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AMCON, Banks Plan Clamp Down On Oil Marketers Over N650bn Debt

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The Asset Management Company of Nigeria (AMCON) and some commercial banks have commenced  moves to takeover of assets owned by the Independent Petroleum Marketers Association of Nigeria (DAPPMA) over N650 billion un-serviced debt.

LEADERSHIP gathered that the action was in response to the inability of the marketers to offset money borrowed from the banks to import petrol on behalf of government.

Our correspondent recalls that oil marketers in Nigeria recently raised the alarm over N650 billion owed them by the federal government in subsidy arrears, saying the settlement of the debts owed them would save their assets from being taken over by banks.

However, on account of this huge debt, AMCON and the banks have begun the takeover of some of the depots operated by DAPPMA members, which is likely to create lapses in petrol supply arrangement and eventual scarcity.

In a telephone interview with LEADERSHIP yesterday, AMCON spokesperson, Jude Nwauzor, said the organisation was not buying more loans from banks or clamping down on debtors in conjunction with the banks, but was only going after debtors in its books.

However, a bigger problem to this is the likelihood of a total shutdown of DAPPMA’s 1.3 billion metric tonnes capacity facilities across Lagos State, in solidarity with others whose assets are being confiscated.

According to information available to our correspondent, government is currently indebted to members of Major Oil Marketers Association of Nigeria (MOMAN), Independent Petroleum Marketers Association of Nigeria (IPMAN), Depot and Petroleum Products Marketers Association (DAPPMA) and Independent Petroleum Products Importers (IPPIs).

Available figures indicate that the major marketers (MOMAN) are owed N130.7 billion, and the non-payment of these subsidy arrears, according to the marketers, has resulted in huge financial challenge in the downstream sub-sector, coupled with its inability to attract more funds as the banks are  yet to get back their loans.

According to the chairman of MOMAN, Mr. Andrew Gbodume, due to the fast eroding goodwill of the sector and inaction of government to effect payment of ‘cleared’ subsidy arrears, most downstream players are currently experiencing contraction of operations occasioned by reduced capacity.

In March this year, the federal government requested the appropriation of N650 billion from the National Assembly to clear the backlog of subsidy arrears owed marketers.

The request to the National Assembly came after a 14-day ultimatum issued to the government by DAPPMAN to commence staff disengagement over the N650 billion debt owed it.

As a result, government was prompted to facilitate series of engagements and meetings among the Nigerian National Petroleum Corporation, the Ministry of Labour, the Presidency and DAPPMAN/MOMAN to find a common ground that could avert another phase of petroleum products scarcity across the country.

After wide consultation, the government showed commitment to paying the debts, which eventually calmed the situation and returned normalcy in the product supply chain.

Subsequently, in July this year, the Senate approved the payment of N348 billion as outstanding subsidy claims to 74 petroleum marketers which included Oando, Total, Honey Well, Capital Oil, Conoil, A.A. Rano, Folawiyo, Eternal oil, Aiteo, Forte Oil, Bovas, Mobil (11 Plc), MRS Oil and Gas, among others.

The Senate said the payment was to enable them update all outstanding liabilities and clear all debts, interest accrued and foreign exchange differential once and for all.

The approval was sequel to the adoption of the interim report of the Committee on Petroleum Downstream on the Promissory Note Programme and a Bond Issuance to Settle Inherited Local Debts and Contractual Obligations to Petroleum Marketers.

Our correspondent, however, gathered that the process of payment was presently stalled as the Debt Management Office, was yet to finalise the process that would lead to the release of the fund.

An insider source told our correspondent that government made a promise for issuance of promissory notes to offset inherited local debts, but that has not been effected.

The chairman of the committee, Kabiru Marafa, had advised that continuous delay of the approval of the promissory note request will affect the liquidity of the oil companies and undermine their crucial role in the development of the economy.

In the report, the committee recommended that the 55 oil marketers be paid 100 per cent of their claims. Of the said amount, 55 oil marketers are to receive N276 billion (N275,750,415,108) while 19 others will get N73 billion (N73,452,639,866).

The committee also called for the payment of 65 per cent claims to some marketers due to contentions in their figures.

The committee was of the opinion that interim payments should be effected to the marketers pending full verification was done.

Though the spokesman of AMCON, Jude Nwauzor, could not be reached to confirm this development or respond to SMS from our correspondent, the executive secretary of DAPPMA, Mr. Olufemi Adewole, confirmed that its members were already losing their investments to AMCON.

Adewole said: “I will not be in a position to give you names of the depots now shut down by AMCON and the banks, but I can only tell you that our members are now losing their assets to the agency.

“Again, let me emphasise that the figures currently being reported is not accurate because every day interest on the loan multiplies, but I cannot calculate it or give exact figures. However, the information and devastating aspect of this unfinished business is the loss of assets by our members.”

Adewole further lamented that the inability of the federal government to pay the debt had resulted in massive job losses in the oil and gas industry (downstream), which had affected the marketers’ business operations, adding that 60 per cent of marketers are already out of business.

According to him, aside marketers that have been forced out of business, others were struggling to survive due to the government’s inability to settle the subsidy arrears, a development, he said, had been threatening investment in the downstream sector.

He said: “It has had very adverse effects on our operations. I am aware of two depots that have been forcibly taken over by banks because they got injunctions from the courts.

“They did so the moment they heard that the National Assembly had approved payment to marketers. Unfortunately, as at today, the money is yet to get into our accounts.

“Some marketers had to lay off more than 90 per cent of their staff because of financial challenges.”

Adewole, however, said that the government had promised that part of the money would come as promissory note and cash.

According to him, the information gathered was that government may pay only in promissory note.

“It means you have to go back and discount this promissory note in the bank. This means we are losing because the money has been delayed and this adds up the interest to be charged on our accounts. Really, what was approved to be paid is not the actual amount the government owes us, the interest came about as a result of devaluation of the naira from N197 to N285 to a dollar,” he explained.

On his part, the chairman of MOMAN, Andrew Gbodume, said: “We appreciate the efforts of the National Assembly, but the non-payment creates a significantly negative impact on the operational efficiency of the downstream sector of the oil industry.

“We can’t pay salaries, and staff reviews in terms of emoluments cannot be done because of this sum owed us.”

He added that the current business model in the downstream sector was unworkable, unsustainable and needed to be reviewed by stakeholders.

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