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B N W: Biafra Nigeria World News |
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Indigenous oil firms protest import policy
AS the Nigerian National Petroleum Corporation (NNPC) this week prepares to release over $1 billion worth of contracts for the importation of refined petroleum products, indigenous players in the sector have condemned the guidelines prescribed for the exercise.
The indigenous firms, under the aegis of the Crude Oil and Petroleum Trading Association of Nigeria (COPTAN), are particularly worried by the stipulation that only companies with a yearly turnover of $5 billion can engage in the business.
But the Group Managing Director of the NNPC, Mr. Funso Kupolokun, at the weekend in London told The Guardian that the decision would not be reversed.
COPTAN said in a statement: "The current rule, which clearly shows that no Nigerian company can possibly meet the condition, may reverse these gains," adding that it would soon make representation to the NNPC boss on the issue.
The association warned that the policy has dire "implications for the Nigerian economy and the Nigerian banking sector in particular where COPTAN companies contribute a turnover of over N60 billion".
It said that the decision might lead to thousands of job losses by Nigerian workers and destroy the budding and vibrant oil trading sub-sector.
COPTAN described the rules, which among other demands, state that only companies with turnover of $5 billion could bid for the contracts, as capable of putting Nigerian oil companies out of business while unduly promoting the interest of their foreign counterparts.
The association has since the introduction of the deregulation process supported the government policy on private sector initiative by importing en-mass various refined products and developing support and logistics infrastructure for the effective distribution of petroleum products to the Nigerian people.
"Some of these companies have incurred huge losses along the way because of the fluctuating and all-time high crude oil prices," COPTAN said.
But Kupolokun told The Guardian that the guidelines remained as stated and advertised.
The NNPC boss said that as far as he was concerned, the guidelines had not stated that the contracts for the fuel imports for the last quarter of the year were for oil majors alone or locals.
"The rules are there for everyone to see and that is what we are applying," he said.
But COPTAN says that the policy would undermine the government's crusade for increased local content in the oil industry.
It argued: "None of these foreign companies has taken the Nigerian risk by importing petroleum products in dollars and selling in Naira as so actively done by COPTAN members who take on the full exposure of the foreign exchange risk."
It added that the President Olusegun Obasanjo government had since inception promoted and encouraged the development of local content in the oil industry with the attendant emergence of a breed of young Nigerian entrepreneurs who have developed capital, skill, knowledge, labour, finance and investment in petroleum trading.
The group said: "The current rule, which clearly shows that no Nigerian company could possibly meet the condition, may reverse these gains. "The importance of investment in any growing economy cannot be over-emphasised and it is clearly seen that none of the foreign trading companies has visible investment in Nigeria. We as COPTAN have invested enormous amounts of hard earned resources generated from our trading books in infrastructural development, including but not limited to acquisition of filling stations, tank farm construction, vessel acquisition, urban mass housing development, refineries, power plants etc."
The group continued: "Furthermore, the value of the Premium Motor Spirit (PMS) imports awarded by NNPC in the fourth quarter translates to over $1 billion. Allowing just foreign companies to bid and acquire these contracts will result into massive capital flight in a time when the banking sector is going through a period of consolidation as modelled by Central Bank (CBN)."
The NNPC has however, insisted that the rules have come to stay. Its officials explained that by raising the turnover requirement from $500 million to $5 billion, the corporation aimed at pulling off pressure from politicians usually using small companies to bid for fuel import contracts.
COPTAN however, argued that its members are bonafide business entrepreneurs and should not be counted as fronts for politicians or paper traders.
"When the requirement for fuel imports in the second and third quarters were amended, many indigenous companies qualified to deliver cargoes even under the Category One segment and they performed exceedingly well," the association said.
It added that $5 billion is too high a demand for the importation of a PMS cargo of 30,000MT valued approximately at less than $16 million.
Even now, COPTAN members are still being owed over $200 million by NNPC on contracts duly honoured and performed and are still able to leverage on their cash flow to meet further import requirement, the association added.
COPTAN is composed of such notable trading names as Bronwen Energy; (PPI) Petroleum Projects International Ltd; Union Petroleum; Ocean & Oil; Mocoh; Sahara Energy; Linetrale; Taleveras (Vivaro Energy); Pedmagreck; Sigmund and Synergy Limited.`
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