Subsidy arrears: Senate orders MoF, CBN to meet oil marketers

The Senate has directed the Ministry of Finance, Central Bank of Nigeria (CBN) to immediately convene a meeting with oil marketers and other relevant stakeholders to reconcile figures of subsidy claims and discuss ways of ensuring speedy payment of subsidy arrears.

It urged the stakeholders to report back to the committee within one week.

This was the outcome of a meeting by the Senate Committee on Petroleum Downstream on Wednesday in Abuja on ‘Promissory Note Programme and Bond Issuance to Settle Inherited Local Debts and Contractual Obligations to Petroleum Marketers.’

Specifically, members of the committee condemned the Federal Government for not paying the subsidy claims by petroleum products marketers despite the approval by the National Assembly over three months ago.

In his remarks, Chairman of the committee, Kabiru Marafa, explained that the meeting was called to know how much the Federal Government had implemented the Senate’s resolution, the situation with the 19 marketers with contentious claims and the solution to the continued conflict of subsidy figures between the government and oil marketers.

“The situation is becoming a vicious cycle that will not end. There is a general disquiet in the industry as I am speaking to you today, that government’s efforts may be sabotaged because as Chairman of this committee, I am aware of the very serious efforts put in place by this government to ensure that there is no fuel scarcity in this country. We have abundant quantities in every part of Nigeria,” Marafa stated.

The lawmaker explained that while the government and the marketers agreed in June 2016, with another agreement made in June 2017, the government had yet to pay the agreed sums while the marketers had continued to groan over interests caused by the delay in their payment.

The committee chairman warned that he would be forced to report to President Muhammadu Buhari if the relevant ministries, departments and agencies delayed the payments, leading to fuel scarcity in the country.

He recalled that there was a meeting between the relevant ministries and agencies with the President where the Governor of the Central Bank of Nigeria allegedly said commercial banks would be advised to suspend interests on loans taken by oil marketers for fuel importation.

“All that did not happen and the marketers are saying that the interests have continued (to grow). Apart from the figure agreed, they are now asking for another figure. Even if the government pays that one, there is another problems again. So, this issue of subsidy will continue and it is going to tell on the integrity of a lot of people. This committee is concerned,” Marafa added.

It would be recalled that the Senate had in July 2018 approved payments of subsidy claims totalling N348 billion to oil marketing companies following a request by President Buhari.

The approval had followed the adoption of an interim report by the committee on ‘Promissory Note Programme and Bond Issuance to Settle Inherited Local Debts and Contractual Obligations to Petroleum Marketers.’

While approving that 55 oil marketers be paid verified figures totalling N275.7 billion the upper chamber of the National Assembly had asked that 19 marketers “with contentious claims and verified figures” be paid 65 per cent of their claims, amounting to N73.4 billion pending further investigation and verification by the committee.

In her submission, the Director-General, Debt Management Office (DMO), Patience Oniha, pointed out that while the payments were approved by the Senate in July, the office did not receive communication from the Clerk to the National Assembly until September.

Oniha also said the processes through which the payments would be made were detailed in the request made to the Federal Executive Council, which was passed and forwarded to the National Assembly for approval.

According to her, the processes, which must be followed, were still ongoing and DMO would engage the marketers by the middle of November.

She said, “By the time the Senate kindly approved the one for oil marketers, we had already started working and putting a framework in place which was submitted to the Minister of Finance. For us to incur any debt – to book any debt in whatever form, whether promissory note or public debt stock – we need the approval of the National Assembly. That of the (upper) House was only communicated to us in September”.

Oniha also stated that the Federal Government was contracting an international consultant based in Nigeria to audit the subsidy claims and payments.

Although she did not disclose the name of the accounting firm, she explained that the firm had been approved by FEC to do “a review of the numbers.”

While noting that the marketers would be paid based on the outcome of the review, the DMO boss said the Federal Government planned to convert the claims and pay the marketers with promissory notes.

Members of the committee however disagreed with the DMO on the processes, which they said would further worsen the plights of the marketers in the hands of the banks.

On their part, marketers also lamented that commercial banks, from which they obtained loans to import Premium Motor Spirit (petrol), had been seizing their assets since it was announced that the National Assembly had approved payment of subsidy arrears.

Speaking on their behalf, the Executive Secretary, Depot and Petroleum Products Marketers Association of Nigeria, Olufemi Adewole, said, “Giving us discounted promissory notes is like killing us twice because it is already a loss for us; now we are to be given promissory notes that we are going to be forced to discount. The CBN governor promised us then, that the banks would be advised to stop charging interests. We have written to him several times but nothing has been done and the banks are doing this. We are pleading, we need these payment instruments like six months ago.”

OWEDE AGBAJILEKE, Abuja