Connect with us


We Owe Banks $1bn, Oil Marketers Lament



Oil Declines Below 60USD A Barrel
  • We Owe Banks $1bn, Oil Marketers Lament

Oil marketers under the aegis of the Independent Petroleum Products Importers have said they owe some Nigerian banks over $1bn used for the importation of petroleum products, with accumulated interest of N160bn.

They said the interest had accumulated because the government could not pay them or pay the banks’ interest on the loans as agreed, adding that the inability to pay or service the loans had stalled the importation of fuel.

The IPPI, in a communiqué signed by its Legal Adviser, Mr. Patrick Etim, after a meeting in Lagos, stated that some of the marketers, which included members of the Major Oil Marketers Association of Nigeria, Independent Petroleum Marketers Association of Nigeria and Depot and Petroleum Products Marketers Association, had begun to close shops due to the indebtedness.

According to the communiqué, the marketers are unable to pay because the sums they owe the banks form part of what they are in turn owed by the government.

It stated that the government’s debt arose from the petrol subsidy scheme whereby the Federal Government entered into a contract with the IPPI mandating the members to import and supply petrol to the market on condition that it would pay to the body the difference between the landing cost of and pump price as fixed by the government, provided that the landing cost was higher than the selling price.

It said, “When the selling price of petrol was increased from N97 to N145 per litre in May 2016, it was based on an exchange rate of N285/$1, resulting in a 45 per cent increase. On June 20, 2016, the naira was devalued from N285/$1 to N305/$1, which is an increase of seven per cent, but the fixed pump selling price of petrol has not been increased. This means that petrol must be subsidised.

“The banks are worried that financing new petrol imports when outstanding loans, interests and charges have not been paid will be foolish, especially when it is clear that the imports will represent an unmitigated loss to the importers based on the landing costs.”

According to the communiqué, the claims by the IPPI arose largely from the importation of petroleum cargoes authorised by President Goodluck Jonathan’s government under the subsidy scheme.

The association noted, “It is said that government is a continuum, therefore, the contracts of the President Jonathan government with the IPPI will remain binding on successive governments. There is a need for President Muhammadu Buhari’s government to keep improving governance, especially by correcting the wrongs of previous governments, and making the government responsible to its contracts and responsibilities.

“Government, through the Central Bank of Nigeria, has initiated intervention programmes for strategic sectors such as agriculture, manufacturing, petroleum products’ importation and aviation. The CBN’s intervention programmes are primarily to stimulate growth in Nigeria’s foreign exchange earning capacity, and to prevent collapse of the banking system due to the huge exposure of the banks.

“The CBN has also offered foreign exchange to the IPPI under a special window aimed at liquidating outstanding matured Letters of Credit at an exchange rate of N305/$1. However, the exchange rate of N197/$1 when the Letters of Credit were initially opened for the IPPI members and transactions concluded and the current CBN offer rate of N305/$1 is an increase of 55 per cent and a significant rate differential.”

It added, “This means that for every 15,000MT of petrol imported by the IPPIs at a rate of $500 per metric tonne and whose foreign exchange differential claims has not been paid, then it means that the cargo of 15,000MT imported at the N197/$1 rate will now be given foreign exchange at the rate of N305/$1; by implication, a cargo of 15,000MT at $500 per MT is $7,500,000 or N1,477,500,000 at N197/$1 rate, or N2,287,500,000 at N305/$1.00 rate.

“If these outstanding payments to the IPPIs are made at N305/$1, they will suffer a loss of N810,000,000 per 15,000MT cargo of petrol. Government’s delay in paying debts to the IPPIs and the difficulty they face in procuring forex at equitable rates will likely see the extinction of many of the IPPIs in 2017 thereby, creating petroleum products’ shortages and attendant insecurity.”

Meanwhile, the group financial loss of the Nigerian National Petroleum Corporation increased to N180.48bn in November 2016.

According to the latest operations and financial report of the NNPC released in Abuja on Monday, the national oil firm’s loss increased from N161.8bn in October last year to N180.48bn in November.

The latest losses were NNPC’s total deficit beginning from January 2016 up until the month under review.

The corporation also recorded a year-to-date revenue of N1.52tn as against an expense of N1.7tn.

The report indicated a trading deficit of N18.72bn by the corporation for the month of November alone.

This represents an increase of N1.87bn against the trading deficit recorded in October.

The NNPC said, “The marginal increase in the trading deficit was due to an upsurge in the Integrated Data Services Limited’s operating costs, which is attributed to the ongoing mobilisation activities in both the Benue Trough seismic data project located in Bauchi, and Party 05 in Elele, Rivers State, despite an improved revenue generation.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Portland Paints, Chemical and Allied Products Plc Agreed to Merge



Portland Paints

Portland Paints, Chemical and Allied Products Plc Agreed to Merge

Portland Paints and Products Nigeria Plc and Chemical and Allied Products Plc have agreed to merge, according to the latest statement from both companies.

In a statement released through the Nigerian Stock Exchange, the Board of Directors of CAP said we are “pleased to inform you that following discussions and negotiations, the Boards of CAP and Portland Paints have reached an agreement to undertake a merger between both entities (the “Merger” or the “Proposed Merger”).

Accordingly, we “hereby present to you the terms and benefits of the Proposed Merger for your consideration and seek your support and approval to effect the Proposed Merger.

“The Proposed Merger presents a compelling opportunity to create significant value for shareholders of CAP and achieve the company’s strategic growth objectives as a larger company with a broader product portfolio, more corporate owned brands and diversified revenues.

“The resultant entity is also expected to benefit from enhanced distribution capabilities in addition to economies of scale and operational efficiencies.”

Continue Reading


Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17




Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17

Tony Elumelu owned Heir Holdings Limited and its related company Transnational Corporation of Nigeria Plc on Friday announced it has completed the purchase of 45 percent stake in Oil Mining Lease (OML 17) through TNOG Oil and Gas Limited.

The acquisition includes all assets of Shell Petroleum Development Company of Nigeria Limited (30 Percent), Total E&P Nigeria Ltd (10 percent) and ENI (five percent) — in the lease.

It was further stated that TNOG Oil and Gas Limited will also have the sole right to operate OML 17.

The field presently has a production capacity of 27,000 barrels per day. Also, there are estimated 2P reserves (proven and probable) of 1.2 billion barrels and an additional one billion barrels in possible reserves — all of oil equivalent.

A consortium of global and regional banks and investors provided a financing component of $1.1 billion for the largest oil and gas financing in Africa in over a decade.

In a statement released on Friday, Shell said the completion was after all the necessary approvals have were received from authorities.

“A total of $453m was paid at completion with the balance to be paid over an agreed period. SPDC will retain its interest in the Port Harcourt Industrial and Residential Areas, which fall within the lease area,” the SPDC said.

Speaking after the completion of the deal, Elumelu said “We have a very clear vision: creating Africa’s first integrated energy multinational, a global quality business, uniquely focused on Africa and Africa’s energy needs. The acquisition of such a high-quality asset, with significant potential for further growth, is a strong statement of our confidence in Nigeria, the Nigerian oil and gas sector and a tribute to the extremely high-quality management team that we have assembled.

“As a Nigerian, and more particularly an indigene of the Niger Delta region, I understand well our responsibilities that come with stewardship of the asset, our engagement with communities and the strategic importance of the oil and gas sector in Nigeria. We see significant benefits from integrating our production, with our ability to power Nigeria, through Transcorp, and deliver value across the energy value chain.

“I would like to thank Shell, Total and ENI, for the professionalism of the process, the Federal Government of Nigeria, the Ministry of Petroleum Resources, and the NNPC for the confidence they have placed in us.”

Tony Elumelu is the Chairman of Heirs Holdings Limited, Transcorp and United Bank for Africa Plc.

Also, read Transcorp Plc Acquires FGN’s 100% Equity in Afam Power for N105 Billion

Continue Reading


Exporters Say CBN Pre-export Requirements is Frustrating Export of Goods



Institute of Chartered Shipbrokers

Exporters Say CBN Pre-export Requirements is Frustrating Export of Goods

Exporters have said the recently introduced pre-export requirements by the Central Bank of Nigeria is creating unnecessary bottlenecks for exporters and the movement of goods out of the country.

Exporters, who spoke under the aegis of the Network of Practicing Non-oil Exporters of Nigeria (NPNEN), said the electronic Nigeria Export Proceed Form now required by financial institutions from exporters had come with so many challenges.

Ahmed Rabiu, the President, NPNEN, explained that the new policy had several requirements that often led to delays and loss of income on the part of exporters.

He said, “We acknowledge the CBN’s desire to ensure that all exports out of Nigeria are documented in order to ensure that the proceeds of such exports are repatriated.

“However, the reality on the field shows that the process is causing undue delays and consequently, encouraging corruption.

According to them, in the new pre-export requirements, the Central Bank of Nigeria wants an export transaction to be initiated through eNXP processing on the trade monitoring system.

After which exporters are expected to have a pre-shipment inspection agent, the Nigeria Customs Service and other designated government agencies carry out their pre-export inspections.

The exporters said the pre-shipment inspection agent was expected to issue a clean Certificate of Inspection while Customs would issue the Single Good Declaration. All these they said takes time and delay goods from leaving the country on time.

Pointing to a recent report, they said about N868 billion worth of goods bound for export were stuck at the ports due to the new policy.

Speaking further Rabiu said, “For example, for the PIA to issue the CCI, the exporter is required to upload a certificate of origin as one of the supporting documents for the eNXP.

“The PIA is also required to upload the CCI to the TRMS(M) and until this is done, the Customs service will not issue the Single Good Declaration.”

He added, “After issuing the SGD, the customs is further required to upload it into the TRMS before the goods are allowed to be gated into the port and loaded on the vessel by the shipping line.

Continue Reading