There may be no end in sight for the lingering fuel shortage in the country as depot owners under the aegis of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) have given the federal government and its agencies 14 days to approve and pay off its remaining subsidy era indebtedness amounting to over N650 billion to them and all other petroleum marketing companies.
The marketers have also stated that they do not have any other option to forestall increasing debt burdens of borrowing to pay staff than to immediately commence massive staff disengagement after the expiration of the 14-day ultimatum.
In a letter addressed to the Minister of State for Petroleum, Dr. Ibe Kachikwu, which was obtained by THISDAY, the marketers referred the minister to their earlier letter with ref: DS/ES/Presidency/16, dated 24th January, 2018 where they had claimed lack of response on the part of the federal government to the plight of petroleum marketers, many of who have become financially insolvent.
The Executive Secretary of DAPPMAN, Mr. Olufemi Adewole, who signed the latest letter with Ref: DS/ES/16 and dated February 20, 2018, informed Kachikwu that the marketers are continually under pressure by their banks and the Asset Management Corporation of Nigeria (AMCON), with looming threats of imminent takeover of their petrol stations and tank farms.
In the letter titled: “Re: Outstanding subsidy induced debts owed petroleum marketers: Notification of formal disengagement of staff due to our inability to continue bearing the costs alongside interest burden,” Adewole also disclosed that other creditor labour unions such as the National Association of Road Transporter Owners (NARTO) and the Petrol Tanker Drivers (PTD) are also threatening the marketers.
He explained: “In the light of the fore going, Depot and Petroleum Products Marketers’ Association of Nigeria (DAPPMAN) members do not have any other option open to us to forestall increasing debt burdens of borrowing to pay staff than to immediately commence massive staff disengagement as earlier forewarned in our letter of 24th January, 2018, where we had, in the light of the above and after exhausting all formal avenues to secure payment of these debts, alerted the Federal Government, via a 21-day notice to the likelihood of disengaging personnel; a last resort to curtail spiralling borrowings and interests in the effort to meet salary obligations to underutilised personnel.
“The unfortunate primary fallout of this step is the likely shut down of all DAPPMAN depots nationwide due to lack of man power to operate same pending the time the Federal Government will pay off its indebtedness to petroleum marketers. This unfortunately will have a multiplier effect on the nationwide supply and distribution of petroleum products which currently is still a struggle.”
According to him, this letter serves as a fresh 14-day reminder and an opportunity for the federal government and its agencies to speedily approve and pay off its remaining subsidy era indebtedness to all their members and indeed all petroleum marketing companies.
“Whilst we would remain expectant of federal government’s positive response and financial instruments to offset the debts owed, please accept the assurances of our highest regards,” he added.
Adewole also copied the vice-president, Senate President, Speaker of the House of Representatives and the Chief of Staff to President Muhammadu Buhari.
The marketers had repeatedly warned that unless the claims were paid, they could kill not only their businesses but also worsen the liquidity crisis in the banking sector with the attendant unsavoury implications for fuel supply nationwide.
In a recent communiqué issued at the end of one of their meetings in Lagos, the marketers, under the aegis of Independent Petroleum Products Importers (IPPIs) had argued that the outstanding debt was money borrowed from banks to fund importation during the subsidy regime.
The communiqué added that the outstanding claims arose largely from the importation of petroleum cargoes authorised by the administration of President Goodluck Jonathan, stressing that since government is a continuum, the contracts of President Jonathan’s government will remain binding on successive governments.
“The CBN has also offered foreign exchange to IPPIs under a special window aimed at liquidating outstanding matured Letters of Credit at an exchange rate of N305. However, the exchange rate of N197 when Letters of Credit were initially opened for IPPIs and transactions concluded and the current CBN offer rate of N305 is an increase of 55 per cent and a significant rate differential,” the marketers explained.
They said: “This means that for every 15,000 metric tonnes of petrol imported by the IPPIs at a rate of $500 per MT and whose foreign exchange differential claims have not been paid then it means that the cargo of 15,000MT imported at the N197 rate will now be given foreign exchange at the rate of N305.
“By implication a cargo of 15,000MT at $500 per MT is S$7,500,000 or N1, 477,500,000 at N197 rate or N2, 287,500,000 at N305 rate. If these outstanding payments to IPPIs are made at N305 they would suffer a loss of N810, 000,000 per 15,000MT cargo of petrol. “Government’s delay in paying debts to IPPIs and the difficulty they face in procuring forex at equitable rates will likely see the extinction of many of the IPPIs in 2017 thereby creating petroleum products shortages and attendant insecurity.”