FG assures MOMAN of settling N264bn subsidy claims March ending

In a bid to avert another round of scarcity of petroleum products across the country even as the nation gears up for the rescheduled general elections next month, the Federal Government has assured Major Oil Marketers Association of Nigeria (MOMAN) that it would settle all outstanding subsidy payments which amount to about N264 billion by March ending.

Olufemi Olawore, executive secretary, MOMAN, who disclosed this in a chat with newsmen in Lagos, Tuesday, assured Nigerians that the marketers were confident that the Federal Government would keep to its promise of prompt payment which Ngozi Okonjo-Iweala, minister of finance and coordinating minister for the economy, in her meeting with the oil marketers outlined as certain “between now and March ending.”
Speaking at the event, Olawore explained that the Federal Government, through the coordinating minister for the economy, had agreed to pay all outstanding subsidy claims to MOMAN members.

“As regards subsidy, we have some outstanding with government, we also have outstanding in foreign exchange interests. You will recall that last year, the government through the Ministry of Finance, paid about N345 billion which was subsidy of part of 2013 and part of 2014.
“However, we still have some outstanding for 2014 and the early part of this year. The total of invoices already sent is N164 billion on subsidy. On foreign exchange and interests combined, it is totalled at about N100 billion.
“The minister met us yesterday and promised that government will pay the subsidy between now and the end of March, which to a very large extent was agreeable to our principals. And we believe her.
“This means that the product situation which was about to go down will pick up; which means we need to assure ourselves that even if we notice any tightness on the strength of yesterday’s meeting there will be products. Today, we are not using the word scarcity at all. It’s not in the dictionary today at all.”

Making clarifications about the price of PMS and diesel, the MOMAN executive secretary stated in details how the exchange rate has continued to affect the price of the petroleum products in the country.
He said: “The unfortunate situation we found ourselves was and is that as the price of crude oil was dropping, as the international price of diesel was dropping, we devalued. For example: before the devaluation, exchange rate for bringing in PMS was N171 to a dollar; at that price, the landing price was N90.67.

“Then when the exchange rate went to N188, the landing price of PMS rose from N90.67 to N98.36. And as at today, when the exchange rate has climbed to N199, landing cost rose to N103.45. If it moves to N215, I’m painting a scenario here, the landing cost of PMS will move to N110.84.
“So you see that the real factor here is the exchange rate. When the exchange rate begins to move like it has moved at the rate of N10, N20, N30, it swallows all the advantages we may have derived from the fall in international price of crude oil.”
On the price of diesel, the MOMAN executive secretary explained: “For diesel, when the exchange rate was N171.36, landing cost for diesel was N89.77. When the rate went to N188 to a dollar, the landing cost went to N96.86. At N199, landing cost was N100/N101.

“This is the landing cost, you have not added distributive margin, you have not added transportation, both local and others, taxes on the road, etc. If you add all these prices there is no way you can sell at the price PPRA has set.”
As a lasting solution to fluctuating price of petroleum products, Olawore called for complete deregulation of the oil sector and the passage of the Petroleum Industry Bill (PIB) in parts even if it means amendments will be made on the bill later.