The country may soon be thrown into another fuel crisis as Major Oil Marketers Association of Nigeria (MOMAN) and other importers of petroleum products said they could no longer participate in the importation of petroleum products with regulated pump prices due to a loss of $319.8 million to exchange rate differential in the third quarter of 2008.
The major marketers, comprising African Petroleum Plc, Chevron Oil Nigeria Plc, Conoil, Oando, Mobil and Total also said they require between $200 million and $250 million monthly for importation of products.
MOMAN Executive Secretary, Mr. Thomas Olawore, who stated this in a statement, added that a foreign currency window must be made available for PMS importation, at current market trends, since the private sector requires between $200 million – $250 million monthly for importation of petroleum products.
He identified late interest payment and exchange rate differential as two major challenges that have made it impossible for them to participate in products importation any longer.
“Marketers/Importers are unable to recover these additional costs from the regulated pump price and as such would be unable to further participate in importation of products with regulated pump prices until these issues are resolved,” he said.
“From December 2008 to date the naira has devalued against the dollar by 36 per cent. The present exchange rate is well beyond that provided in the Petroleum Products Pricing and Regulatory Agency (PPPRA) import template. As a result, when the verified private sector subsidy claims for Q3 2008 of $1,189,964,305.45 was paid in naira, on the 10th of January, 2009 at the rate of N117.91, the naira payment of 39,225,823,738.27, could only purchase $ 870,161,398.36 at the prevailing exchange rate thereby leaving a shortfall of $319,802,907.09, a sum equivalent to the nation’s cost of PMS import for a month,” Olawore said.
He noted that the marketers would continue to incur such loss as long as the rate of exchange utilised for payment is different from the prevailing exchange rate of the date of purchase of foreign exchange.
On the late payment of interest he disclosed that by virtue of the Clause 3.3 of the Agreement between the PPPRA and Importers on Petroleum Support Fund (PSF), subsidy payment should be made monthly and within 15 days of submission of claim.
He lamented that to date, all refunds to Major Marketers have been made later than the stipulated period; some payments have been as late as 200 days.
Olawore however pointed out that despite this fact marketers have continued to supply products to the country.
According to him, to ensure continuous supply of products the private sector requires the immediate payment of all outstanding cost and exchange rate differential and that all payments for subsidy claims or contribution should be based on the prevailing exchange rate.
He also said that interest on late payments of subsidy claims should be paid on past claims to enable importers recover cost of funding, adding that the present interest rate as a result of worldwide economic situation must be reflected in the PPPRA template.
The MOMAN scribe also said that for them to import products, PPPRA and Ministry of Finance must make payment within the period stipulated in the contract to avoid additional costs.
This development may lead to fuel scarcity as the private sector imported at least 50% of the nation’s PMS requirements under the Petroleum Subsidy Fund (PSF) scheme in 2008 while the NNPC delivered the balance.
The PSF, which is managed by the PPPRA under the supervision of the Ministry of Finance aims to reimburse importers for the differential between the cost of importing PMS and selling same at a regulated pump price.
Efforts by THISDAY to get the reaction of PPPRA to this development proved abortive.
However, Group General Manager, Public Affairs Division of NNPC, Dr. Levi Ajuouma told THISDAY that the Federal Government and other stakeholders are also losing huge revenue to the falling oil prices.
“It is part of the risk. What about the money we are losing as a nation? That is why the government is no longer sharing excess crude oil revenue. Everybody is losing – government, major marketers, independent marketers and all Nigerians. The budget was predicated on $45 per barrel but the price has fallen below $35,” he said.
Source: This Day