economic well-being of the citizens.
“A good government cannot inflict scarcity on its people. It cannot bite its nose to spite its face, especially at a time when there is political tension. There is no government worth its onions that will say rather than focus on strategies to win election, let us deprive the citizenry of adequate supply of petroleum products. So when people are sitting in Dubai and issuing statements that are unfounded, I think we as the conscience of the nation should know better,” he stated.
Also yesterday, the Petroleum Products Pricing and Regulatory Agency (PPPRA) blamed the scarcity on the two rounds of devaluation carried out by the CBN between November last year and February 2015.
Speaking at the on-going budget defense before the Senate Committee on Petroleum (Downstream), Executive Secretary of PPPRA, Farouk Ahmed, told the panel that the devaluation caused huge confusion in the oil sector as the petroleum agency did not know the exchange rate to be used for payment for fuel importation.
“Thus marketers could not deliver the cargoes of fuel expected from them because they were not sure of the exact delivery cost as a result of the devaluation as the old template used for paying the marketers was no longer useful,” he said.
Ahmed, who said the PPPRA had to seek the advice of the CBN before it could eventually draw up a new template, told the lawmakers that the crisis had eventually been resolved as the Budget Office on Monday approved payment of outstanding claims the marketers. He revealed that the truce was brokered after a meeting of the Ministry of Finance, PPPRA and other relevant agencies.
“The recent events have to do with delay in the arrival of cargoes. Non-arrival of cargoes made it difficult for petrol to be delivered. What actually complicated it was the devaluation of naira – two times.
“The first one that took place on November 28 when naira was devalued from N155 to N168 to $1. The second one took place on February 18, 2015 that brought the exchange rate to N199 to $1. These two developments brought a lot of confusion into the oil sector.” – Guardian.