Subsidy Removal: Government Meets With Oil Marketers To Discuss Equalization Fund’s Scrapping

The federal government has reportedly held a meeting with oil marketers to discuss the scrapping of the Petroleum Equalization Fund (PEF), a decision that was announced earlier this month.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and oil marketers held the meeting in Abuja on Wednesday, where they discussed plans to close PEF accounts next month, Punch reported on Sunday.

A former chairman of the Major Oil Marketers Association of Nigeria, Tunji Oyebanji, said, "The meeting was a consultation with the NMDPRA on implementation of the PIA, clarifications of various issues, applying for licenses, quality issues and closure of the Petroleum Equalization Fund."

"Some people owe PEF and it also owes some people. There is a need for reconciliation to close out the account."

PEF was established by the Nigerian government in 1975 under the Petroleum Equalization Fund Act to ensure that there was price uniformity in petroleum products, regardless of the location across the country.

Independent Petroleum Marketers Association Of Nigeria's National Controller of Operations, Mike Osatuyi, revealed that the fund currently owes the members N80 billion.

"We do not owe the Fund because before you lift products, you would have made deposits," Osatuyi told Punch. "But the Fund owes us N80bn which would be paid before the closure. The money piled up over some time but it has stopped piling up."

He continued, "The role played by the Fund has ended upon the full deregulation of the downstream sector as stated in the PIA. No need for the Fund again since we have deregulated."

Osatuyi shared that the date at which IPMAN members will receive their funds has not been announced. However, he assured that they will be paid before the accounts were closed, adding that the process has already started.

Depots and Petroleum Products Marketers Association of Nigeria also shared that their members were being called for a reconciliation meeting.

A source from the association told Punch they were aware the fund was closing.

"We are now at the stage where our members and other depot owners are being invited to reconcile the account," the source said. "They informed us that the account would be closed in the next 20 days, starting from yesterday (Wednesday) when the meeting was held."

The fuel subsidy removal announcement was made by the new president of Nigeria, Bola Ahmed Tinubu, on May 29. Following the removal, The National Economic Council disclosed last week that they were considering the idea to pay N702 billion to civil servants as a cost of living allowance.

The governor went on to share that the N702 billion was a suggested amount for the labor category to "cushion the effect on workers on a new allowance that will be tagged cost of living adjustment allowance."