Oil marketers have called on the Federal Government to pay the sum of N800bn owed them for fuel importation and interest on bank loans so as to enable them to resume the importation of petrol.
The marketers said they had yet to pay the over $1.2bn that they borrowed from Nigerian banks to import fuel, adding that interest on the loans had accumulated over time because the government had failed to pay them.
The oil marketers, including members of the Depot and Petroleum Products Marketers Association, issued a communiqué signed by their legal adviser, Mr. Patrick Etim, stated this after a meeting in Lagos.
According to them, Acting President Yemi Osinbajo summoned a meeting with them on May 22, 2017 on how to pay the debt, with the Minister of Finance, Mrs. Kemi Adeosun; Minister of State for Petroleum Resources, Dr. Ibe Kachikwu; and Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, in attendance.
They said Osinbajo, at the end of the meeting, directed Adeosun to within two weeks resolve the problem of the outstanding debt, adding that Kachikwu confirmed the indebtedness to them at the meeting and asked the government to do everything possible to clear the debt so that they could commence importation of petrol.
The marketers said the devaluation of the naira from 195 to 285 and later to over 305 against the United States dollar had put an additional debt burden in excess of N300bn on them, as the Federal Government agencies base their reimbursement calculation on N197 to $1.
The communiqué read in part, “The downstream sub-sector is now saddled with a debt burden of over N400bn, which keeps rising because the banks are still charging interests on it until the total debt is fully liquidated.
“As a result of the unpaid interest and foreign exchange differentials, we are becoming insolvent and financially handicapped to continue operating profitably. Commercial banks, the original and actual owners of these funds, are already hard hit by our inability to return these funds within the contract tenure of 45 days and have, in line with the CBN’s guidelines, classified marketers’ accounts in all the banks in the federation.”
The marketers said properties, including some storage facilities such as tank farms, provided by them as securities for the funds were in the process of being auctioned.
“We have indeed made several spirited efforts to get the government agencies involved to pay up fully, adhering to the principle of full restitution to all participants in the then Premium Motor Spirit import scheme, but the major challenge on the economy has impeded complete success; hence, we are making a direct appeal to the acting President to intervene.”
The marketers stated that the government’s debt arose from arrears of unpaid imported petrol supplied to the country.
The communiqué added that the government entered into a contract with the marketers, mandating them to import and supply petrol on the condition that it would pay the difference between the landing cost and the selling price of petrol (as fixed by the government), provided that the landing cost was higher than the selling price.
“A key term of the government’s contract with the marketers is that the under-recovery payments shall be paid to the marketers within 45 days of submission of documents evidencing discharge of petrol cargo and trucking out from storage. It was also agreed that after 45 days, the government shall pay the interest charges on the loans taken by the marketers to finance the importation of cargoes of petrol,” it said.
They added that the banks opened Letters of Credit at approximated exchange rate of N197/$1, adding, “As of 2016, the banks had not liquidated the LCs from 2014 because of lack of foreign exchange from the government.
“The outstanding matured Letters of Credit are currently over $1.2bn. Because many Nigerian banks were involved in raising this fund, the entire Nigerian banking system is at risk on account of these transactions.”
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