Fresh fuel crisis looms as oil marketers lament huge debt, FX constraints

Nigeria’s tight fuel situation that is gradually easing on account of the recently announced deregulation of the downstream oil sector could worsen again if the Federal Government fails to help the oil marketers access foreign exchange (FX) for imports.

Ibe Kachikwu, minister of state for petroleum, announced the deregulation modalities that saw the official pump price of Petroleum Motor Spirit (PMS – petrol) raised to a band of between N135 and N145 a litre on tight FX conditions in the country, saying that the oil marketers were no longer allowed to source FX from the CBN window.

But the marketers at the weekend lamented that they were already being overburdened by huge debts owed by the past administration on subsidies and compounded by their obvious inability to now source money from the banks at the proposed N285/$.

The ministry of finance has recently released about N42 billion – part of the subsidy debts, but the marketers say this amount is still too small to make any dent on what they owe their creditors and they can no longer import.

At a meeting with the finance minister, Kemi Adeosun, to seek government assistance on their myriad problems, the marketers, led by Dapo Abiodun also raised the concerns that the money was paid to them in naira and was still sitting in their banks, as they were unable to convert them to dollars to import the products.

Under the new circumstance, the Nigerian National Petroleum Corporation (NNPC) is to import up to 50 percent of the total PMS need while the marketers have been allowed to source the remaining 50 percent and sell at their own prices, however, within the stipulated band.

“We are here as members of Depot and Petroleum Products Marketers Association of Nigeria DAGMAN who have the largest investments in the downstream oil sector and the largest employer of labour in this industry to meet with the minister and dialogue with her on our funding and payments and any other matters that we want to request for assistance,” he stated.

The meeting had in attendance the CEOs of all the depots in Nigeria.

Explaining their circumstance, Abiodun said: “We all recall very vividly how desperate we were to get paid before this administration came in. It was so bad for the fact that our bankers who have stopped supporting us have practically made it impossible for us to continue to import petroleum products during the transition time from the previous to this administration.”

He said they however, decided that in good faith and with their commitment and level of patriotism, to continue to do everything to keep the country ensure availability of petroleum products despite the fact that huge amounts of monies were being owed them just before President Buhari’s administration came in.

He admitted that some payments were released to them shortly after President Buhari took over but that the payments have not made any good sense to them because they were in naira, which they are finding difficult to convert to dollars and import petroleum products.

“Till this time, many of us have naira sitting in our accounts from previous transactions and we continue to bid to that we can liquidate out foreign bankers without commendable success,” Abiola told the finance minister.

He said as at date, there exposure to their foreign bankers have not been offset, because “up till now, most of us still have the monies sitting in our accounts because of the non-availability of foreign exchange.”

He said this was majorly the reason that led to the unavailability of the petroleum products that was witnessed in recent past.

He emphasised that even the recently made naira payments will continue to sit in their banks as they cannot convert them to dollars in this present era.

“We look forward to you expediting the sourcing of foreign exchange to liquidate those positions because our bankers and their correspondent banks abroad are now worried,” the oil marketers begged the minister through their leader.

Abiodun added said their worries are also borne from the fact that marketers can now access their FX at any rate they can find, a situation he called a quick fix solution to the critical fuel situation the country is facing.

“We still have this naira sitting in our account from previous transactions and we are worried that if anything happens to the exchange rate officially, the situation will be too bad. And we do not want to come to you that we have foreign exchange differentials,” he stressed.

Responding, Adeosun assured that the government would try as much as possible to support the marketers.

She said that the N42 billion paid the marketers were made under the new processes put in place in the ministry of finance.

“I want to assure you that we understand your challenges of foreign exchange availability and we will do what we can to support you the way we can by liaising with the Central bank to ensure you get access,

Adeosun was optimistic that with this collaborative approach with the marketers, the government will enable them bring in products so that Nigerians do not suffer queuing for days for products which should be readily available across the country.