Senators angry over FG refusal to pay subsidy to marketers

The Senate on Thursday criticized the Federal Government for its alleged refusal to pay oil subsidy claims by petroleum products marketers.

The upper chamber said that the Federal Government has failed to pay the marketers despite the approval granted it by the National Assembly in July.

The Senate Committee on Petroleum (Downstream) held a stakeholders meeting in Abuja where members of the committee took turns to disparage the government action.

The senators claimed that government agencies appeared to have been deliberately slowing down paying the products marketers their entitlements.

The committee ordered the Federal Ministry of Finance to within one week initiate a meeting with other government agencies and the marketers to reconcile figures of subsidy claims.

The committee also resolved that the meeting should discuss ways and means of fast tracking payment of arrears claims without further delay.

It mandated the stakeholders to report back to the committee the progress made next week.

The upper chamber had, in July 2018, approved payments of subsidy claims of over N348bn to oil marketing companies.

The approval was granted based on a request by President Muhammadu Buhari to that effect.

It also followed the adoption of an interim report by the committee on “Promissory Note Programme and Bond Issuance to Settle Inherited Local Debts and Contractual Obligations to Petroleum Marketers.”

The Senate approved that 55 oil marketers should be paid verified figures totalling N275,750,415,108.

The upper chamber said that 19 other marketers “with contentious claims and verified figures” be paid 65 per cent of their claims, totaling N73,452,639,866, pending further investigation and verification by the committee.

Chairman of the committee, Senator Kabiru Marafa, noted Thursday that the meeting was called to know how much the Federal Government had implemented the Senate’s resolution.

Marafa also said that his committee wanted to know the situation with the 19 marketers with contentious claims.

He noted that the committee wanted the solution to the continued conflict of subsidy figures between the government and oil marketers.

Marafa said, “The situation is becoming a vicious cycle that will not end. There is a general disquiet in the industry as I am speaking to you today, that government’s efforts may be sabotaged because as Chairman of this committee, I am aware of the very serious efforts put in place by this government to ensure that there is no fuel scarcity in this country. We have abundant quantities in every part of Nigeria.”

He added that the government and the marketers reached agreement in June 2016, with another agreement made in June 2017.

Marafa said that the government was yet to pay the agreed sums while the marketers had continued to groan over interests caused by the delay in their payment.

He said, “Since they were not paid as at that time, the interests did not stop.”

The committee chairman noted that there was a meeting between the relevant ministries and agencies with President Muhammadu Buhari where the Governor of the Central Bank of Nigeria allegedly said commercial banks would be advised to suspend interests on loans taken by oil marketers for fuel importation.

He said, “All that did not happen and the marketers are saying that the interests have continued (to grow). Apart from the figure agreed, they are now asking for another figure. Even if the government pays that one, there is another problems again. So, this issue of subsidy will continue and it is going to tell on the integrity of a lot of people. This committee is concerned.”

Director-General, Debt Management Office, Mrs. Patience Oniha, on her part noted that while the payments were approved by the Senate in July, the office did not receive communication from the Clerk to the National Assembly until September.

She said that the processes of the payments were detailed in the request made to the Federal Executive Council, which was passed and forwarded to the National Assembly for approval.

The DG noted that the processes, which must be followed, were still ongoing and DMO would engage the marketers by the middle of November 2018.

Oniha said, “By the time the Senate kindly approved the one for oil marketers, we had already started working and putting a framework in place which was submitted to the Minister of Finance. For us to incur any debt – to book any debt in whatever form, whether promissory note or public debt stock – we need the approval of the National Assembly. That of the (upper) House was only communicated to us in September.

“So, technically, if we had put everything in place, until we got that final resolution from the Clerk, we would not have started. In the letter that came from the Clerk to the National Assembly after the approval by the Senate, it was expressly stated that this was the approval of the Senate and we only got the approval in September.”

She also said that the Federal Government wanted to contract an international consultant based in Nigeria to audit the subsidy claims and payments.

The accounting firm, which she did not name, had been approved by FEC to do “a review of the numbers.”

The marketers, she said, would be paid based on the outcome of the review.

The DMO DG noted that the Federal Government planned to convert the claims and pay the marketers with promissory notes.

The committee disagreed with the DMO DG on the processes of payment.

Members of the committee insisted that the process of payment would further worsen the plights of the marketers in the hands of the banks.

Senator Mao Ohuabunwa, a member of the committee said, “With the brief from the DMO, are we trying to give the marketers a grant or pay them for a business that had been contracted and concluded? You said you wanted to appoint an international auditor and you have not appointed one. You are still in the process of engaging one and you are talking about promissory notes. You said from 15th November you would start engagements (with marketers), not even to start paying, which means there is no fixed time frame yet. I can’t understand this.”

Another member, Senator Ibrahim Dambaba said, “I want to register my disappointment and displeasure over the way government handled this matter. I have a paper here with me that dated 30th June 2017. These debts were verified as far back as June 30th. To this point as I am talking, nothing is happening, and you are still saying that you will engage these marketers again. I think that should not be the case.”

Marafa noted that the committee would be forced to report to President Muhammadu Buhari if ministries, departments and agencies delayed the payments, leading to fuel scarcity in the country.

Marafa said, “I think there is a fundamental problem. I agree with some of the submissions by my colleagues. These things are badly handled. That is the truth of this matter. When you look at the submissions by DMO and the processes, from 2017 that you agreed to something, who forced you? Did anybody force the Federal Government to agree with these figures? From the moment you accepted, you have to honour your words.

“I don’t want to say this but I can see some hands behind these things. God forbid, honestly, if these things result into any fuel scarcity, I will be one of the few people that will walk up to Mr. President and say that there is sabotage. I know the efforts the government put to avoid these things.”

The marketers claimed that commercial banks, from which they obtained loans to import Premium Motor Spirit (petrol), had continued to seize their assets since it was announced that the National Assembly had approved payment of subsidy arrears.

The Executive Secretary, Depot and Petroleum Products Marketers Association of Nigeria, Olufemi Adewole, said, “The processes they have highlighted, to us, are killing our businesses. I can tell you without mentioning the name of the banks that the moment some banks heard – they just heard; they read it in the media – that the National Assembly had approved, they went to courts, got injunctions and seized our assets. My people – marketers – are in a dire state.

“I don’t need to go over how many members of staff have been laid off. Those who were laid off are feeling the pain right now. Today is the end of the month and another cycle of interests will be placed on those accounts tomorrow (today) morning. Every CEO here will get an alert of increase on interests tomorrow morning. These are needless expenses for the Federal Government. We are pleading, we are at our knees’ end, by whatever means, let us have this money.

“Giving us discounted promissory notes is like killing us twice because it is already a loss for us; now we are to be given promissory notes that we are going to be forced to discount. The CBN governor promised us then, that the banks would be advised to stop charging interests. We have written to him several times but nothing has been done and the banks are doing this. We are pleading, we need these payment instruments like six months ago.”

A former Minister of Trade and Investment and Chairman of Integrated Oil and Gas Limited, Captain Emmanuel Iheanacho, also said his firm hand been dragged to court by its creditor who was about take over his assets.

Marafa said that the committee would continue to monitor and ensure that the marketers were paid their claims.

The Nation Newspapers