FG withholds N971bn subsidy from oil marketers EXECUTIVE Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Mr Reginald Stanley, has told importers of petroleum products to be ready for hard times as the Federal Government has refused to commence payment of subsidy claims for the 2013 fiscal year. He made the disclosure in Abuja on Wednesday during a meeting with the Senate Committee on Petroleum Resources (Downstream). This was as the Senate committee chairman, Senator Magnus Abe, warned that refineries should be allowed to function optimally, saying this would, in the long run, reduce importation of petroleum products. The Federal Government allocated N971.138 billion for fuel subsidy in the 2013 budget, as against the sum of N888.1 billion that was officially allocated for the same purpose in 2012. The fuel subsidy allocation for 2013, as contained in the Approved 2013 Budget signed by President Goodluck Jonathan last February, indicated that the N971.133 billion is for “domestic fuel subsidy (marketers) (carry- over from 2011& 2012 provision for partial subsidy)”. The PPPRA Executive Secretary Stanley blamed the delay to inability to sort out foreign exchange claims by the marketers at the Federal Ministry of Finance. “There has been no payment for any marketer importing petroleum products in 2013. This is caused by delays in the payment of subsidy clams by the Federal Ministry of Finance resulting in interest as foreign exchange differential claims request by marketers, etc.” Stanley also noted that although the Federal Government had spent a total of N3.7 trillion in five years, the agency has succeeded in cutting the number of oil marketers from 142 to 38 as at December 2012. He also said local consumption of Premium Motor Spirit (PMS), also known as petroleum, had also been brought down from 60.25 million liters per day in 2011 to 40 million liters per day. “Between 2006 and August 2011, total government expenditure on petroleum subsidy amounted to N3.7 trillion. Expenditure on subsidies increased from N261 billion in 2006 to N673 billion in 2010, which represents an increase of about 160 per cent. “Additionally, there have been unprecedented payments in 2011 that so far amounted to N1.4 trillion due, in part, to two key factors: increase in subsidy per litre as a result of rising global oil price and large arrears due NNPC for household kerosene imports. “When we started, the chairman was very hard on us but he’s objective. I asked for time that we will live up to the Senate’s expectation and I’m happy with this visit. “2011 was like a gold-rush where you had briefcase marketers. Local consumption rose to 60.25 million liters per day in 2011 but had dropped to 39.66 million liters per day in 2012... Most of the international traders who did business with their Nigerian counterparts were also briefcase traders. They would sell and run away. “That practice, I can tell you, has since been cancelled. One of the biggest fraud in 2011 was “Bills for Collection” which is used to trade for petroleum products. There’s been a very dramatic transition from what obtained in 2011 and what we have today.” Speaking on some key challenges facing the PPPRA, Stanley reiterated that the agency was yet to clarify the status of kerosene namely, whether it has been deregulated or not. Responding, Abe urged Stanley and the PPPRA not to relent in sanitising and weeding out ‘briefcase marketers’, adding that they were still lurking around, waiting to manipulate any loophole in the system. “We are happy that you have put in measures to control the cost of subsidy payment. We have looked at the figures and we are impressed with the progress you are making and we believe you can do more. “At this juncture, all I want to say is that all Nigerians should be vigilant. The reason we are celebrating now is because of the attention which made some people run away. The moment we relax, they may come back. Those who ran away with their briefcases are also looking for how to come back”, he said.
Posted on: Thu, 06 Jun 2013 07:00:23 +0000
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