Thursday, June 13, 2024

Fuel Scarcity May Bite Harder As Oil Marketers Plan Shut Down Of Fuel Depots

The Depot and Petroleum Products Marketers Association of Nigeria, DAPPMAN has announced that it will sack its staff, numbering over 10,000, and shut down all its depots in less than 14 days.

This was contained in a letter sent to Emmanuel Ibe Kachikwu, minister of state for petroleum resources. The letter, signed by Olufemi Adewole, DAPPAM’s executive secretary, was dated February 20.

The association said the decision was taken because members could no longer continue operations due to N650 billion owed them by the federal government.

“In the light of the foregoing, Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) members do not have any other option open to us to forestall increasing debt burden of borrowing to pay staff than to immediately commence massive staff disengagement,” the letter read.

“The unfortunate primary fallout of this step is the likely shutdown of all DAPPMAN depots nationwide due to lack of manpower to operate same pending the time the federal government will pay off its indebtedness to petroleum marketers.

“This, unfortunately, will have a multiplier effect on the nationwide supply and distribution of petroleum products which presently is a struggle.

“This letter serves as a fresh 14-day reminder from today and an opportunity for the federal government tiers and its agencies to speedily approve and pay off its remaining subsidy era indebtedness to all our members and indeed all petroleum marketing companies.”

In an initial letter sent to President Muhammadu Buhari, DAPPMAN said members could no longer access bank funds for their operations and gave a 21-day notice beginning January 24 before it would lay off workers.

It also said that lending banks in conjunction with the Assets Management Corporation of Nigeria (AMCON) are in the process of auctioning the properties provided by marketers as security for loans.

“These debts came about as a result of:
1. The foreign exchange differentials which arose as a result of the initial devaluation of the naira (by the last administration) from the initial N165/$

“2. The interest component that arose due to delayed reimbursement also by the same administration which the federal government had approved for payment to marketers but which was not fully settled by the appropriate federal government agencies.

“3. The second forex differential component and obviously the largest chunk is due to the last but further devaluation of the naira from N195 to N305 to $1, while he federal government agencies had based their reimbursement calculation on N197/$; this devaluation left petroleum marketers within our association with additional unplanned debt burden in excess of N300bn.

“As a result of 1, 2 & 3 above, the downstream sector as a whole, has been saddled with a debt burden of over N650bn which keeps rising alongside the previous debts because the banks keep charging interests and will continue to do so until the total debt is fully liquidated.”



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