Car queues at a filling station
By Shaka Momodu
Nigerians may have to bear the current fuel scarcity which reared its ugly head some weeks back till March next year going by signals emanating from major marketers and independent importers.
They are lamenting the lack of credit from the banks for importation of petroleum products, non-payment by the Petroleum Products Pricing Regulatory Agency (PPPRA) and Ministry of Finance of the outstanding subsidy on products already imported and consumed by Nigerians with the accrued interest rate, which is growing on a daily basis.
Most of the marketers spoken to, but who decline being named alleged that since the Lamido Sanusi-led reforms in the banking sector, and the recent ban by the Central Bank of Nigeria (CBN) on granting of fresh credit facility by banks to debtors, the banks have practically stopped credit facility for the importation of petroleum products consequently crippling their ability to import.
They also lamented the late payment of the subsidy differential by PPPRA which leads to loss of profit since when the money is eventually paid, what would have come to them as a profit, goes into servicing interest on bank credit.
Over the weekend, queues which appeared to have thinned out last week, returned to filing stations across Lagos, which further underscores the precarious epileptic supply chain that has seen the re-emergence of fuel lines across the country.
But the Nigerian National Petroleum Corporation (NNPC) and the Pipelines and Products Marketing Company Limited (PPMC) have blamed the current fuel supply and distribution situation in the country to recent vandalism of products pipeline at Arepo; where PPMC engineers who went for repairs were shot and killed.
According to NNPC, as a result of security challenges, PPMC is yet to gain access to the vandalised points to effect repairs.
The vandalised point is along the Atlas Cove-Mosimi line that feeds five depots and accounts for products supply to the whole of the South-west region and also contributes to about 60 per cent of total bridging to the North.
Some marketers also posit that they now prefer a situation where NNPC will import and deliver to them for distribution at their retail outlets.
“All we need to do in this case is to just mark up our little margin on the price, so basically it is more profitable to allow NNPC import and deliver to us or for us to sell since NNPC will bear the cost of importation which will now free us from the banks and the huge interest that goes into servicing loans. But unfortunately, NNPC alone does not have the capacity to import on a consistent basis without the country experiencing shortages. And that is the major problem that is currently playing out.”
Another independent marketer pointed out that even if they are able to source credit facility from the banks, they will still not be inclined to import products because the Ministry of Finance has exhausted the budgetary provision for subsidy payments in this year’s budget.
“So how will they pay us? Look, the real problem is that the CBN has directed banks not to open LCs for import, so the banks are not touching PMS importation coupled with that is the fact that there is no guarantee that if we import the product into the country, that government will be able to pay us the subsidy differential because the Ministry of Finance has exhausted the budget for the payment of subsidy in the current budget which is still in operation.
Nobody wants to import and find himself in a quagmire.”
The independent marketer stated that until there is a firm guarantee from government of intention to pay and a clear directive from the CBN to banks to help finance product importation, marketers will have to rely only NNPC to import and Nigerians will have to bear the burden of scarcity for till next year February/March.
Another marketer who pleads anonymity revealed that airlines operators in the country collectively owe major marketers over N5 billion.
“The airlines are indebted to us because we usually give them aviation fuel on credit. As we speak, they owe us marketers over N5 billion. But with the CBN “name and shame’’ policy of those owing Banks and the cancellation of credit facility to marketers, we have equally cancelled all credit facility to the airlines.
THISDAY investigation revealed that most of the private deport in Apapa and Ibafor have no product in their storage tanks, out of the 21 visited in the course of this investigation, only about two had product for sale. The premises of others were deserted and looked like ghost towns compared to the beehive of activities a few months ago.
These are basically investments that the banks funded in billions of naira in the hope of a sustained boom, which unfortunately has turned out a nightmarish investment for both the owners and the banks which funded them.
Another dimension to it is that almost all the oil marketing companies and the deport owners invested heavily in shipping and haulage during the boom time with credit facility from banks at phenomenally high interest rate.
But unfortunately the economic meltdown seems to have affected all projections and the ability of the huge investments to generate returns to pay back the loans.
Many are either now laying off workers or on the verge of, owing largely to their inability to pay salaries.
Many of the oil companies are currently on life support, weighed down by crippling huge debt, burden, CBN ban on access to fresh credit, threat of AMCON take over of their assets.