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N800bn Subsidy Debt: Fuel scarcity looms as marketers shut depots

Marketers of Premium Motor Spirit (PMS) also known as petrol, and depots owners have begun shut down of over 44 private depots nationwide and mass disengagement of their staff as the seven-day ultimatum issued to government on payment of N800 billion subsidy arrears expired midnight yesterday. The development has heightened fear of fuel scarcity in the system.

 

But the Nigerian National Petroleum Corporation (NNPC) has assured petroleum products consumers across the country not to engage in panic buying. The state-owned oil firm stated that it holds 2.6 billion litres of PMS petrol and 90,000 metric tonnes of Dual Purpose Kerosene (Diesel), saying the holding is expected to last 52 days, assuming no single drop of products is imported from now. Rising under the auspices of the Depots and Petroleum Products Marketers Association of Nigeria (DAPPMA), the depot owners issued shutdown directive to all members as it reiterated the rejection of offers from the Federal Government, which included promise to pay N236 billion (out of N800 billion) fuel subsidy debts by Friday 14th December.

 

Executive Secretary of DAPPMAN, Obafemi Adewole, stated in a document entitled; “DAPPMAN’s shut down directive from 9th December 2018, effective 12 midnight,” that his group took the regrettable decision to engage in mass disengagement “of our loyal staff who we have sustained through bank facilities at outrageous interest rates.”

 

He further stressed; “Premised on our inability to pay December 2018 salaries and to avoid owing staff for work done without any hope of pay, it is hereby agreed that, since our staff have been disengaged, all DAPPMAN member depots are not in a position to operate, hence will shut down all loading operations at midnight, Sunday 9th December, 2018 until Federal Government pays our calculated claims: the remaining subsidy (to few members), forex differentials and interest incurred up to 31st December, 2018.”

 

This decision, the DAPPMAN scribe said, “is binding on all members of the association and full compliance is expected of every member company of the association.

 

The association shall revert in the same vein with any other directives as might be deemed necessary. “Our workforce, save for security operatives, has ceased to be on our payroll pending payment of the debts owed by the Federal Government.” Adewole said that the N236 billion proposed payment of promissory notes is not acceptable to DAPPMAN because, according to him, this “will adversely affect the financial system taking due cognizance of the futuristic nature of this proposed mode of payment.”

 

The association, the DAPPMAN said, “took a bold step to stop the financial haemorrhage of its members by the painful disengagement of its loyal workforce after over three years of engaging the Federal Government in the efforts to secure the payment of all subsidy induced debts owed marketers; efforts which till date have not yielded the desired results, hence another approach.

 

“As you’re aware, the association reviewed the suspension of the ultimatum given to the Federal Government on 25th December, 2018, which was suspended due to the intervention of well-meaning Nigerians and Federal Government’s promise to immediately pay marketers the outstanding subsidy induced debts.”

 

Giving reasons for the shutdown, the DAPPMAN scribe said: “Unfortunately as at today (Sunday), and almost 12 months to the date, all we got so far are invitations to meetings and dialogues which have so far not stopped the daily increasing interest on these debts (which are owed to banks, AMCON, PPPRA and PEF(M)B) and FIRS and which, also, has not manifested as credit to marketers.

 

“We duly notified the Federal Government through the Federal Ministry of Finance and the DMO and directly to the presidency of our financial constraints and the challenge of paying staff salaries beyond 30th November, 2018 except we receive help via the payment of all our outstanding debts: subsidy, interest and forex differentials with summation calculated up to 31st December, 2018.

 

“Further talks to which we are usually invited, which now seem to be their response to our follow ups on these debts, never consented to our requests for full cash payment of these debts, hence the regrettable decision we have had to take to let go of our loyal staff who we have sustained through bank facilities at outrageous interest rates.”

 

However, NNPC Group General Manager, Group Public Affairs, Mr. Ndu Ughamadu, in a statement last night in Abuja, said the purported shut down of operations by DAPMAN would not affect products distribution as NNPC has ordered all its depots across the country and those of bulk purchase marketers it recently entered agreements with to undertake a 24-hour operations to avert any shortages in products distribution in the country.

 

Ughamadu stated: “All NNPC depots, Petroleum Products Marketing Company (PPMC) throughput partner depots, the Major Marketers depots and depots of DAPMAN members who signed the Bulk Purchase Agreement (BPA) with PPMC as well as NNPC Retail stations, Major Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN) filling stations, will continue to operate at maximum levels to ensure uninterrupted distribution of petroleum products nationwide.

 

The statement said despite the threats by DAPPMAN government was committed to going ahead with settling the N236 billion first tranche of the verified subsidy claims of the oil marketers in line with the approval of Federal Executive Council (FEC) and National Assembly (NASS) by Friday, 14th December.

 

The NNPC spokesperson advised members of the public to report to offices of the Departments of Petroleum Resources (DPR) across the states any fuel stations, which attempts to take advantage of the situation to inflate products price, saying that the price of PMS remains N145 per litre. Meanwhile, the Federal Government, yesterday, made a last-minute move with the fast tracking of deals, which are to get bulk purchase marketers to operate at maximum levels that will ensure uninterrupted distribution of petroleum products nationwide.

 

Chief Finance Officer (CFO), NNPC, Mr. Bello Abdul-Rasaq, who disclosed the fast track of deals with bulk purchase marketers, noted that the corporation had 2.6 billion litres of petrol in offshore and onshore storage that could last for 52 days at 50 million litres per day consumption. His counterpart at the downstream directorate at the NNPC, Engr.

 

Henry Ikem Obih, added that all NNPC depots, Petroleum Products Marketing Company (PPMC) throughput partner depots, the major marketers depots and depots of Depot and Petroleum Products Marketers Association of Nigeria (DAPMAN) members who signed the Bulk Purchase Agreement (BPA) with PPMC as well as NNPC Retail stations, Major Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN) filling stations, will continue to operate at maximum levels to ensure uninterrupted distribution of petroleum products nationwide. Obih urged motorists not to engage in panic buying of petroleum products during the festive season.

 

“All relevant stakeholders should note that NNPC has 2.6 billion litres stock of petrol and 90,000 metric tonnes of Dual Purpose Kerosene (Diesel),” the corporation said, insisting that the holding is expected to last 52 days, assuming no single drop of products is imported from now. The stock, the NNPC claimed, is the largest petroleum products inventory ever held by the National Oil Company since it was established in 1977. Orbih added that products are already strategically stored in all NNPC depots across the country.

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