By Martin Ayankola Tuesday, 6 Jul 2010   

 

The Federal Government‘s spending on fuel subsidy has hit N120bn, our correspondent has gathered.It was learnt that the amount was the total expenditure on subsidy 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 on Monday, “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 the SDN to guarantee payment for fuel importation in April this year.

 

The current market price of petrol is N107.16 per litre, although it is still being sold at the official price of N65 per litre.According to the Petroleum Product Pricing Regulatory Agency‘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 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 have been stable because we have been getting SDNs from the government,” he said.

 

The Debt Management Office controls the issuance of SDNs to fuel importers for products imported under the Petroleum Support Fund being managed by the PPPRA.This serves as a guarantee that the debt will be paid within 45 days stipulated under the PSF arrangement.

 

When products are imported, the Nigerian Customs Service, Nigerian Ports Authority, Department of Petroleum Resources, auditors from the Ministry of Finance and PPPRA officials will verify that the products have 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 SDN.”

 

(Source:Punch)