By Ahamefula Ogbu and Ejiofor Alike
The Petroleum Products Pricing and Regulatory Agency (PPPRA) will this week issue fuel import allocations to marketers for the second quarter of 2012 as part of efforts to address the worsening scarcity of Premium Motor Spirit (PMS), otherwise called petrol.
THISDAY gathered that the current scarcity, which arose from abysmal performance of the marketers in the first quarter of 2012, was due to the refusal of the banks to finance fuel importation because of the concern that the government might not pay subsidy.
It was learnt that because of the poor performance of the marketers, which was below 27 per cent, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, had at a recent Town Hall meeting in Lagos assured the banks that the government would pay subsidy and urged them to provide lines of credit for the marketers.
A source privy to the meeting told THISDAY that the banks were reluctant to finance importation in the first quarter of 2012 to avoid a repeat of the 2008/2009 financial crisis, which resulted from the inability of the marketers to repay loans.
But following the assurance by the minister, a source at the PPPRA confirmed to THISDAY last night that some marketers had placed orders for fuel cargoes, having received lines of credit from the banks.
Diezani Alison-Madueke (Mrs.) over saw the spending of about N2 trillion last year on “subsidy” while the previous highest in a year was N640 billion
He, however, noted that due to the long time it would take for the imported cargoes to arrive Nigerian waters, it could take up to the second and third week of March 2012 before normal supply of PMS would be restored across the country.
He also stated that import allocation for the second quarter of 2012 would be released this week.
“The allocation for the second quarter, which starts in April, will be out this week but we have not decided on the number of marketers that will be given allocation,” he said.
On the possibility of sanctioning marketers who did not perform in the first quarter of 2012, the official stated that they would not be sanctioned because their poor performance was due to the refusal of banks to finance importation.
“That the marketers did not perform was not because they did not want to perform. Their performance was not good because the banks did not give them credit lines to import products. So, we are being careful, so as not to punish them unjustly,” he said.
Following the inability of the private marketers to import PMS, due to lack of financial support from the banks, most of the private marketers have been scrambling for products imported by the Nigerian National Petroleum Corporation (NNPC).
This situation has created fuel scarcity and long queues at filling stations in Lagos, Abuja and other parts of the country.
Meanwhile, the National Economic Council (NEC) rose from its meeting presided over by Vice-President Namadi Sambo yesterday evening stating that projected revenue from the deregulation of the downstream sector of the oil and gas of the country had dropped drastically from N1.134 trillion to N426 billion, following the review of pump price of petroleum from N141 to N97 per litre.
The situation led to a review of the Subsidy Reinvestment (SURE) projects, misunderstood to mean an outright cancellation of the projects when it was announced by President Goodluck Jonathan recently.
Briefing State House correspondents after the meeting, NEC said the Federal Government which ought to get N478 billion from the total deregulation saw the amount reduced to N180 billion at the current N97 per litre pump price.
The body said other areas they discussed included receiving reports on the Federal Government irrigation projects, review of Millennium Development Goals (MDGs) and special intervention projects in agriculture which cover about N137 billion.
It insisted that there was no way the government could have gone ahead with the same level of intervention when the policy changed from total deregulation to increase in pump price and therefore necessitated the review of the SURE documents to align it with current realities.
“When the Subsidy Re-investment Programme was drawn up, the projects that were selected to be implemented were based on the assumption that we were going to have complete deregulation of the downstream sector. When the announcement was made with the complete deregulation, the price of PMS went to as high as N141.
“But after engagement with the labour unions, deregulation was reversed and we have a partial deregulation that pegs the price of PMS at N97. This is more or less 37 or 38 per cent liberalisation of the price. That implies that we cannot have the full re-investable fund because we have partial deregulation unless we are going to end up with less than the projected re-investment fund.
“If you look at SURE document, the estimate of the Re-investable fund was N1.134 trillion but with the partial deregulation, the computed total re-investable fund per annum came to N426 billion and that is what is available to the Federal Government, the state government and the LGs. The share of the FG came down from N478 billion to N180 billion. So the document you have seen was based on an expectation of N478 billion every year for four years but now that we are getting N180 billion every year for four years, we have to prioritise. What we are doing now is that we are prioritising.
“In those priorities, we have to select the safety net programmes; that is, maternal and child health, public works programme to generate employment for our youths, the mass transit and the technical skill acquisition. These are the safety nets that will be implemented and of course we have already launched the public works and the mass transit and we now look at the transportation sector, we took the road and the railways.
These are what we can actually do with N180 billion. So when the president talked of more or less reviewing the programme, it is not just reviewing or changing it but prioritising. Taking what you can do with the money available today,” NEC explained.
At the briefing were governors, ministers and ministries, departments and agencies (MDAs). The Minister of National Planning Shamsuddeen Usman, Minister of State for Finance Yerima Ngama with Governors Kashim Shettima of Borno, Sullivan Chime of Enugu and Ibrahim Geidam of Yobe States addressed the press on behalf of NEC.
Throwing more light on the statistics behind the figures, Ngama said the public would have felt deceived if the government did not come out to explain to them that it would be unrealistic to continue as if nothing had changed when there was drastic reduction in the revenue that would be used to prosecute projects under the SURE programme.