Unpaid subsidy arrears eroding oil marketers’ working capital- MOMAN

Rising debts profiles on account of unpaid subsidy arrears of over N130.7 billion by government is posing huge financial challenges to downstream sector as Major Oil Marketers Association of Nigeria (MOMAN) appeals to the Federal Government for prompt payment of outstanding subsidy debts owed members.

Andrew Gbodume, the Chairman of MOMAN said that inability of the Federal Government to pay the debts had affected the mutual relationship of members of the association with their banks in sourcing for loans.

“We urged the government to effect payment of the outstanding debts on subsidy since audit and agreement had been carried out since July,” Gbodume told Journalists.

“Since inception, MOMAN has progressively gained a reputation in the Nigerian petroleum industry as a key player however one of the major challenges the downstream petroleum sector is still facing is the non-payment of the long outstanding fuel subsidy to oil marketers,”

The Chairman of MOMAN said the oil marketers 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.

“It has placed severe strain on its efforts to continually invest in the infrastructure and raise industry standards,” the chairman of MOMAN lamented.

“We hope that the debts will be paid in full to the oil marketers as soon as possible.”

Gbodume, who puts the debt owed MOMAN members at N130.7 billion as at August 2018, stated that once reconciliation has been done and particular figure was agreed as debt, he could not understand why settlements have not been made.

The MOMAN chairman commended the Petroleum Products Marketing Company (PPMC) for its efforts over the years in ensuring consistent product supplies and stressed that marketers are working tirelessly with the PPMC to ensure fuel availability and prevent fuel scarcity that rocked the nation in December 2017.

“We acknowledge and appreciate the efforts of the PPMC over the last few months in ensuring consistent supply of petroleum products within the country,” according to Gbodume.

“PPMC has demonstrated its resolve to guaranteeing a non-repeat of the scarcity, which the nation experienced at the end of 2017, and quite frankly has done well so far.”

Gbodume said that currently, only NNPC was importing 100 per cent petroleum products, while members of the association were collecting products from NNPC and pay within two weeks.

“No MOMAN members are importing petroleum products, because no bank is ready to loan us due to our inability to pay the outstanding debts owed by marketers,”

He said that MOMAN has established a committee to self-regulate its members by collaborating with the Federal Road Safety Corps (FRSC) and Department of Petroleum Resources (DPR) to improve minimum transportation standard.

The chairman said that the association was currently engaging petroleum drivers and transporters to ensure the use of the truck loading bay provided to ease free flow of traffic at Apapa Bridge.

The non-payment of subsidy arrears, according to stakeholders, has resulted in huge financial challenge in the downstream sub-sector coupled with its inability to attract more funds as the banks (which had earlier lent to players in space) had yet to get back their loans.

In March this year, the Federal Government requested for the appropriation of N650 billion from the National Assembly to clear the backlog of subsidy arrears owed marketers.

The request to the National Assembly came on the heels of a 14-day ultimatum issued to the Federal Government by Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) to commence staff disengagement over the N650 billion debt owed it.

As a result, government was forced to facilitate series of engagements and meetings between NNPC, the Ministry of Labour, the Presidency and DAPPMAN/MOMAN to find a common ground that could avert another phase of petroleum products scarcity across the country.

In July, the Senate approved the payment of N348 billion as outstanding subsidy claims to 74 petroleum marketers.

Some of the oil marketing companies were Oando, Total, Honey Well, Capital Oil, Conoil, A.A. Rano, Folawiyo, Eternal oil, Aiteo, Forte Oil, Bovas, Mobil (11 Plc), MRS Oil and Gas, among others.

The Senate said the payment was to enable them update all outstanding liabilities and clear all debts, interest accrued and foreign exchange differential once and for all.

The approval was sequel to the adoption of the interim report of the Committee on Petroleum Downstream on the Promissory Note Programme and a Bond Issuance to Settle Inherited Local Debts and Contractual Obligations to Petroleum Marketers.

DIPO OLADEHINDE