Wednesday, November 7, 2012

Fuel shortage will worsen during yuletide – Marketers


Major oil marketers have warned that the current scarcity of petrol will worsen during the Christmas and New Year period if nothing is done to reverse the ugly trend.
According to a top official of the Major Oil Marketers Association of Nigeria, who asked not to be named, with the expected demand upsurge during the yuletide period, the shortage will worsen except supply is increased substantially.
The daily petrol demand in the country is currently in the region of 40 million litres, but it was gathered that the market was currently being under-supplied.
The official told our correspondent on the telephone on Tuesday that the main cause of the current scarcity of the product was inadequate supply.
He said, “The Federal Government should pay us our money (subsidy money) so that we can flood the market with petrol. The Nigerian National Petroleum Corporation has not been supplying enough petrol to the market and the NNPC alone cannot do it.
“The System 2B pipeline being out of service is just a cheap excuse. The real reason is that supply is inadequate and until we resume full fuel importation under the subsidy arrangement, the shortage will not go away.”
“The Federal Government still owes us over N100bn and it has been paying the debt piecemeal,” the official added.
The Minister of Finance, Dr. Ngozi Okonjo-Iweala, recently said the N888bn allocated for subsidy payments in the 2012 budget should be enough to pay petroleum products’ importers.
She told journalists in Tokyo, Japan, recently that the fund had not been exhausted and should be enough to pay the subsidy bills for this year.
“We have not exhausted the fund and there may not be a need for a supplementary budget,” Okonjo-Iweala said.
The Federal Government spent over N1.7tn on fuel subsidy in 2011, but it had since tightened the payment system and is currently prosecuting some oil marketers for subsidy fraud.
The government is also making efforts to revamp the nation’s comatose refineries with about $1.6bn set aside for their turnaround maintenance.
The nation has 445,000-barrel per day crude oil refining capacity but has been relying on petroleum product imports for domestic consumption.
The government has, however, invited the original builders of the refineries in Port Harcourt, Warri and Kaduna to help revamp them.
Also, it has earmarked N971bn for petroleum subsidy payments in the 2013 budget estimates presented to the National Assembly by President Goodluck Jonathan.
The government’s efforts, according to analysts, suggest that it may not completely remove fuel subsidy until it gets the local refineries working optimally.
Meanwhile, the Federal Government is targeting to raise the amount in the Excess Crude Account to $10bn between January and February, 2013.
Our correspondent gathered from sources close to the Ministry of Finance that the government was seeing the balance in the account, currently at $8.4bn, climbing to $10bn by the first quarter of the year.
It was gathered that the Finance ministry was anticipating that the fund would increase to $10bn, even if deductions had to be made from the account to pay for petroleum subsidy in 2012.
The country currently saves oil revenue above the benchmark budgeted price of $72 per barrel in the ECA.

The Punch

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