PPPRA grants fuel import approvals to NNPC, marketers- july 2010

The Petroleum Product Pricing Regulatory Agency has granted petrol import approvals for the third quarter of the year to the Nigerian National Petroleum Corporation, oil marketers and other importers. The Executive Secretary of the Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, told our correspondent in a telephone interview on Tuesday, that the association’s members had received approvals for the importation of petrol for the third quarter from the PPPRA. ”I can confirm to you that we have received import approvals from the PPPRA and our members are continuing product importation,” he said. He also disclosed that the current payment system through Sovereign Debt Notes was working well as importers were getting paid as and when due. The PPPRA, according to investigation, is importing about four billion litres of petrol for the third quarter, which is the same volume imported in the second quarter. Meanwhile, the Federal Government‘s spending on fuel subsidy has hit N120bn, our correspondent gathered. It was learnt that the amount was the total expenditure between the first and second quarters of the year. A top official in one of the government agencies managing the disbursement of the subsidy to importers told our correspondent recently,” I can tell you that the Federal Government has spent not less than N120bn so far, between January and June, on fuel subsidy.” ”We have not been owing importers because of the introduction of the Sovereign Debt Note, which is being issued to importers after importation as a guarantee for payment.” The Federal Government started using Sovereign Debt Notes to guarantee payment for fuel importation by importers in April this year. The current market price of petrol is N107.16 per litre although it is still being sold at N65 per litre. According to the PPPRA‘s pricing template of June 22, the expected price of an imported litre of petrol is N107.16, thus the difference between the expected price and the capped price of N65 per litre is N42.16 per litre. A spokesman for the major oil marketers had told our correspondent in a telephone interview in May that the group had started receiving the payment guarantees since the middle of April. ”You can see that importation of products has been stable because we have been getting SDNs from the government,” he said. The Debt Management Office manages the issuance of SDNs to fuel importers for payment for products imported under the Petroleum Support Fund being managed by the PPPRA. This serves as a guarantee that the debt would be paid within 45 days stipulated under the PSF arrangement. It was learnt that whenever products were imported, the Nigerian Customs Service, Nigeria Ports Authority, Department of Petroleum Resources, auditors from the ministry of Finance and PPPRA officials usually verify that the products had arrived. A PPPRA source told our correspondent, ”After that, the marketers will file claims for payment to the PPPRA, following which the PPPRA will issue a Sovereign Debt Statement to the marketer or importer and copy the Ministry of Finance and the Debt Management Office. ”After this, the marketer will go to the DMO for the issuance of the Sovereign Debt Note. After the issuance of the SDN, the Central Bank of Nigeria is bound to effect the payment within 45 days stipulated in the SDN,” the source said.