Monday, 27 September 2010
PPPRA issues new conditions for allocation of import approvals
The Petroleum Products Price Regulatory Agency (PPPRA) has issued new conditions for the allocation of import approvals with effect from Q4 of this year. According to reports, PPPRA's decision stems from its concern that in the third quarter only 11 of the 50 approved marketers that were issued import licenses, actually submitted the required performance reports. The result was that only 22 per cent of the anticipated totals were imported.
The new conditions are also said to be in line with the objections raised by established marketers that the introduction of the sovereign debt notes scheme had brought about an influx of marketers who had no facilities or infrastructure and were not genuine marketers in the petroleum products import allocation scheme. According to reports, the new conditions which emerged after a meeting between PPPRA and marketers include the rule that marketers will now be required to produce proof of financial capacity, as evidenced by a letter of undertaking from a bank.
There is a penalty rider to the condition, which states that marketers who connive with banks to produce misleading statements of financial capacity will be subject to a fine of N10 million. The PPPRA will also no longer give approvals to transfer fuel import permits to third parties – this is in order to discourage the practice of bogus marketers simply obtaining import approvals with the sole intention of transferring/selling them on to third parties.
The PPPRA has also suspended the issuance of new import licenses and the revalidation of expired import licenses. This will enforce optimal performance by forbidding marketers who have not exhausted their allocation to roll it over to the next quarter. This use it or lose it clause means that the marketer who does so loses the right to revalidate the license and use it for the next quarter.
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