Naira devaluation causing fuel scarcity – PPRA

Naira devaluation causing fuel scarcity – PPRA

The Executive Secretary of Petroleum Product Pricing and Regulatory Authority,
Senator Farouk Ahmed, said on Tuesday that the fuel scarcity currently being
experienced across the nation was caused by the two rounds of devaluation
carried out by the Central Bank of Nigeria between November last year and
February 2015.
The disclosure came just as officials of the Nigeria National Petroleum
Corporation, and heads of some subsidiaries under it failed to appear before the
Senate Committee on Petroleum ( Downstream) to defend their 2015 budget.
Chairman of the Committee, Senator Magnus Abe , lamented that by their action,
they had deprived Nigerians an opportunity to know reasons behind the current
fuel scarcity and possible way out.
But Ahmed, told the committee that the devaluation caused huge confusion in the
oil sector as the petroleum agency did not know the exchange rate to be used for
payment on fuel importation.
He said the marketers could not deliver the cargoes of fuel expected from them
because they were not sure of the exact delivery cost as a result of the
devaluation, adding that the old template used for paying the marketers was no
longer useful.
Ahmed said PPPRA had to seek the advice of the CBN before it could eventually
draw up a new template.
He, however, stressed that the crisis had eventually been resolved as the Budget
Office on Monday approved payment for outstanding bills that the marketers are
being owed.
He also said the truce was brokered after a meeting of the Ministry of Finance,
PPPRA and other relevant agencies.
Ahmed said, “The recent events have to do with delay in the arrival of cargoes.
Non-arrival of cargoes made it difficult for petroleum motor spirit to be delivered.
What actually complicated it was the devaluation of naira – two times.
“The first one that took place on November 28 devalued Naira from N155 to N168
to $1. The second one that took place on February 18 brought the exchange rate
to N199 to $1. “These two developments brought a lot of confusion into the oil
sector.
“Marketers were not sure of the actual delivery cost. We had to draw a new
template as advised by the CBN. The delay we have now is caused by the
November devaluation. But the reality is that the policy is clear now.
“The Minister of Finance, PPPRA and other agencies are working closely to
ensure that outstanding bills are paid. And that one had been done now.
“Yesterday, (Monday) we got an approval from the Budget Office for payment of
all outstanding bills. We have adjusted the template now. We have to put the
exchange rate at the interbank rate. Now, we have a direction”
Meanwhile, the non appearance of the the NNPC management to appear before
the committee to give its own side of the fuel scarcity story, had prompted the
committee chairman, to read a riot act to the corporation.
Abe said, “We invited NNPC to come and defend their budget. They didn’t show
up. They don’t even have the respect to give any response to the invitation. We
are directing the clerk to re-invite the NNPC, Department of Petroleum
Resources, Pipeline Product and Marketing Company and all refineries.
“All of them must appear before this committee on Thursday. All of us have our
roles in constitution. The letter should contain a a strong warning that NNPC must
never repeat this before the committee.
“NNPC has never agreed to bring their budget for discussion. This is the same
problem we have every year. I’m disappointed that after we agreed on this issue
last year, we are still back to it.”