Discriminatory Forex Intervention Policy: Oil Marketer Drags FG To Court
In a bid to forestall the continued implementation of alleged discriminatory Forex investment policy to the advantage of some importers of petroleum products, an Independent Oil Marketer in the downstream sector of the economy, Spot Market Oil(Overseas) Limited has dragged the Federal Government before a Federal High Court in Lagos.
Joined as co -defendants in the ensuing legal battle are; the Attorney General of the Federation (AGF) and the Central Bank of Nigeria (CBN).
In an affidavit in support of the motion on notice sworn to by the Chairman of the company, Chief Ajibola Aribisaala (SAN) and filed before the court, the deponent averred that following the discovery of massive fraud in the fuel subsidy regime, during the previous administrations, President Mohammad Buhari decided to liberalize the oil and gas industry.
The plaintiff said that on May 11, 2016 the Federal Government opted to deregulate the Petroleum products as a policy by removing fuel subsidy on petroleum products with the price of petroleum partially deregulated and capped at N145 per litre.
In January, 2017,the full deregulation policy, earlier made applicable to only Diesel was extended to kerosene products Dual Purpose Kerosene(DPK), Aviation Turbine Kerosene(ATK) and HHK-H Household Kerosene, which is the Petroleum products the Plaintiff deals in it.
In pursuance of participating in the deregulated oil market and in line with the aforesaid policy of the Federal Government, Spot Market Oil Company, applied for a loan of $4,500,000 at the rate of 7 per cent from its bankers and subsequent to the issuance of import permit by the Petroleum Products Pricing Regulatory Agency (PPPRA) to the company, it imported 10,000 Metric Tonnes of Petroleum products which was kept at a storage facility at N3.00 per litre.
Despite all the troubles the plaintiff went through in obtaining the import permit, the facility from the bank backed with the down payment of 150 per cent of Naira value of the Dollar at the prevailing high exchange rate and the actual importation of the petroleum products in Nigeria which includes payment of bank’s interest and other ancillary charges, independent marketers, like the plaintiff, still had to be kept waiting for average of four months before the Central Bank of Nigeria would allow the private marketers to bid for the foreign exchange meant for the total liquidation of the line opened by the banks from where the forex was sourced.
Further to the above, upon the eventual approval of the bid by the CBN, importers like plaintiff, would still be forced to wait for a further two months before the forex approved would be allowed to be transferred to the foreign banks from which the forex was sourced from by the importers thereby making it six months.
Meanwhile, throughout the waiting period, interest on the facilities from the banks continued to accrue on the said amount of forex loaned to the private marketers by the banks.
This is despite due fulfillment, as aforesaid, from the plaintiff’s own purse with the rigorous conditions attached to the foreign exchange line before she could import the said petroleum product into the country.
The plaintiff said that despite the pain which the Independent petroleum marketers have to go through, the Federal Government, through her agencies, NNPC and CBN, suddenly intervened in the deregulated market by earmarking a sum of $144million as forex intervention fund for Major Oil Marketers and members of Depot and Petroleum Products Marketers (DAPPMA) for the importation of petroleum products at a much lower, special exchange rate, to the exclusion of independent or private marketers, including the plaintiff, who were left at the mercy of the vagaries of higher foreign exchange rate and rigorous conditions stipulated by foreign banks and their local, agent, before the dollar could be disbursed to them.
It was further alleged that the intervention made by the Federal Government into the already deregulated market, is highly selective and discriminatory administrative action for not being made applicable across board to all investors involve in the importation of the said deregulated petroleum products
The major Oil marketers paid no bank interest on the above disbursement made by the defendants under the forex intervention fund and since they have their own storage facilities they are not also paying any fees for through put storage facility like the plaintiff.
For instance the selling of 12,230,000 litres by the major oil marketers at the rate of N165 per litre will yield N2,017,950 000 and if this amount is deducted from the sum of N1,724,775,000( used to buy the Dollar ) the margin of the major oil marketers will be N293,175,000,whereas if the plaintiff sells the same quantity of petroleum product at the same price the profit margin will be very low compared with the above profit margin of the major oil marketers having regard to the selective intervention made in their favour by the Federal Government.
Aribisala averred further that the selective intervention made by the Federal Government has caused the plaintiff company substantial loss, or profit margin that would have accrued upon the sale of the petroleum product in the market if the government had kept, strictly to the said deregulated policy by allowing a level playing field, where market forces should be allowed to determine the appropriate pricing of the products.
Consequently, the plaintiff claimed it suffered and is still suffering as a result of the alleged discriminatory and selective Forex policy being implemented by the defendants in favour of the Major Oil Marketers, thereby putting the investment of the plaintiff in serious jeopardy.
The plaintiff urged the court to restrain the defendants and their agents from implementation or continued implementation in any form whatsoever, by selective Forex investment fund to the advantage of some importers of petroleum products and to the exclusion of other importers or independent marketers including the plaintiff, Spot Market Oil (Overseas) Limited .
He further averred that the damages that will occur to the plaintiff, if the defendants are not restrained, would be irreparable as it will result in massive job losses to her employees and social economic losses to the country and as such that cannot be adequately compensated, in monetary terms if the plaintiff succeed at the trial of this suit
Meanwhile, the Presiding Judge Professor Chuka Obiozor while adjourning the suit till June 8, 2017 for hearing, ordered the plaintiff to serve the defendants with all the process.