Working for the Banks

Fri, Jul 19, 2013

By publisher

3 MIN READ

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Major oil marketers have threatened to stop further petrol importation because they are paying huge interests to the banks as a result of federal government’s indebtedness to them

|  By Anayo Ezugwu  |  Jul. 29, 2013 @ 01:00 GMT

THE Major Oil Marketers Association of Nigeria, MOMAN, has threatened to stop the importation of Premium Motor Spirit, PMS or petrol, if the federal government does not pay its outstanding N65.1billion subsidy claims. MOMAN said that the federal government still owes Conoil N3.98 billion, Forte, N4.148 billion, MRS, N5.35 billion, Mobil, N5.62 billion, Oando, 19.34 billion and Total, N1.66 billion.

Obafemi Olawore, secretary, MOMAN, said the debt was largely for petrol imports done this year. Although, he said subsidy payments were made in June, only Forte, Mobil and Total got N2 billion, N2.2 billion and N5.2 billion, respectively. That amounted to only N9.4 billion. While other marketers have been fully paid for their fuel imports in 2011 and 2012, Mobil is still being owed N7.83 billion for the period.

The non-payment of the debt, Olawore said had made it difficult for marketers to continue to do business, noting that they relied on bank loans for petrol imports. He explained that the agreement with the federal government was for subsidy payments to be made 45 days after the imported fuel had been delivered.

For failure to abide by the 45-day agreement, the MOMAN said the marketers were losing a lot in bank interests and foreign exchange. As such, he said, the marketers had reduced their fuel import quota from 60 per cent to 45 per cent. He said the marketers could be forced to stop importation of petrol if the N40.6 billion was not paid. “The federal government does not abide by the 45-day agreement for subsidy payment. The government didn’t pay between January and June 2013 until we shouted in June. As at June 2013, the total subsidy claims for major marketers amounted to N50 billion. But we have only been paid N9.4bn for imports done in 2013.  It is noteworthy to know that only three major marketers were paid N9.4bn. The other three with a large chunk of the money have not been paid anything,” he said.

Due to nine months of delayed payment, Olawore said MOMAN members had to pay N13.1 billion as interest to banks, adding that another N2.49 billion loss was incurred as a result of foreign exchange fluctuation. “Generally, interest rate is between 20 per cent and 23 per cent for oil marketers because of the volume of business we do with the banks. But because we are always not being paid on time, the bank charge becomes an issue and interest starts counting after 45 days.

“Because of this, marketers have paid N13.1bn as bank interest for a part of 2012 and the last six months in 2013. I was shocked when one marketer showed me a demand note from one of the banks for payment of interest and it was N300m. It has become very tough to continue the business. The banks are chasing us, and if you do not return their money, they won’t give you more money to do business. At the same time, they are happy calculating the interest.”