Banks have confiscated multibillion naira worth of assets, including 79 filling stations and nine tank farms from fuel marketers as the lenders intensified collateral take-over spree in the downstream oil and gas industry. Oil Marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) and Depot and Petroleum Products Marketers Association (DAPPMA), who confirmed the assets’ takeover yesterday, maintained that this was caused by delay in payment of over N800 billion in fuel subsidy debts and taxes, which the Federal Government owe the marketers.
The National Assembly and the Federal Executive Council (FEC) have earlier announced approval of the payment for marketers, but MOMAN and DAPPMAN said that the payment is yet to be made while its announcement and inaction of agencies saddled with payment have worsened their relationship with banks.
The processes highlighted for payment by the government, MOMANand DAPPMAN said, were inimical to the operations of their businesses. “The processes they have highlighted are killing our businesses. Immediately the banks read in the mediathattheNationalAssembly had approved, they went to court, got injunction and seized our assets.
“Sixty per cent of marketers have been forced out of business as banks have taken over their depots, assets and properties due to their inability to pay back monies borrowed to import fuel,” Executive Secretary of DAPPMAN, Babafemi Adewole, said at a joint interactive session by DAPPMAN and Executive Secretary, MOMAN, Mr. Clement Isong, in Lagos. MOMAN is a downstream oil and gas group made up of six major marketers, including Mobil, Conoil, OVH Energy, Forte Oil, MRS Oil and Total Nigeria Plc.
Though Adewole did not mention the number of assets that banks have seized, he maintained that 60 per cent of marketers have been forced out of business as banks have taken over their depots, assets and properties due to their inability to pay back monies borrowed to import fuel. Checks by New Telegraph showed that the assets include over 79 filling stations, nine tank farms, landed properties and exotic cars, among others, which were used as collateral to access the loan facilities. Many marketers were, according to him, forced out of business, while others are struggling to survive due to the government’s inability to settle the subsidy arrears, saying the development is threatening investment in the downstream subsector. The DAPPMAN scribe said although the Federal Government has earmarked money to clear the debts, the marketers were yet to be paid.
“The debt 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 approved payment of the debt to marketers. Unfortunately, as at today, the money was yet to get into our accounts,” Adewole said.
He said the other challenge is that many of the marketers have laid off more than 90 per cent of their staff because of financial constraints. Adewole, however, said that the government has promised that part of the money would come as promissory note and cash.
“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 to the interest to be charged on our accounts,” he said. On his part, Isong appealed to government agencies saddled with the payment to expedite action to save marketers from closing shop as interest on loans keeps increasing.
The government, he said, should hasten payment of the outstanding debts of fuel imports subsidy arrears owed them (marketers) as the continued non-payment has severely limited their access to credit and negatively impacted their working capital leading to their inability to pay their banks and their service providers. According to him, the major challenge the Nigerian downstream petroleum sector is facing is the non-payment of the long outstanding fuel subsidy to oil marketers. “We appreciate the efforts of the National Assembly and the FEC in approving payment, but the non-payment creates a significantly negative impact on the operational efficiency of the downstream sector of the oil industry, thereby placing a severe strain on its efforts to continually invest in infrastructure and raise industry standards. We hope that the debts will be paid in full to the oil marketers as soon as possible,” he said.
The MOMAN scribe said that the debt owed members alone stood at over N130.7 billion as at August 2018. He stated that once reconciliation has been done and a particular figure was agreed as debt, he couldn’t understand why settlements had not been made. Chairman of the committee, Senator Kabiru Marafa, said the oil marketers had earlier submitted a bill of N650billion, but government later reviewed the bill to N429 billion and eventually gave an approval of N386 billion. However, the N386 billion as okayed by the government came with a condition that subjected its implementation to the appointment of an international audit firm that would comprehensively review and ascertain the veracity of the claims by the oil dealers. Also, the payment was said to be made not in cash, but by a promissory note.