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Senate approves N348bn subsidy payment to oil companies

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The House of Senate on Wednesday, July 18, in adherence to the order of the presidency, has approved the payment of subsidy claims amounting to N348bn to oil marketing firms.

This also came after the adoption of the interim report by the Senate committee on petroleum (downstream) on ‘Promissory Note Programme and Bond Issuance to Settle Inherited Local Debts and Contractual Obligations to Petroleum Marketers’, Punch reports.

In its approval, that that 55 oil marketers be paid N275,750,415,108, the House demanded that 19 marketers with controversial claims and verified figures be paid 65 per cent of their request, which in sum was N73,452,639,866, until more investigation and verification by the committee are carried out.

Among the key marketers to complete payment are Aiteo, Bovas, Capital Oil, Eternal, Folawiyo Energy, Hyden, Integrated Oil, Mobil Oil Nigeria, MRS, NIPCO, NNPC Retail, Obat Oil, Sahara Energy and Total Nigeria, while those to be partly paid are Conoil, Forte Oil, Honeywell, IPMAN Investment, Matrix Energy and Oando.

The order by President Muhammadu Buhari was referred to the committee with the mandate to ascertain all outstanding subsidy arrears, accrued interests and forex differentials, as well as to collate a harmonised figure as the deep indebtedness of the federal government to the marketers for consideration and approval.

According to the report, the committee identified the irregularities in the subsidy claim figures presented by the Federal Ministry of Finance and the marketers.

The report, which was presented by Senator Kabiru Marafa, the chairman of the committee on the Petroleum Products Pricing Regulatory Agency, verified and sent the sum of N429,054,203,228 to the federal ministry of finance as subsidy claims. However, the marketers requested for N670,497,543,158 as of Saturday, June 30.

The committee said the ministry got the approval of the Federal Executive Council to pay the amount presented by the PPPRA as the verified subsidy claims.

The ministry was said to have sent the clarified figure of N429,054,203,228 to the presidential initiative on continuous audit for more verification, which did a downward review of the amount to N407,255,263,288.

In part, the report stated: “The Federal Ministry of Finance indicates that the verified figures in respect of 19 oil marketing companies were either higher or very close to their claims, while those of the OMCs with higher claims got lesser figures.

“This issue, including the determination of the terminal date of the subsidy programme, amount paid to the OMCs and the interest accrued from 30th of June, 2017 to date will be taken up and resolved in the final report this committee will be submitting to the Senate in due course. This submission should be able to reconcile and bring to a conclusion all issues in respect of petroleum subsidy programme implementation and payments.

“Further verification needs to be made to ascertain the discrepancies between the OMCs and the recommendations for payment made by the FMoF (PICA) in this respect; the committee is of the opinion that interim payments should be effected to the OMCs pending full verification of PICA’s recommendation and updating of the full implication of interest accruals from 30th of June, 2017 to date.

“Continuous delay of the approval of the promissory note request will affect the liquidity of the OMCs and undermine their crucial role in the development of the economy.”

The committee said that the federal government’s failure to pay the OMCs in June 2018, had further increased its liability since the interest continued running, hence, the need for more work by the panel to compile and update the level of indebtedness and the interest accruals.

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