Between 2013 and 2014, a total amount of N1.29tn was recorded as petrol subsidy claims from oil marketers.
Figures from the Petroleum Products
Pricing Regulatory Agency show that about N832.06bn was paid as subsidy
claim by the Federal Government to oil marketers in 2013 alone.
For July and December 2014, the government paid N45bn and N166bn respectively.
Aside these payments, oil marketers
under the aegis of Major Oil Marketers Association of Nigeria and Depot
and Petroleum Products Marketers Association, also alleged that the
Federal Government owed them another N250bn in unpaid subsidies for
2014.
With the realities on the ground, the
government may not be able to offset this debt in 2015 considering the
fact that it only made a provision for N200bn subsidy in the 2015 budget
proposal, our correspondent learnt.
Before November 2011, the business of
fuel importation into the country was an all-comers’ affair, resulting
in manipulations and malpractices that swelled subsidy claims to about
N2tn.
Petrol subsidy, in this context, is a
form of financial support extended to Nigerians by the Federal
Government with the aim of keeping the price of petroleum products low
compared to what it would have been in a perfect market situation.
Government had claimed to be subsidising the pump prices of petrol,
kerosene and LPG. Diesel prices, however, had been deregulated.
A total of 128 companies were engaged in
fuel importation in the old regime thus providing an opportunity for
the abuse of the system.
The PPPRA later reduced the number of
participating companies to 42 in the first quarter of 2012, before it
was further reduced to 39 in the third quarter of 2012, terming the
development a reformatory move.
The volume of imported products also
dropped from 5.036 billion litres in the first quarter of 2012 to 4.20
billion litres in the third quarter of 2012.
But due to growing concerns that the
inability of these accredited importers to access credits from the banks
could fuel another crisis in the system, the PPPRA later expanded the
list to over 40 participating companies since 2013.
The case of kerosene, however, is
different because oil marketers have refused to sell the product for the
N50 regulated price per litre. The product, however, is currently sold
for prices between N100 and N150 per litre in filling stations across
the country.
Between January and September 2014, oil
marketers in Nigeria were said to have made not less than N148.5bn as
illegitimate profit from DPK sold to Nigerians.
The Managing Director, PPMC, Mr. Haruna
Momoh, however ties the price anomaly in the kerosene market to sharp
practices of some middlemen in the industry.
He said, “It is the wish of the
government to make kerosene available, but our research since we came
gives a totally different picture from the good intention of the
government. It is diverted to neighbouring countries and also used for
production and construction.”
The pump-price of petrol has just been
reduced to N87 from N97 by the Federal Government, meaning that the
subsidy on petrol has been eroded by market fundamental – which in this
case are falling oil prices.
Also, the Executive Secretary, MOMAN, on
Tuesday, stressed that now was the right time for the government to
totally deregulate the downstream business of the petroleum industry,
saying that such a move would make it incumbent on the marketers to
either raise or reduce product prices, given market realities.
To this end, a former Group Managing
Director of the NNPC, Mr. Chamberlain Oyibo, last week, said that
depleting crude oil prices in recent times had finally eroded subsidy
placed on petrol by the government.
He added, “Now, it is expected of this government to announce to Nigerians that the subsidy era is over.”
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