The Federal Government has commenced the process of paying oil marketers the arrears it owes the marketers.
A statement from the Debt Management Office (DMO) last night stated that it has “commenced the accelerated implementation of the Programme in line with the process approved by the Federal Executive Council (FEC).
The approved process the DMO revealed will be through the issuance of promissory notes to the oil marketers.
The DMO also indicated that it would meet with the oil marketers in November 2018.
The obligations due to the oil marketers represent interest accruals and foreign exchange differentials.
The DMO explained that “the government of President Buhari, as one of its strategies to address inherited arrears to various contractors, approved the issuance of Promissory Notes to various categories of creditors.”
“After the approval by the Federal Executive Council (FEC), the President presented a request to the National Assembly, as required by the Fiscal Responsibility Act, 2007. The categories of creditors for whom the settlement of arrears was approved by FEC include pensioners and staff, contractors, construction companies, exporters, DisCos, GenCos, State Governments, Judgement Debts, as well as the petroleum marketers.”
To ensure Transparency and Value for Money to the Federal Government in the settlement of these arrears, the FEC had specified the processes to be adopted in the issuance of the Promissory Notes, one of which is the validation of the claims by an International Accounting Firm operating in Nigeria.
The benefits of this initiative by the Buhari Administration include “the return by contractors to project sites, thereby improving infrastructure and creating jobs. Another benefit is that there would be an improvement in the ability of banks to lend to the real sector, since some of the creditors to be settled are indebted to banks and the issuance of the Promissory Notes will enable them to repay their debts to the banks.”
To arrive at the decision to expedite the settlement of oil marketers arrears, the DMO in its statement said “the Senate Committee on Downstream Petroleum Sector called a meeting of stakeholders on Wednesday, October 31, 2018 to discuss the issue of the outstanding payments to oil marketers. At the meeting were the Federal Ministry of Finance, the Debt Management Office (DMO), the Central Bank of Nigeria (CBN), the Petroleum Products Pricing Regulatory Agency (PPPRA) and representatives of oil marketers.”
The Chairman of the Senate Committee, Senator Kabiru Marafa, was said to have he called the meeting to ascertain the status of the implementation of the approvals given by the National Assembly for the settlement of arrears to oil marketers.
The Committee also requested the Central Bank of Nigeria (CBN) “to confirm the position on a statement by oil marketers that there was an agreement to stop the accrual of interest on loans owed by the oil marketers to banks.”
The Senate Committee had earlier approved an amount to be paid to the oil marketers in July 2018, but the complete approval of the National Assembly, required by law for the issuance of Government Debt Securities, was only received when a resolution conveying the approval of the House of Representatives was issued on September 26, 2018.
“On the strength of the provisions of the law, therefore, implementation could not have commenced prior to September 26, 2018” the DMO said.