- 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.”
South African Government to Sell Stake in South African Airways to Takatso Consortium
The South African government is selling a 51% stake in South African Airways (SAA) to Takatso consortium, which will initially commit more than 3 billion rand ($221 million) to give the struggling airline a new lease of life.
SAA has been under a form of bankruptcy protection since December 2019, but its fortunes worsened during the COVID-19 pandemic and all its operations were mothballed in September 2020 when funds ran low.
The airline is one of a handful of South African state companies that depend on government bailouts, placing the national budget under huge strain at a time of rapidly rising debt.
The partnership with Takatso will alleviate that financial burden, public enterprises minister Pravin Gordhan told journalists on Friday as the state would no longer provide any funding to the airline, which exited administration in late April after receiving 7.8 billion rand from the government. read more
Gordhan added that the government will retain a 49% stake with the intention of eventually listing the airline to address future funding requirements.
“The objective of bringing in an equity partner to SAA is to augment it with the required technical, financial and operational expertise to ensure a sustainable, agile and viable South African airline,” he said.
The consortium includes pan-African investor group Harith Global Partners and aviation group Global Aviation, Gordhan said.
Following the announcement, co-founder and consortium Chair Tshepo Mahloele told Reuters that 3 billion rand should be sufficient to operate the airline for 12 to 36 months.
The government could dispose of more of its ownership stake going forward, he added.
“They aren’t married to this 49%,” he said. “They won’t be putting more money into this asset.”
An initial public offering for the airline is unlikely to happen within the next three years, and SAA would first need to become profitable, Takatso Chief Executive Gidon Novick said.
Novick said Takatso would seek to relaunch SAA as soon as possible, prioritising first domestic service followed by regional destinations.
International long-haul routes would follow but would be selected carefully, and SAA would also work to forge partnerships with major carriers.
“We’re going to be competing with the greatest airlines in the world, and we need to be mindful of that,” Novick said.
The airline’s subsidiaries meanwhile will be evaluated, in particular Air Chefs, SAA Technical and low-cost airline Mango, Gordhan said, noting that “anything can happen” when asked if some could be shut down.
SAA will continue to be domiciled in South Africa and the government will have a “golden share” of 33% of the entity’s voting rights and certain areas of national interest, Gordhan said.
($1 = 13.5379 rand)
Coca-Cola Partners NGOs To Clear Plastic Waste In Nigeria
Coca-Cola Nigeria has said it partnered with non-profit organisations to reduce plastic pollution across the country.
In a statement on Thursday, it said it would be doing more to promote environmental sustainability as part of efforts to commemorate World Environment Day.
It stated that it had introduced initiatives to protect the environment through its philanthropic arm, the Coca-Cola Foundation.
Coca-Cola said that it supported the Statewide Waste and Environmental Education Foundation to launch the Eko Beach Race 2021 themed ‘A race against plastic pollution.’
The event had in attendance 2,000 youths, students and sports enthusiasts who participated in a marathon race and beach clean-up.
SWEEP Foundation’s President, Obuesi Philips, stated at the event that it “was geared towards recognising the growing contributions of sport to the realisation of societal development.”
The drink maker also partnered with the Aid for Rural Education Access Initiative to host the “Recycle and Win” festival.
It included community outreach and clean-up programmes in Kwara, Kano, Kaduna, Yobe and Oyo States. Coca-Cola said that 10 tons of plastic bottles were recovered through the process.
The Director, Public Affairs, Communications and Sustainability at Coca-Cola, Nwamaka Onyemelukwe, urged Nigerians to adopt more eco-friendly practices while emphasising the urgency of the current global situation.
Onyemelukwe stated, “At Coca-Cola, we recognise there is a packaging waste problem globally and especially in Nigeria, which is why we pioneered the World Without Waste initiative to engineer innovative solutions to tackle this challenge.
“World Environment Day presents an opportunity for us to act on this mandate as seen by the number of environmental sustainability initiatives we have supported in collaboration with local implementing partners.”
RAK Unity Petroleum to Shutdown as Shareholders Approved Liquidation
Shareholders of RAK Unity Petroleum Company Plc, at the company’s 18th Annual General Meeting, held on Friday, 4th June 2021, agreed that the company be wound up voluntarily in accordance with the provisions of the Companies and Allied Matters Act 2020.
The company disclosed in a statement signed by Olubukola Olonade-Agaga, ALSEC nominees Limited Company Secretary.
The liquidation is subject to the approval of the members of the Company in the general meeting.
The statement in part, “THAT Mrs Chinwe Chiwete of the law firm of EPIC Legal of Block 74, Plot 22B, Emma Abimbola Cole, Lekki Phase 1, Lagos be appointed liquidator for the purposes of winding up of the Company, subject to the approval of the members of the Company in the general meeting.”
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