Any hope that the crippling fuel crisis in the country will be resolved soon is unrealistic, TheCable can report.

Reason: the zero provision for fuel subsidy in the recently passed 2015 budget has placed bankers and oil marketers on the alert — financing imports of petrol and kerosene is now tagged “political risk”.

This has worsened the shortfall in fuel supply despite claims by the Nigerian National Petroleum Corporation (NNPC) that there is enough in stock.

Recent payments to marketers were sourced from a loan taken by the federal government, a development that effectively shook the confidence of the financial system on the immediate future of subsidy in the country.

As a result, most oil marketers have decided against importing fuel until the incoming government settles in and defines its direction on the deregulation of the downstream sector.

An industry source told TheCable: “We are stuck on all sides. The banks are unwilling to fund fuel importation because they do not want to take any risks that have political implications. They have classified it as political risk. They are not sure the incoming administration will be eager to pay up on subsidy, especially with the impression that it is all a scam.

“We are also stuck because we would rather have the incoming administration deregulate the sector so that we can run a market-based system, but nobody is sure of what the president-elect (Muhammadu Buhari) has in mind. This is the period of uncertainty and nobody wants to take a reckless plunge.”

He said many marketers ran into a crisis when the pump price was reduced in January by President Goodluck Jonathan because the naira was also devalued around the same time.

A typical fuel import order operates on a 90-day cycle and many marketers who placed orders in December 2014 were caught out.

Whereas they took loans at N158 to $1, they had to start paying back at N200 following the devaluation.

This was worsened by the fact that they had to then sell at a lower pump price of N87 in January.

An official of the ministry of finance, who declined to be named, said the fall in the value of naira and the increasing crude oil price have “made the situation more difficult than we thought”.

The source said: “Before the pump price of PMS was reduced to N87 per litre in January, crude oil price was a little over $50 per barrel. Ideally, it was the right time to deregulate so that the market could take care of itself and people would naturally see the sense in freeing the downstream sector from price controls.

“However, deregulation was the last thing you wanted to discuss within the political context at the time. Rather, the federal government came under pressure to reduce the pump price as was being done globally. People did not reckon with the fact that the exchange rate was under pressure because of the elections, so while we were gaining from lower crude oil price in terms of lower fuel import cost, we were losing because the naira had been devalued.

“All said and done, the subsidy remained. Today, crude oil price is over $60 per barrel, so the cost of importation has risen. The exchange rate has not improved. While the pump price is fixed at N87 per litre, the landing cost is a staggering N129.60,according to the PPPRA template. That means we are paying subsidy of at least N42.60 on every litre of PMS.”

Recently, the ministry of finance paid marketers N156 billion arrears as part of measures to encourage them to keep importing, but the crisis has even escalated.

The payment had two components: N100 billion IOU which the marketers were given in March and  N56 billion in interest payments.

The “interest payments” are meant to offset the cost of funds incurred by the delay in reimbursement of subsidy as well as the differentials in exchange rate.

Despite oil marketers being paid over N500 billion between December 2014 and now, they are still being owed N98 billion.

Technically, the marketers are not losing on the basis of falling exchange rate and accumulation of interest payments because the subsidy regime allows for the recovery of those costs.

However, the delay in payment, according to the industry source, causes cash flow problems and unsettles the banks who are “mortally afraid” of a major debt crisis if the Buhari administration takes a drastic action on the payment of the arrears left behind by Jonathan.

“Many banks had their fingers burnt in 2008 when they gave us loans and the naira was devalued. Moreso, risk management is on the front burner now. A new CBN governor came in 2009 and sacked bank chiefs on the basis of poor risk management. No bank MD wants to experience that again,” he said

http://www.thecable.ng/revealed-will-keep-queuing-fuel

Yes? am waiting for the revelation

Trinxie:
Yes? am waiting for the revelation

When we finish scamming ourselves we will rest

They fought Gej with all they had in 2012 when the inevitable was done to spearhead the country on the part of development but just like Judas, the true enemies of Nigeria gathered at Ojota in the name of occupy Nigeria protests to sells their souls for a plate of porridge and pure water. After being used by the owners of Oando and rest of the cabals, today, they are busy occupying various filling stations in Lagos and Abuja grinding their teeth whilst the cabals that sent them out in 2012 are busy making tremendous profits selling at #150 at the pumps and still sharing #500billion as subsidy largesse. So much of a wise move by my 'sophisticated ' brothers. Ndo nu

biafransoul:
They fought Gej with all they had in 2012 when the inevitable was done to spearhead the country on the part of development but just like Judas, the true enemies of Nigeria gathered at Ojota in the name of occupy Nigeria protests to sells their souls for a plate of porridge and pure water. After being used by the owners of Oando and rest of the cabals, today, they are busy occupying various filling stations in Lagos and Abuja grinding their teeth whilst the cabals that sent them out in 2012 are busy making tremendous profits selling at #150 at the pumps and still sharing #500billion as subsidy largesse. So much of a wise move by my 'sophisticated ' brothers. Ndo nu

I'm waiting whether they will demonstrate at Fawehimi's park. Naija and hypocrisy

still reading.....

biafransoul:
They fought Gej with all they had in 2012 when the inevitable was done to spearhead the country on the part of development but just like Judas, the true enemies of Nigeria gathered at Ojota in the name of occupy Nigeria protests to sells their souls for a plate of porridge and pure water. After being used by the owners of Oando and rest of the cabals, today, they are busy occupying various filling stations in Lagos and Abuja grinding their teeth whilst the cabals that sent them out in 2012 are busy making tremendous profits selling at #150 at the pumps and still sharing #500billion as subsidy largesse. So much of a wise move by my 'sophisticated ' brothers. Ndo nu

Jan 2012 . . . i remember writing about this

yang:
I m very surprised at the replies here. Subsidy ought to go. There is no way Nigeria should keep paying trillions to subsidize fuel alone while a few people profit from it. I am with the president on this one. It just does not make sense. This beggarly attitude of people has to stop. Blaming govt for everything. . . .Hoping Govt does this . . .Govt does that. Govt go marry wife for you still teach you how to yansh am.

Govt has no business doing business. . . How can a govt be importing fuel and you people say it should continue. . . . . . Everyone Insulting the President here is an enemy of the State and should be disregarded . . . . . You are all Probably ASUU Lecturers who have nothing else to do than to sit here and curse GEJ while waiting for Govt handouts.

Make Govt subsidize Garri too, and subsidize peak milk and sugar for you. That time you go know say you be Nigerian. . . . Make una go protest. . . . I dey my house. Talk is still cheap The last time I checked

Today we are back to the same story, that could have been solved 5yrs ago. By now the market would have been librealized like the Telecoms. typical Nigerian story, 1 STEP FORWARD, 3 STEPS BACK coupled with (pHD- PULL HIM DOWN SYNDROME) . I think NLC has serious funding from MOMAN which is crazy.

Omooba77:

I'm waiting whether they will demonstrate at Fawehimi's park. Naija and hypocrisy

No they dare not, they will only be prolonging their sufferings

yang:


Jan 2012 . . . i remember writing about this



Today we are back to the same story, that could have been solved 5yrs ago. By now the market would have been librealized like the Telecoms. typical Nigerian story, 1 STEP FORWARD, 3 STEPS BACK coupled with (pHD- PULL HIM DOWN SYNDROME) . I think NLC has serious funding from MOMAN which is crazy.

It was so painful that we lost such a golden opportunity. For now, still watching them in 3D. Hypocrites everywhere

Honestly am confused.....

ki02020:
Honestly am confused.....

you talk abt hypocrites as if its a one-sided problem. Who suffers again even if subsidy is removed?

The govt kept getting it wrong in every solution they proffered.

First, do u knw how many billions they wasted on refineries that were never repaired? First, it was a lie that it wld be, while every billion they claimed they spent were just their pocket money.

Second, we have forces that cld safeguard our pipelines at no extra cost but their salaries and operation bonus, instead, ur bower hat mofo was throwing the cakes at his brothers in the creeks (I knw u will live dt, right?), and recently, for scooping last minute favour, to the OPC that was even dormant and nonexistent to 80% of the Yoruba people.

Third, what are u saying abt ur brothers in the creek's who ensures theft and shortchange the nation? Oh, don't say it, I knw, it is our oil, right? As intelligent as u feigned, does that even begin to sound as a viable excuse to you?

Fourth, we blamed OBJ for mismanaging money meant for power revitalization, what has your jona done? Biliions of dollors spent and he only took us back 20yrs because the Megawatts hebis leaving us is worse that a quarter of what OBJ left.

These are the problem; you can't keep throwing the inefficiency of a govt to the people as a burden to bear when we all knw, that the cost of governance is even greater than the 13% earmarked for the masses.

You are the hypocrite here

Having devalued the naira, GEJ should not have reduced fuel price. There is still going to be further devaluation so the horizon is not looking bright. GMB should do the needful and remove the subsidy once and for all, let us buy petrol at the global market price.

The so called most educated tribe has hindered the growth and development of Nigeria

From fighting subsidy removal to installing a President whom they wish death so that their son will take over the presidency



YORUBAS HAVE KILLED NIGERIA







Buhari

Prove us wrong that you are not

BABA ONE CHANCE

BABA HYPOCRITE

BABA MAGICIAN


Prove us wrong by probing


Tinubu OBJ Saraki Atiku Rochas Amaechi


Prove us wrong by probing the corrupt Federal Civil Service which is dominated by Tinubu's people


Sir

Tinubu's people voted you because they believe they can steal the oil wealth and presidency through you


They believe Tinubu through Osinbajo can control your government the way Idiagbon did


Sir

They do not believe in change because if they do, they would have voted you in 2007 and 2011


Remember that you are a descendant of Usman Dan Fodio

Remember that your ancestors never allowed the Oduduwas deceive them


WISE UP

SLIDEwaxie:
you talk abt hypocrites as if its a one-sided problem. Who suffers again even if subsidy is removed?

The govt kept getting it wrong in every solution they proffered.

First, do u knw how many billions they wasted on refineries that were never repaired? First, it was a lie that it wld be, while every billion they claimed they spent were just their pocket money.

Second, we have forces that cld safeguard our pipelines at no extra cost but their salaries and operation bonus, instead, ur bower hat mofo was throwing the cakes at his brothers in the creeks (I knw u will live dt, right?), and recently, for scooping last minute favour, to the OPC that was even dormant and nonexistent to 80% of the Yoruba people.

Third, what are u saying abt ur brothers in the creek's who ensures theft and shortchange the nation? Oh, don't say it, I knw, it is our oil, right? As intelligent as u feigned, does that even begin to sound as a viable excuse to you?

Fourth, we blamed OBJ for mismanaging money meant for power revitalization, what has your jona done? Biliions of dollors spent and he only took us back 20yrs because the Megawatts hebis leaving us is worse that a quarter of what OBJ left.

These are the problem; you can't keep throwing the inefficiency of a govt to the people as a burden to bear when we all knw, that the cost of governance is even greater than the 13% earmarked for the masses.

You are the hypocrite here

Oga no too much long grammar.
Should subsidy go or not?

#Hypocriteseverywhere

soundtruth:
Having devalued the naira, GEJ should not have reduced fuel price. There is still going to be further devaluation so the horizon is not looking bright. GMB should do the needful and remove the subsidy once and for all, let us buy petrol at the global market price.

No way oo! subsidy must stay else we shall gather at Ojota again and 'occupy Nigeria'

#hypocriteseverywhere

On your own, GEJ should as a parting gift to Nigerians remove all subsidy.

Gabbysky:


Oga no too much long grammar.
Should subsidy go or not?

#Hypocriteseverywhere

answer this yourself, do u think subsidy being removed now won't destroy the common man?

Subsidy removal shld be planned, and that was what Jonathan promised us. He reduced the subsidy with the story that the saved cash will be used to improve power and provide infrastro. But what have we gotten? Empty reserve, depleted power supply and decreasing capital expenditure.

So, No, subsidy shldnt not be removed. Not now.

Block the loopholes and remove it gradually where the consumption of petrol is not going to be a determinant to survival of the common man as it is now.

SLIDEwaxie:
answer this yourself, do u think subsidy being removed now won't destroy the common man?

Subsidy removal shld be planned, and that was what Jonathan promised us. He reduced the subsidy with the story that the saved cash will be used to improve power and provide infrastro. But what have we gotten? Empty reserve, depleted power supply and decreasing capital expenditure.

So, No, subsidy shldnt not be removed. Not now.

Block the loopholes and remove it gradually where the consumption of petrol is not going to be a determinant to survival of the common man as it is now.

We will stop deceiving ourselves,we will wise up. People have started sleeping in filling stations again

In PHC, you drive into any filling station, agree to buy at 110ngn, fill up your tank, pay after calculating price with a calculator...you drive out happy...tension free, stress free...

The power of a free and open market!

Is it not better than sleeping in the filling stations, pay 500ngn gate fee and still buy at at 110ngn per litre?

Nigerian wise up. Fuel Subsidy must go NOW!