Economy

Oil Marketers Threaten Mass Sacking Over $2bn Debt

Published

7 years ago

August 30, 2017

Oil Marketers Threaten Mass Sacking Over $2bn Debt

Oil marketers have said they will embark on mass retrenchment following the failure of the Federal Government to pay the debt owed them for importation of petroleum products as well as the accrued interest on loans from banks and exchange rate differential.

The marketers under the aegis of Major Oil Marketers Association of Nigeria, Independent Petroleum Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association, and Independent Petroleum Products Importers said the debts had risen to over $2bn.

According to a joint communiqué issued after their meeting in Lagos on Tuesday and signed by their legal adviser, Patrick Etim, many marketers and oil companies owe workers over eight months’ salaries due to the inability of government to pay off their debts on products imported since 2015.

They urged the government to authorise the payment of outstanding interest and foreign exchange differentials owed them to save their business from total collapse.

The marketers said they owed some Nigerian banks over $2bn, which they took as loans to import fuel, adding that the interest had accumulated over time because the government had yet to pay them or pay the banks interest on the loans as agreed.

The communiqué said, “The hope that the outstanding debts owed marketers will be paid, resulting from the intervention of the Vice President, Prof. Yemi Osinbajo, appears to have been dashed as the payment that was promised to happen in July 2017 is yet to materialise.

“This was devastating to marketers as we are being dragged daily by banks on debts owed and under threat of putting our tank farms under receivership.”

The marketers said they expected that the various meetings held between senior government officials and the leadership of the oil dealers to resolve the issue of the outstanding debt would yield the desired result as the figures were fully reconciled and there was commitment from the government to pay by the end of July 2017.

“However, Nigerian banks that are carrying the indebtedness of the marketers on their balance sheet have had been disappointed because as it stands now the payment of all the debts by the Federal Government have not been received and this has resulted in a lot of problems between the banks and marketers.”

The communiqué stated that the government had entered into a contract with the marketers, mandating them to import and supply petrol to the market.

It said the condition of the contract was that the government would pay the difference between the landing cost and the selling price (as fixed by the government), provided that the landing cost was higher than the selling price.

The marketers said the government approved the landing cost, which fluctuated as it depended mainly on the international price of petrol and the exchange rate of naira to the dollar.

According to the communiqué, a key term of the government’s contract with the marketers is that the under-recovery payments shall be paid to marketers within 45 days of submission of documents evidencing discharge of petrol cargo and trucking out from storage.

It said, “It was also agreed that after 45 days, the government shall pay the interest charges on the loans taken by the marketers to finance the importation of cargoes of petrol.”

The marketers said they opened Letters of Credit at exchange rate of N197/$1 while petrol cargoes were supplied and sold at the selling prices approved by the government and the repayment was calculated using the above exchange rate.

They said, “The recent further devaluation of the naira from N195 to N305, and later to over N365 to $1, while the Federal Government agencies based their reimbursement calculation on N197 to $1, left petroleum marketers within our association with additional debt burden in excess of N600bn. This is in addition to the over N250bn arrears owed.”

According to the communiqué, the banks, in line with the Central Bank of Nigeria’s prudential guidelines, have classified the accounts of the marketers as non-performing, with properties provided by the marketers as securities for the funds in the process of being auctioned.

It said, “We have indeed made several spirited efforts to get the government agencies involved to pay up fully, adhering to the principle of ‘full restitution’ to all participants in the then PMS import scheme but the major challenge of the economy has impeded its complete success; hence, we are once more making a direct appeal for the intervention of Mr. President.”

“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.”

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Economy

House of Reps Warns Tinubu Against Multiple Tax Burdens on Nigerians

Published

1 day ago

October 12, 2024

Bassey Marshall

Company Income Tax (CIT) - Investors King

The House of Representatives has warned President Bola Tinubu against imposing multiple taxes, levies, and charges on Nigerians already struggling with subsidy removal and higher electricity bills.

During Thursday’s plenary session, the member representing Anambra East/Anambra West Federal Constituency, Mr. Peter Aniekwe, called for the adoption of a motion on urgent public importance.

Investors King reported that the motion was co-sponsored by the House Minority Leader, Rep. Kingsley Chinda, and four others.

In defense of the motion, Aniekwe noted that the government’s introduction of additional taxes, which he described as sometimes unnecessary, only adds an undue burden on Nigerians.

He emphasized the need for the government to strike a balance when imposing taxes that are essential for revenue generation.

Aniekwe said, “The imposition of multiple taxes, levies, and charges at various levels of government only serves to exacerbate the financial strain on citizens, particularly those in low-income brackets, many of whom are already struggling to meet basic needs such as food, healthcare, housing, and education.

“The introduction of additional and sometimes unnecessary taxes, including consumption taxes, service taxes, and levies on essential goods and services, places an undue burden on the masses, further widening the inequality gap.

“While taxation is necessary for government revenue, a balance must be struck between revenue generation and the economic well-being of citizens, particularly at a time when many families and businesses are still recovering from the economic impact of global and local challenges.

“The government’s primary responsibility is to alleviate the economic challenges faced by the masses, ensuring policies that promote economic development, social welfare, and prosperity for all citizens.”

After Aniekwe’s defense, the House of Representatives adopted the motion.

The House cautioned the Federal Government against multiple taxation and mandated the committees on Finance and FIRS to, within three weeks, conduct a thorough review of existing tax laws and policies to streamline tax collection processes and eliminate redundant or overlapping taxes.

The committee was also tasked with identifying areas of double taxation at all levels for necessary action.

Economy

Boosting Nigeria’s Digital Future: STEM Education and AI Could Add $15 Billion to Economy by 2030

Published

1 week ago

October 4, 2024

Ugwoke Ogbodo

If Nigeria can enhance its Science, Technology, Engineering, and Math (STEM) education and prepare its workforce for future opportunities in the digital space, the economy could expand by an additional $15 billion, a new report has revealed.

The report, issued by consultancy Public First on Thursday, also indicated that Nigeria reaped an estimated $1.8 billion in economic benefits from Google’s tools and services in 2023.

Presenting the report in Lagos State, the Nigeria Digital Opportunity study highlighted the financial value contributed to the nation’s economy through services such as Google Search, Ads, Google Play, YouTube, and Google Cloud.

These services have played a significant role in boosting the productivity of Nigerian businesses, content creators, and workers.

It is no secret that a large number of young Nigerians have become tech-savvy, with many venturing into the thriving world of technology and content creation on social media platforms.

According to Google, its digital skills programs and career certificates are key drivers of Nigeria’s digital transformation, with over 1.5 million young Nigerians acquiring new digital skills in 2023.

Google’s Director for West Africa, Olumide Balogun, expressed the company’s satisfaction with the positive impact that digital technology is having on Nigeria’s economy.

He emphasized that the findings highlight the importance of continued investment in digital skills and infrastructure to unlock the full potential of Nigeria’s growing digital economy.

Balogun noted that with rapid digital advancements, particularly in areas such as cloud computing, connectivity, and artificial intelligence (AI), Nigeria is well-positioned to solidify its standing as a leading digital economy in Africa.

He advised the country to strengthen its technology policies, stating that Nigeria’s economic future will largely depend on its ability to harness technology. Balogun added that Google remains committed to supporting Nigeria’s journey through strategic investments and partnerships.

The report underscored the significant role digital technology plays in Nigeria’s economy, with Balogun noting that for every $1 invested in digital technology, the country generates over $8 in economic value.

Meanwhile, Google has called on Nigerian policymakers to prioritize STEM education to maximize the economic benefits of technology.

The report also projected that AI could contribute $15 billion to Nigeria’s economy by 2030.

Balogun highlighted Google’s efforts in promoting responsible AI development, noting that in 2021, the company committed $1 billion to support Africa’s digital economy.

He added that this initiative included the 2022 landing of the Equiano fiber-optic cable in Nigeria, which is expected to boost internet penetration by seven percent by 2025, significantly enhancing internet access and reliability.

Google also recommended that Nigerian policymakers adopt cloud-first strategies and strengthen the country’s digital infrastructure to harness the full potential of AI, while emphasizing the need for improved STEM education to prepare the workforce for future opportunities.

Amy Price, Director and Head of Technology Policy at Public First, praised Nigeria as a digital leader in Africa. She emphasized that tech investment will serve as a catalyst for further growth and development across the nation.

Price further highlighted the critical role AI will play in shaping Nigeria’s future economy, with the report estimating that AI could add $15 billion to the country’s GDP by 2030. She stressed that the nation must focus on building strong digital infrastructure and investing in STEM education to prepare its workforce for the jobs of tomorrow.

Economy

Lawmakers to Deliberate on Nigerian Tax Reform Bills, Change of FIRS to NIRS

Published

1 week ago

October 4, 2024

Iyanuoluwa Martins

The National Assembly is set to begin deliberations after receiving President Bola Tinubu’s communication seeking consideration and passage of the proposed Fiscal Policy and Tax Reform Bill to align with ongoing financial reforms of the Federal Government and enhance efficiency in tax compliance.

In addition to the Senate, the House of Representatives received four bills forwarded by the President. They include the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Establishment Bill and the Joint Revenue Board Establishment Bill.

The Nigeria Revenue Service (Establishment) Bill seeks to repeal the Federal Inland Revenue Service (Establishment) Act, No. 13, 2007, and establishes the Nigeria Revenue Service, to assess, collect, and account for revenue accruable to the government of the federation.

The Transmission of Fiscal Policy and Tax Reform Bills to the National Assembly is The Nigeria Tax Bill, which seeks to provide a consolidated fiscal framework for taxation in Nigeria.

The Nigeria Tax Administration Bill seeks to provide a clear and concise legal framework for the fair, consistent and efficient administration of all the tax laws to facilitate ease of tax compliance, reduce tax disputes and optimize revenue.

Meanwhile, the Joint Revenue Board (Establishment) Bill aims to establish the Joint Revenue Board, the Tax Appeal Tribunal and the Office of the Tax Ombudsman for the harmonization, coordination and settlement of disputes arising from revenue administration in Nigeria.

This comes after President Tinubu during his speech on Nigeria’s 64th Independence Anniversary on Tuesday (October 1) said some Economic Stabilisation Bills would be transmitted to the National Assembly.

“We are moving ahead with our fiscal policy reforms. To stimulate our productive capacity and create more jobs and prosperity, the Federal Executive Council approved the Economic Stabilisation Bills, which will now be transmitted to the National Assembly.

“These transformative bills will make our business environment more friendly, stimulate investment and reduce the tax burden on businesses and workers once they are passed into law,” he said.

Recently, the Chairman of the Presidential Taskforce on Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, said the Withholding Tax Regulations 2024 has been gazetted.

“I do have some good news, the good news is that the withholding tax regulation has now been gazetted. So, the only reason it hasn’t been published today is because it is public holiday, so first thing tomorrow you will see a copy of the gazette and that provides a lot of relief not just for manufacturers but also every other business in terms of taking away some of the burdens of funding their working capital,” Mr Oyedele said.

Nigeria has been seeking to harmonise its tax base as it has a tax-to-gross domestic product (GDP) ratio of 10.8 percent; comparatively, the average tax-to-GDP ratio for Africa is about 18 percent.