Oil Marketer Sues FG over Discriminatory Forex Policy

Ladipo Sanusi/

An independent oil marketing company, Spot Market Oil (Overseas) Limited, has asked Federal High Court, Lagos to stop further discrimination in the implementation of the forex investment fund by the federal government, which gives undue advantage to some petroleum importers over others.

Joined in the suit are, the Attorney-General of the Federation (AGF) and the Central Bank of Nigeria (CBN).

The plaintiff, in an affidavit in support of the Motion on Notice sworn to by its chairman, Chief Ajibola Aribisala (SAN), and filed before the court, on Friday, the deponent averred that following the discovery of massive fraud in the fuel subsidy regime by previous administrations, President Muhammadu Buhari decided to liberalise the oil and gas industry, on May 11, 2016, by removing subsidy on petroleum products, while the price of petrol was partially deregulated and capped at N145 per litre.

The deponent also averred that in January 2017, the full deregulation policy earlier made applicable to only diesel or Automated Gas Oil (AGO) was extended to Kerosine products like Dual Purpose Kerosine (DPK), Aviation Turbine Kerosine (ATk) or Jet A1, and Household Kerosine (HHK), which the plaintiff deals mainly in.

Aribisala further averred that in pursuance of participating in the deregulated oil market and in line with the aforesaid policy of the federal government, his company applied for a loan of $4.5 million USD at an interest rate of 7 percent from its bankers, subsequent to the issuance of import permit to the company by the Petroleum Products Pricing Regulatory Agency (PPPRA), and imported 10,000 metric tonnes of petroleum product, which was kept at a storage facility at the rate of N3 per litre.

The deponent said despite all the trouble the plaintiff went through in obtaining the import permit, the facility from the bank, backed with the down payment of 150 percent of the Naira value of the Dollar at the prevailing high exchange rate and the actual importation of the petroleum product into Nigeria, coupled with the payment on bank’s interest and other ancillary charges, independent marketers, like the plaintiff, still had to be kept awaiting for an average of four months before the CBN would allow the private marketers to bid for the foreign exchange meant for the total liquidation of the line opened by the bank’s from where the forex was sourced.

Further to the above, the deponent said upon the eventual approval of the bid by the CBN, importers like his company would still be forced to wait for a further period of two months before the forex approved would be allowed to be transfered to the foreign banks from which the Forex was sourced by the importers, thereby, making the total waiting period to be six months. He added that meanwhile, throughout the waiting period, interest charges continued to accrue on the amount of Forex loaned to private marketers by the banks.

The deponent also stated that despite due fulfillment, from the plaintiff’s own purse, of the rigorous conditions attached to the foreign exchange line before it could import the said petroleum products into the country, in accordance with the policy of full deregulation of same by the Federal Government of Nigeria, the first defendant (federal government) through the second and third defendants suddenly intervened in the deregulated market by earmarking a sum of $144 million USD as Forex Intervention Fund for major oil marketers and members of Depot and Petroleum Products Marketers (DAPPMA), thus, enabling them to import petroleum products at a much lower and special exchange rate, to the exclusion of independent or private marketers, including the plaintiff. He added that private marketers, including his company, are thereby left at the mercy of the vagaries of higher foreign exchange rate, and the rigorous conditions stipulated by foreign banks and their local agents before Dollars could be disbursed.

The deponent further averred that the intervention made by the federal government into the already deregulated market was a highly selective and discriminatory administrative action for not being made applicable across board to all investors involved in the importation of the said deregulated petroleum products.

He also averred that the major oil marketers paid no bank interest on the disbursement made by the respondents under the Forex Intervention Fund and since they have their own storage facilities, they are also not paying any fee for storage facility like the plaintiff. He added that selling 12, 230, 000 litres by the major marketers at the rate if N165 per litre will yield N2.017,000.00, and if the amount is deducted from the sum of N1.724,775,000.00, (used to buy Dollar) the margin for major oil marketers will be N293,175,000.00, whereas, if the plaintiff sells the same quantity of petroleum products at the same price, the profit margin will be very low compared with the profit margin for the major oil marketers, with regards to the selective intervention made in their favour by the federal government.

The selective intervention made by the federal government, the deponent further stated, has caused the plaintiff substantial loss of profit margin that would have accrued to it upon the sale of the petroleum product in the market. He said this would not have happened if the government had kept strictly to the deregulation policy by allowing a level playing field, where market forces would be allowed to determine the appropriate pricing of the petroleum product.

Consequently, the deponent submitted that the plaintiff had suffered and is still suffering heavy damages as a result of the discriminatory and selective forex policy being implemented by the defendants in favour of the major oil marketers, adding that this action has put the plaintiff’s investment in serious jeopardy.

The deponent, therefore, urged the court to make an order restraining the defendants and their agents from the implementation or continued implementation, in any form whatsoever, by the defendants of a selective forex investment fund to the advantage of some importers of petroleum products and the exclusion of other importers and independent marketers, including the plaintiff (Spot Market Oil (Overseas) Limited). He said the damages that would occur to the plaintiff, if the defendants are not restrained, would be irreparable and also result into massive job loss to her employees, as well as socio-economic losses to the country, and as such could not be adequately compensated in monetary terms, if the plaintiff succeeded at the trial of the suit.

After hearing the plaintiff’s Motion on Notice, the presiding judge, Justice (Prof.) Chuka Obiozor, ordered the plaintiff to put all the defendants in the suit on notice, while adjourning the matter till June 8 for hearing.

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