page 21 new 2 lead business

page 21 new 2 lead business

Subsidy may remain, as FG approves N413bn for oil marketers

By Daniel Adugbo

The federal government has approved the immediate payment of N413 billion to oil marketers as outstanding payment for subsidy claims.

This is the first subsidy payment to be made by the Buhari administration after subsidy backlog inherited from the former government had climbed in excess of N300bn and with fuel scarcity already hitting many states.

The Nigeria National Petroleum Corporation (NNPC), in a statement yesterday by its spokesman, Ohi Alegbe, said the payment was part of measures to eliminate the noticeable fuel queues across some major cities in the country.

“It is our belief that with the outstanding payment due to oil marketers now assured, the marketers and other downstream players will join hands with the NNPC to guarantee that the nation remains wet with petroleum products all year round,’’ the Corporation said.

It also said it has injected additional volumes of petrol to enrich product availability in the affected states.

Oil marketers had, in June this year, said they were still being owed over N291bn subsidy claims.

At a time, only the NNPC was said to be importing petrol because members of the Major Oil Marketers Association of Nigeria (MOMAN) had refused to import owing to subsidy arrears owed them by the federal government.

MOMAN Executive Secretary, Obafemi Lawore, could not be reached when contacted on the latest N413bn approval for its members.

A transition committee set up by President

Muhammadu Buhari shortly after he won the presidential election advised him to end the fuel subsidy programme and privatise the nation’s four refineries.

“I have received … literature on the need to remove subsidies, but much of it has no depth,” Buhari had said.

Some analysts say the recent approval may be an indication that the president has finally made up his mind to retain fuel subsidy.

A professor of Energy Economics, Prof. Adeola Adenikinju said it is high time the government came out with a long-term policy that will address this issue once and for all so that Nigerians will know that there is a road map.

“The President himself has said that subsidy is the only benefit Nigerians are getting, so he seems reluctant to remove subsidy. As long as you have this kind of signal, subsidy will continue. We don’t even have money now; government is complaining about no money, yet you are still paying huge subsidy to these marketers,” he said.

The Nigeria Programme Coordinator for

the Natural Resource Governance Institute, Dauda Garuba said what the government has done is paying debt that it owed marketers and does not in any way represent a policy statement on what to do with subsidy.

However, he said, “I strongly feel the Buhari administration needs to engage the Nigerian public on what to do with subsidy across the board. Countries are either dropping or rejigging subsidy.”

Head of Research at Ecobank, Dolapo Oni said the government had no option but pay the debts, “but the question is: where is the money going to come from? The budget for this year only had N145bn for subsidy. So far, with this payment we would have spent close to N700bn now.”

MTN must obey Nigeria’s laws – South Africa’s Deputy President

MTN Group Ltd., Africa’s biggest mobile-phone company that’s facing a $5.2 billion fine in Nigeria, must follow the rules in countries where it does business, South African Deputy President Cyril Ramaphosa said.

“We will obviously be taking note of what is happening with a view of seeing how the company involved responds and reacts in this matter,” Ramaphosa told lawmakers in Cape Town on Wednesday. “We would like our companies to comply with the laws and regulations of countries where they operate, without violating those.”

The comments by Ramaphosa, a former chairman of MTN, suggest South African authorities may leave MTN to fend for itself as it seeks to have the penalty reduced.

MTN shares have slumped 14 per cent since Oct. 26, when Nigeria’s industry regulator imposed the fine for failing to disconnect customers with unregistered phone cards.

The Nigerian Communications Commission (NCC) has given MTN until November 16 to pay the fine, which relates to the timing of the disconnection of 5.1 million subscribers and is based on a charge of N200,000 ($1,005) for each unregistered customer. Nigeria is Johannesburg-based MTN’s biggest market with 62 million clients as of September.

“It does seem like in the case of Nigeria, there were issues, and those issues need to be addressed,” Ramaphosa said. “If this fine is indeed imposed as it is, it is going to impact on South Africa as well, as our revenue fortunes from a taxation point of view are going to be lower.”

Lawmakers plan to summon MTN officials to explain why the company was fined, Nkhensani Kubayi, chairwoman of Parliament’s telecommunications committee, said by phone from Cape Town. The panel also intends questioning the South African industry regulator to determine whether MTN is compliant with local rules, with hearings likely to take place next year, she said.

“I believe the South African government should be doing more than having a watching brief on what MTN does,” Athol Trollip, a lawmaker for the main opposition Democratic Alliance, said by phone. “They should give leadership on this.”

(Bloomberg)