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PPPRA, BANKS, OIL FIRMS IN SOVEREIGN DEBTS RECONCILIATION TALKS

By NBF News
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By LOUIS IBA
All may still not be well with the management of Nigeria's fuel subsidy scheme as there were strong indications, over the weekend, of a crisis in the reconciliation of sovereign debt notes (SDN) accounts between local banks, oil marketing firms and the Petroleum Products Prices Regulatory Agency (PPPRA).

Daily Sun learnt that some banks had recently communicated to the PPPRA of some 'slight variations' they noticed in the amount they were being paid by the Finance Ministry, which they noted reflected a shortfall in the actual amount of credit they had advanced to oil marketing firms to import petroleum products on behalf of the Federal Government.

The complain of the shortfall is currently a source of apprehension for marketers who fear, given current credit crunch which marketers are facing, a further crisis in the honouring of the SDN by the government to the banks would worsen their chances of securing funds to execute the quarterly import permits given to them by the PPPRA. And the PPPRA it was learnt had threaten not to renew import permits not fully executed by oil firms. 'Some of the banks are complaining of some slight variations in the SDN repayment they are getting from the Finance Ministry which they insist is not a reflection of the credit they gave to the oil marketing firms to import petroleum products,' said an industry source.

'The banks say they are getting piecemeal as they were paid monies that were lesser than what the marketers actually borrowed and this has created apprehension in the industry because of the credit crunch which marketers are experiencing as well as the added delay in re-payment by the finance ministry to some marketers under probe,' the source added. It was learnt that the finance ministry might have opted for the 'piecemeal' payment mode as a part of checks and balance that would help detect marketers and banks that could have upped their debts or demanded for sums considered as over payments.

Under the fuel subsidy scheme, banks loan out money to marketers to import products on behalf of the government which in turn would refund the marketers via the banks when the products are certified by the PPPRA to have been imported and delivered to end-users. Recently, the government had complained it was shortchanged by the marketers who submitted proposals for the repayment of credits they never took and the government said it had to cough out about N1.3trillion las year to foot marketers fuel subsidy claims.

But marketers on the other hand had accused government of being insincere pointing out that they were owed about N300billion by the government. The crisis had led to multiple probes of the industry by various government agencies with the resultant effect being the withdrawal of credit facilities to some of the oil marketing firms by banks.