By Oji Odu
Tension is mounting to a fearful level in the country. The Academic Staff Union of Universities (ASUU) is still on strike with several meetings with Federal Government to resolve the issue of poor funding of the nations universities deadlocked. The Academic Staff Union of Polytechnics (ASUP) has threatened to down tools if federal government hesitates to resolve their problem. The Nigerian Labour Congress (NLC) is still battle ready to ground the nation if government continues to waste time in kick-starting the new N30,000 minimum wage regime. Now, oil marketers have given the Federal Government seven days to pay their N800 billion subsidy arrears including foreign exchange (forex)differentials and interest rate component owed them in cash or they bleed the oil and gas sector.
In a joint statement, the marketers, under the aegis of Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association (DAPPMA) and Independent Petroleum Products Importers (IPPIs) said that failure to meet the deadline will leave them with no other option but force its members to disengage their workers at the depots from fuel loading.
According to Patrick Etim, legal adviser to the IPPIs, the seven-day ultimatum became necessary as investments and assets of oil marketers were been taken over by their creditor banks, while payment of workers’ salaries remained a serious problem.
He said the marketers have asked their workers to stay at home from December 1 as their salaries could not be paid due to huge debts owed by government on subsidy.
“The only way to salvage the situation is when government pays the outstanding debts though cash option for marketers to pay workers – than other forms of payment instruments like (promissory note) – to save the intended mass retrenchment.
“As at tail end of 2018, several months after the assurances received that government would pay off the outstanding debt, nothing has been done.
“The oil marketers have requested forex differential and interest component of government’s indebtedness to marketer be calculated up to December 2018 to be paid within the next 7-days from the date of the letter sent to them,’’ he said.
Etim regretted that thousands of jobs are on the line in the oil and gas industry, as oil marketers begin a cut-down of their workforce due to inability to pay salaries. He revealed that the current administration paid part of the debts with a substantial portion of the subsidy interest and foreign exchange differential still pending, in spite of then acting President Yemi Osinbajo’s intervention and directive to the former Minister of Finance, Mrs Kemi Adeosun.
Speaking in similar vein, the Executive Secretary, Deport and Petroleum Products Marketers of Nigeria (DAPPMA), Olufemi Adewole, confirmed that oil marketers had given government 7-day ultimatum to pay all outstanding debts owed marketers including forex differentials and interest component. He said this became necessary to save the industry from imminent collapse and also help to stave off any sack of workers as marketers can no longer afford to pay beyond November 30th with such financial constraint.
He advised that DMO’s prompt response would stop the wastage of government resources, which continuous to increase in the form of interest on unpaid amounts which as at today is in excess of N118 billion.
“We urge the DMO to process and pay marketers in cash for their outstanding forex differentials and interest component claims, together with the amount already approved by the Federal Executive Council (FEC) and the National Assembly.
“Marketers are not in a position to discount payment on the subsidy induced debt owed as proposed by DMO, the expected payment is made up of bank loans, outstanding admin charges due to Petroleum Products Pricing Regulatory Agency (PPPRA), outstanding bridging fund due the Petroleum Equalisation Fund (Management) Board (PEF(M)B) and in a few cases AMCON judgment debts.
“We urge that the FEC approval payment instrument, the promissory note, be substituted with cash and paid through our bankers to stop the avoidable waste of public funds through these debts accruing interest,’’ he said.
The Magazine learnt that in March this year, following a 14-day ultimatum issued the federal government by DAPPMAN, to commence staff disengagement over the N650 billion subsidy debt owed it, government had requested for the appropriation of N650 billion from the National Assembly to clear the backlog of the subsidy arrears .
Subsequently, in July this year, the Senate approved the payment of N348 billion as outstanding subsidy claims to 74 petroleum marketers which included 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 Red Chamber 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.
But due to a hazy settlement timing, the Executive Secretary of MOMAN, Cement Isong, cautioned government to hasten payment of the outstanding debts of fuel imports subsidy arrears owed them (marketers) because the delay in payment has severely limited their access to credit and negatively impacted their working capital leading to their inability to pay their banks and their service providers, as some have closed shop and laid off more than 90 percent of their staff.
Isong, however urged the government agencies concerned to address the bureaucratic bottlenecks causing the delay in the payment process, adding that the delay in payment of the debt has resulted in the degradation of the downstream subsector of the oil and gas industry, and affected the marketers’ business operation.
“We appreciate the efforts of the National Assembly and the Federal Executive Council in approving payment but the non-payment creates a significantly negative impact on the operational efficiency of the downstream sector of the oil industry, thereby placing a severe strain on its efforts to continually invest in infrastructure and raise industry standards. We hope that the debts will be paid in full to the oil marketers as soon as possible,” he said.
The MOMAN scribe said that the debt owed MOMAN members alone stood at over N130.7 billion as at August 2018, and that once reconciliation has been done and a particular figure was agreed as debt, he couldn’t understand why settlements had not been made.
In his reaction, Executive Secretary, Deport and Petroleum Products Marketers of Nigeria, Olufemi Adewole, regretted the processes highlighted for payment by the government which he said were inimical to the operations of their businesses.
“The processes they have highlighted is killing our businesses. Immediately the banks read in the media that the National Assembly had approved, they went to court, got injunction and seized our assets,” he said.
Adewole revealed that about 60 per cent of marketers have been forced out of business as banks have taken over their depots, assets and properties due to their inability to pay back monies borrowed to import fuel.
He said many marketers were forced out of business, while others are struggling to survive due to the government’s inability to settle the subsidy arrears, saying the development is threatening investment in the downstream subsector.
The DAPPMAN scribe wondered why the marketers are yet to be paid although the Federal Government had earmarked money to clear the debts.
He noted the other challenge of payment in promissory note. Adewole said that Federal government had promised that part of the money would come as promissory note and cash. But s information gathered was that the 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 to the interest to be charged on our accounts,” he lamented.
Meanwhile, the Debt Management Office (DMO) said it is accelerating implementation of the Promissory Note Programme and Bond Issuance to settle the oil marketers’ arrears.
The DMO affirmed that the programme was to address inherited local debts and contractual obligations due to various categories of creditors. It also said that the programme would be implemented in accordance with the process approved by the Federal Executive Council (FEC).
“It is to be noted that the claims by oil marketers are for accrued interest and foreign exchange differentials. These were unpaid obligations carried over from previous administrations.
“Whilst some of the issues involved in the implementation of the programme have been explained to representatives of the oil marketers, the DMO has invited them to a meeting to explain the process to them and provide a status report.”
With few days to the deadline, the Magazine’s findings show that not many are in the know of the oil marketers threat as people are going about their businesses.
According to Dele Abayomi, an oil and gas expert: “ This will be disastrous if they are allowed to make good their threat. This is because they hold the aces that can make or mar the nations economy.
“ We cannot afford to again experience the fuel crisis that happened in past administrations when oil marketers downed tools. Not this time. I believe that Federal Government has to take urgent wise steps to stop this as the February 2019 general election draws closer,” he said.
Abayomi further prayed that government should not allow more crisis to erupt now, especially as different bodies either on strike or threatening to embark on strike.