Share this:

Like this:

Like Loading...
" />
Published On: Fri, Jul 20th, 2018

Oil marketers get N26b excess in fuel subsidy payment -Senate

Share This
Tags

By Ikechukwu Okaforadi and Musa Adamu

Senate yesterday said that the federal government will pay N26billion naira in excess to oil marketers, even as it moved to unravel what resulted in the discrepancies in the amount payable to oil dealers.
Also, the Senate approved the “Promissory Note Program and Bond Issuance” of the federal government, “to Settle Inherited Local Debts and Contractual Obligations to Oil Marketing Companies in the sum of N348,003,054,975.00 as an interim measure”.
Presenting an interim report yesterday on the investigation of the Fuel subsidy crisis, Chairman, Senate Committee on Petroleum (Upstream), Sen. Kabir Marafa, disclosed that some OMCs were to be overpaid, while some were marked for less payment as per their demands.
In the report, N26,045,704,446 amounted to the total sum that was to be paid out to the OMC in excess of their respective demands.
Among the oil marketers that were to benefit from the money were CONOIL who was to be paid N5.4 billion in excess of their N8.5 billion bill; and ONTARIO OIL & GAS LTD who was to be paid N8.8 billion in excess of their N2.9 billlion demand.
Marafa explained that the figures ourageous though, the increments were caused by undue payment delay and fall of the Naira value.
“The Government’s inability to pay the OMCs as at 30th June, 2017 has further increased its liability since the interest continued running till date, hence, the need for further work by the Committee to compile and update the level of indebtedness and its interest”, he explained.
He however suggested that, in view of the fact that the service of the OMCs is very important to the economic development of the country and closely tied to National security, paying the marketers would stem the threat of fuel scarcity, increase economic activities and promote a more harmonious working relationship between the oil marketters and the NNPC.
He said the Federal Government Committee reviewed and recommended outstanding payments on subsidy, interest charges and foreign exchange differentials due to OMCs as at 30th June, 2017 as agreed in an earlier meeting between the presidency and the OMCs.
The accrued interest, he said, was based on the Service Level Agreement (SLA) under the Petroleum Support Fund (PSF) Scheme in which Government is to pay all liabilities (interest and forex differentials) arising from non-settlement of subsidies within the agreed time frame of 45 days.
He said the OMCs however claim that due to delay in payments and subsequent scarcity of forex as at the time of LCs liquidation, the commercial banks exchange rate was higher than the CBN rate and therefore should be used as the benchmarks for the arrears computation.
Also, since the government could not meet up with the cut-off date 30th June, 2017, the banks continued accumulating interest on the claims and as such, the attracted additional charges should be paid, he said.
The total amount verified and sent to Federal Ministry of Finance by PPPRA is in the sum of N429,054,203,228, while the Marketers claim is in the sum of N,497,543,158.62 as at 30th June, 2017:
Federal Ministry of Finance, upon receipt of PPPRA’S verified Figures, the report said, sought and obtained approval of Federal Executive Council to pay the sum of N429,054,203,228 subject to the approval of the National Assembly.
Finance ministry sent the approved Figure of N429,054,203,228 to Presidential Initiative on Contiuous Audit (PICA) for further verification; PICA upon receipt of the figure from FMOF worked and verified the sum of N407,255,263,288.42.
The promissory Note and Bond Issuance, according to Sen. Marafa, is meant to offset unpaid debts in various sectors of the economy which includes subsidy obligation;
“Section 41(1)(a) of the Fiscal Responsibility Act (FRA), 2007 provides that, “Government at all tiers shall only borrow for capital expenditures and human development, provided that such borrowing shall be on concessional terms with low interest rate and with reasonably long amortization period subject to the approval of the appropriate legislatiVe body where necessary.
The Subsidy Arrears, Interest Accrued and Foreign Exchange Differentials constitute part of capital expenditure.
The Federal Government Committee reviewed and recommended outstanding payments on subsidy, interest charges and foreign exchange differentials due to OMCs as at 30“h June, 2017 as agreed in an earlier meeting between the presidency and the OMCs:
The accrued interest was based on the Service Level Agreement (SLA) under the Petroleum Support Fund (PSF) Scheme in which Government is to pay all liabilities (interest and forex differentials) arising from non-settlement of subsidies within the agreed time frame of 45 days.
The OMCs however claimed that, Due to delay in payments and subsequent scarCity of forex as at the time of LCs liquidation, the commercial banks exchange rate was higher than the CBN rate and therefore should be used as the benchmarks for the arrears computation: and Since the Government could not meet up with the cut-off date 30th June, 2017, the banks continued accumulating interest on the claims and as such, the attracted additional charges should be paid.
The total amount verified and sent to Federal Ministry of Finance by PPPRA is in the sum of N429,054,203,228 (Four Hundred and Twenty Nine Billion, Fifty Four Million, Two Hundred and Three Thousand, Two Hundred and Twenty Eight Naira) while the Marketers claim is in the sum of me,497,543,158.62 (Six Hundred and Seventy Billion, Four Hundred and Ninety Seven Million, Five Hundred and Forty Three Thousand, One Hundred and Fifty Eight Naira, Sixty Two Kobo) only as at 30*“ June, 2017:
Federal Ministry of Finance, upon receipt of PPPRA’S verified Figures sought and obtained approval of FEC to pay the sum of N429,054,203,228 subject to the approval of the National Assembly:
Ministry of Finance sent the approved Figure of N429,054,203,228 to Egg for further verification; PICA upon receipt of the figure from Ministry of Finance worked and verified the sum of N407,255,263,288.42.
The Senate at its sitting on Thursday, 31st May, 2018 reconsidered the request of President Mohammadu Buhari on the Establishment of a Promissory Note Programme and a Bond Issuance to Settle Inherited Local Dents and Contractual Obligations; and referred the request to its Committee on Downstream Petroleum Sector for further legislative action.

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

%d bloggers like this: