By Omoh Gabriel, Business Editor
LAGOSÂ â€” THE Federal Government is set to reduce the Nigeria Ports Authority, jetty charge by 50 per cent, preparatory to the deregulation of the downstream sector of the oil industry.
This is one of the several measures being adopted by the Government to cushion the effect of deregulation of prices of petroleum products. Other measures to be taken by the government include resuming routine maintenance of jetties such as the sweeping of Apapa jetty; commencing the dredging of Apapa jetty, including exploring the scope for private involvement and seeking the cooperation of all Nigerians in the implementation of the oil sector reforms being embarked upon by the government.
Also, the government is meeting with relevant stakeholders in an attempt to carry all Nigerians along in the reform process. The Minister of Finance, Dr. Mansur Mukhtar, who is the chairman of the reform implementation committee and the Chief Economic Adviser to the President Mr. Tanimu Yakubu have already met with Independent and Major oil marketers and the oil unionsÂ â€”Â PENGASSAN and NUPENG.
The Federal Governmentâ€™s team, it was gathered, will continue its consultation, this week, with members of the Organised Private sector; Manufacturers Association of Nigeria, MAN; Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA; Nigeria Economic Summit Group, NESG, among others.
According to those close to the consultative meeting, the objectives of the meeting, as stated by the Minister of Finance, among other things, included discussing the challenges faced by the marketers regarding the outstanding subsidy payments, which runs into several billions of naira and discussion on the reforms of the downstream petroleum sector being envisaged by the government.
It was gathered that the Federal Government insisted on the need to have a common understanding on the issues with key stakeholders with a view to addressing the various challenges confronting both the government and the marketers.
The Federal Government had estimated that it will spend N600 billion on petroleum subsidy this year alone, stating that the money will come from excess crude account savings.
Minister of Finance, Dr. Mukhtar, who made the disclosure, said that government sees â€œsubsidies as a major challenge in the downstream petroleum sector which needs to be addressed.â€ He stressed the need for all stakeholders to collaborate with government in the implementation of the envisaged reforms. He further disclosed that about 29 per cent of the foreign exchange sales were used to finance the importation of refined petroleum products in January.
Dr. Mukhtar who presented the position of government was said to have disclosed to those who attended the meetings the need for government to â€œAddress inefficiencies in the Downstream Petroleum sectorâ€Â highlighting the rationale for the reforms as well as policy measures that will remove supply bottlenecks and enhance domestic product supply within a competitive environment.â€
The source said the government sees â€œsubsidies as a major challenge in the downstream petroleum sector which needs to be addressed. He stressed the need for all stakeholders to collaborate with government in the implementation of the envisaged reformsâ€.
A representative of Major oil marketers at the meeting was said to have expressed concern regarding their inability to import substantially, arising from the inability on the part of the government to settle outstanding liabilities (which run into billions of Naira) by the government/PPPRA. He stressed the difficulties faced by the marketers in accessing credit facilities from the banks as well as volatility in foreign exchange market.
He was said to have also stated that there were steady, but significant declines in the volume on products imported by private marketers between January and August, 2009.
The marketers also expressed concerns regarding delays in payments, which run into several months, well above the recommended 45 days, and frowned at the bureaucratic red-tape involved in the processes.
The marketers also were said to have highlighted the fact that high interest charges are accrued on current liabilities due to delayed payments.
Responding to the remarks made by the representative of oil marketers according to those at the meeting, PPPRA responded by stating that most outstanding claims had been processed.
A representative from NNPC (PPMC MD) was also said to have responded by expressing sympathy with the oil marketers, and noted their difficulty in sourcing funds from banks.
He added that NNPC was watching the industry, and would intervene if there was a shortfall from the major marketers. He further stated that with deregulation, products will be readily available, adding that deregulation was best for the country.
According to him, NNPC has reserves that could last till the 1st quarter of 2010, and pledged to ensure that the supply of products into the market does not fail.