Three top Nigerian Banks namely EcoBank; Access Bank and Guaranty Trust Bank, have the highest exposure to downstream companies of the troubled oil and gas sector according to the loan profile sighted by MetroBusinessnews.
The total amount the oil companies are owing the banks collectively is put at about $1.184billion or N400.06billion.The amount forms the outstanding unliquidated or mature letters of credits the two major associations namely the Major Oil Marketing Association of Nigeria (MOMAN) and the Deport and Petroleum Product Marketing Association of Nigeria (DAPPMA) are yet to settle their banks.
A breakdown of the figure indicates that EcoBank is the leader with $231,354,037.97 or N78.241 billion from both MOMAN and DAPPMA members. It is followed by Access Bank with $216,452,098.90 or N73.201 billion and Guaranty Trust Bank $135,262,878.13 or N45.74 billion.
Other banks being owed by the oil marketing companies are First bank $34.5 million, Zenith Bank $97.5 m, Standard Chartered $22.09 m, UBA $31.544m,Unity Bank $4.7m, Wema Bank $14.7m, Keystone Bank $74.2m,Fidelity Bank$13.3m, Union Bank$53.0m, Stanbic IBTC $26.5m
Muda Yusuf, director general, Lagos Chambers of Commerce and Industry (LCCI) has urged the Federal Government to pay the marketers so that they can also pay the banks.
Yusuf observed that what is happening is part of the consequences of the over regulation of the downstream subsector of the industry, saying that to the extent to which nobody has dispute the claims by the oil marketers the money should be paid.
He said: “The whole thing is question of agreement. It was an agreement with the government that the marketers should import and it would be subsidised. Agreement should be respected, so the government should find a way of paying the marketers”.
Babajide Soyode, a former general manager of the Warri Refinery and Petrochemical Company while commenting on this development appeal to the government to fulfil its obligations to the marketers so that banks can give them the opportunities to continue to carry legitimate transactions that would boost the economy.
The marketers have raised alarm over outstanding subsidy claims incurred during the subsidy regime, saying their indebtedness to banks now a whopping $1 billion.
The outstanding debt was money borrowed from banks to fund importation during the subsidy regime and has accumulated an interest of N160 billion because of the failure of the federal government to pay the interest on the loans as agreed.
“Government through the Central Bank of Nigeria (CBN) 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 (forex) 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 marketers under a special window aimed at liquidating outstanding matured Letters of Credit at an exchange rate of N305. However, the exchange rate of N197 when Letters of Credit were initially opened for the marketers and transactions concluded and the current CBN offer rate of N305 is an increase of 55 per cent and a significant rate differential,” the marketers explained.
The oil marketing companies have loan exposure to 18 out of the 24 existing banks in the country.