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Govt queries subsidy claims, denies owing marketers N200b

By Emeka Anuforo, Abuja
03 May 2015   |   11:16 pm
THE Federal Government yesterday decried what it described as the ‘unpatriotic’ attitude of oil marketers, imploring them to put the nation first, when making their claims.
Okonjo-Iweala-Tuesday

Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala

THE Federal Government yesterday decried what it described as the ‘unpatriotic’ attitude of oil marketers, imploring them to put the nation first, when making their claims.

It also denied owing the marketers N200 billion.

Meanwhile, government says, but for the May 1 holiday, they would have received their alerts.

Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, who spoke to newsmen in Abuja yesterday, also questioned aspects of the marketers’ claims.

She stressed that government would do its best to offset all genuine claims as this present government would not want to leave huge debt burden for the incoming government.

She also dismissed reports that subsidy was not provided for in the 2015 budget.

“As you know, we have revenue challenges because of the 50 per cent drop in the source of our main revenue. But despite these constraints, we have really prioritised this payment to marketers. We have gone to extra ordinary length to try and pay them. As you know, since December, we have paid half a trillion Naira (N500 billion) and you know that is not a small part of even our annual budget, if you were to compare.

“It is quite a lot of money. Of course it contains both of last year and this year, rolling. We have paid N500 billion. So, we have tried really, really hard.

“We also have appealed to them, that they are also Nigerians. With the fact that we have prioritised them and their payments so that Nigerians won’t suffer has been the main tenet of this: Let us try and pay even though we have serious revenue challenge so that Nigerians won’t suffer, Nigerians won’t be in queues. We have done that and we have been appealing to them on their own side, that they are Nigerians. They should not allow the country to suffer. Everybody is making sacrifices. But the marketers, as you know, the template that covers their business is designed to cover all their costs, plus a profit margin. That is the PPRA template against which I have quarreled for quite some time.”

She called for a closer scrutiny of the Petroleum Pricing Regulatory Authority (PPRA), noting that a situation where government pays for risks associated with oil import business and the beneficiaries still make the country suffer was not acceptable.

Her words: “It means that it is really a no-risk business for them or very little risk. But the risks are all well covered. That template says they must be paid exchange rate differentials, they have spent for the business.

“Based on that, government is taking the full burden of risks of their business, according to this template. Even when we have revenue shortfall and we cannot pay, then any interest that and we have been pleading with them because at the end of the day, the government is still the one paying for all these things.

“So, why are you making Nigerians suffer? Why all these long queues? It has become a situation where we have a cartel that can grind the nation to a halt at will. When they want something, they close all the stations and refuse to sell. When they see that they have got their way, they open the stations again. Is that not what is happening today? We have been labouring under this for a long time, trying to deal with it, trying to manage a group strong enough to hold the nation to ransom.

“I remember arriving August 17, 2011, when I came back as Finance Minister and the first thing that hit me was this big scandal of subsidy. More than N1 trillion had already been paid, and we went through that whole thing. Since then we structured, we cleaned up and you see that the amount that we have been paying year after year diminished substantially to about N971 billion a year, down from the N2.3 trillion of 2011. We need very substantial restructuring and changes to the whole process that brought the amount down for the nation.

“Yet, we have to deal with this problem, and the whole country has seen us trying our best, struggling. So, we are really appealing to the marketers with everything we have got. They should not hold the nation to ransom. They should not make Nigerians suffer unnecessarily.

“At the same time they are expecting government to bear every single cost, every cost. The template provides for everything, including their profit margin. So, it is a no loss business. I am not sure Nigerians know that. So, if you are doing that and you are expecting Nigerians to cover this cost, then why are you making Nigerians suffer?

“Now they are making very huge claims. As you know, we paid N156 billion recently N100 billion of the principle payment that we owe them, and then we paid N56 billion for interest rate and some remaining exchange rate differentials. Prior to that, we had just paid N31 billion to them for exchange rate differentials. At the time we paid that last week, what we had outstanding was N98 billion.

“This was last week. You know this thing is rolling, every week the PPRA sends us. We can only subscribe to whatever we have received that time and certified that this is what is due.”

On the exact amount government was owing, she noted: “As at now, since we made the announcement last week, it has now risen from N98 billion outstanding to N131 billion outstanding in principal payments, and they are now making a demand, and quoting N200 billion.

“I ask them what the balance is for. They are now making demands for huge sums in interest rate and exchange rate differentials. And we have said to them that what they are asking for is so large, and on exchange rate differential, in particular.

“PPRA needs to look at this. How is it being calculated? Is it in line with the exchange rate policy that was just announced by the Central Bank of Nigeria? Has the CBN certified that this is a proper way? Being that we had a huge exchange rate shock, is this the proper way for them to calculate this differential? When circumstances change, you need to look at your methodology. You cannot just keep doing the same thing as before. The country just went through a revenue shock, which led to a devaluation, and then exchange rate differential. Have they sat with the CBN to dialogue?”.