THE SUBSIDY FACTS:

 

1. 90% of petrol consumed in Nigeria is imported due to inadequate and limited local production. 2.  This importation is carried out by Nigerian National Petroleum Corporation (NNPC), Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association (DAPPMA), and other independent marketers under permits issued by Petroleum Products Pricing Regulatory Agency (PPPRA). 

3. The PPPRA has a 26 member Board which inter alia includes the Central Bank of Nigeria (CBN), Federal Ministry of Finance (FMF), Nigeria Employers Consultative Association (NECA), Nigeria Labour Congress (NLC), Trade Union Congress (TUC), Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), National Union of Petroleum and National Gas Workers (NUPENG), National Association of Road Transport Owners (NARTO), National Union of Road Transport Workers (NURTW), Nigerian Guild of Editors, National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), MOMAN, DAPPMA, Independent Petroleum Marketers Association of Nigeria (IPMAN), amongst others. 

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4.  The PPRA pricing template was established by its Board and was utilised to calculate on a daily basis the landed price of regulated products. This formed the basis of subsidy claims made by Participants under the Petroleum Support Fund (PSF) (www.pppra-nigeria.org). 

5. The PSF is funded by the Federation of Nigeria, administered by the PPPRA and supervised by the Ministry of Finance. 

6. The difference between the higher cost of imported PMS as ascertained by PPPRA and the then lower regulated pump price of N65 per litre was the subsidy that was repaid to importers after being subjected to an audit by Government appointed auditors. For example, as at 6 Dec 2011, the total cost PMS imported product is as detailed below;

 

7.  ANY MEMBER OF THE PUBLIC WHO BOUGHT PETROL OR USED PETROL BOUGHT AT N65 PER LITRE (NOW 97 PER LITRE) BENEFITED FROM THE PSF AND WAS A BENEFICIARY OF SUBSIDY. Our members who participated in the Subsidy Fund were merely claimants who were entitled to reimbursement of cost incurred in the importation and delivery of petrol into Nigeria . Claiming subsidy under the PSF for reimbursement is neither an unwholesome act nor is it illegal. 8. At inception, participating under the PSF was limited to marketing companies that owned storage of minimum 5,000 metric tons and a network of petrol stations/retail outlets. The PSF was to be funded by contribution of the three tiers of government during times of under recovery and by funds contributed by the participating marketing companies during periods of over recovery. For the scheme to work, only bona fide companies with meaningful and identifiable assets in the downstream could be held accountable. Unfortunately, a change in the guidelines of the PSF in particular Part V, in 2007, allowed companies with nothing more than a throughput agreement to operate under PSF, this saw the emergence of ‘briefcase’ companies (with no asset base nor accountability) in the PSF scheme. 9.   MOMAN members who have extensive storage and distribution capacity have invested massively in retail distribution infrastructure and assets nationwide, ensuring adequate petroleum products supply to all parts of the Federation and gainful employment for thousands of Nigerians. 10. RECENT PUBLICATIONS AND STATEMENTS REFERRING TO ALL CLAIMANTS UNDER THE PSF AS MARKETERS AND ‘CABAL’ ARE FALSE, UNFOUNDED AND WITHOUT ANY MERIT WHATSOEVER. 

MOMAN has always been a proponent of the total deregulation of the downstream sector and viewed the Subsidy Scheme as an intermediate measure. As responsible entities, we hold efficient utilisation of national and corporate resources very dearly. 

We welcome any inquiry or investigation into our activities under the PSF which will no doubt establish utmost good faith on the part of our members. FURTHERMORE, MOMAN COMMITS TO PARTICIPATING IN THE PSF ONLY ON THE BASIS OF TOTAL TRANSPERENCY AND ACCOUNTABILITY. 

MOMAN is a law abiding body and remains committed to supporting the Nigerian People and the Federal Government in ensuring that petroleum products are made available nationwide.Signed

Thomas Olawore

Executive Secretary

Major Oil Marketers Association of Nigeria .

 

My Reply

Gary K. Busch    This is more than disingenuous. It mentions the cost of the PMS to import the fuel to Nigeria but it doesn't mention the price these importers pay for the crude leaving Nigeria for overseas refineries. The cost to the importer, based on the price of the crude under the 450,000 bbl/day is less than 41 Naira a litre delivered back to Nigeria. Moreover, the profit made on the refined output of the Nigerian crude from which this PMS (and diesel and kerosene also delivered to Nigeria at a profit) is equivalent, at today's netback for the remainder of the refined barrel not imported to Nigeria, at around US$46 per barrel (or 7,400 Naira a litre) - not one kobo of which is paid to NNPC or the Treasury. So, there is no subsidy at all. The 65 Naira price already included a profit of 24 Naira a litre. This 24 Naira is a subsidy to the importers not the Nigerians. In addition, the unreturned profit for the refined product not imported to Nigeria equals 445,000 barrels times USD$46 or USD$20,930,000 a day. This is why Nigerian importers are rich beyond everyone's dreams and why most Nigerians are poor and without basic services. What a farce!