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Alleged Discriminatory Forex Intervention Policy: Oil Marketer Drags FG To Court

In a bid to forestall the continued implementation of discriminatory forex investment fund to the advantage of some Importers of Petroleum products, an independent oil narkerter in the down stream sector, Spot Market Oil (Overseas) Limited, has instituted a suit before a Federal High Court, Lagos, against the Federal government of Nigeria and two others.

Other two defendants in the suit marked FHC/L/CS/781/2017, are: Attorney-General of the Federation (AGF) and the Central Bank of Nigeria (CBN).

The oil marketer, in an affidavit in support of the Motion on Notice sworn to by its Chairman, Chief Ajibola Aribisala, a Senior Advocate of Nigeria (SAN), and filed before the court by the deponent averred that following the discovery of massive fraud in the fuel subsidy regime, the previous administrations, President Muhammadu Buhari decided to liberalize the oil and gas industry, on May 11, 2016, by opting for deregulation of Petroleum products as a policy by removing fuel subsidy on Petroleum products. However, 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 Petroleum or Automated Gas Oil (AGO) was extended to Kerosine Petroleum products like dual Purpose Kerosine (DPK), Aviation Turbine Kerosine (ATk) or Jet A1, and Household Kerosine (HHK), which the plaintiff deals in.

Chief Aribisala (SAN) also averred that in pursuance of participating in the deregulated oil market, in line with the aforesaid policy of the Federal government, his company applied for a loan of $4.5 million USD at interest rate of 7 percent from its bankers, subsequent to the issuance of Import permit BT the Petroleum Products Pricing Regulatory Agency (PPPRA), to the company and imported 10,000 metric tonnes of Petroleum product whice was kept at a storage facility at N3 per liter.

The deponent stated that 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, upon the eventual approval of the bid by the CBN, the deponent stated that 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 from by the Importers, thereby making the total waiting period to be six months, meanwhile, throughout the waiting period, interest charges continued to accrue on the said amount of Forex loaned to private marketers by the bank's.

The deponent also stated that despite due fulfilment, as aforesaid, 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 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), in the importation of petroleum products at a much lower, special exchange rate, to the exclusion of Independent or private marketers, including the plaintiff, who are left to the mercy of the vagaries of higher foreign exchange rate, and the rigorous conditions stipulated by foreign banks and their local agents before the Almighty Dollars could be disbursed.

The deponent further stated 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 involved in the importation of the said deregulated petroleum products.

He also averred that the major Oil marketers paid no bank interest on the above disbursement made by the respondents under the Forex Intervention fund, and since they have their own storage facilities, thet are not also paying any fee for though put storage facility like the plaintiff. He stated that selling of 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 of 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 above profit margin of the major Oil marketers, having regards to the selective intervention made in their favour by the Federal government.

The said selective intervention made by the Federal government, the deponent stated has caused the plaintiff substantial loss, or profit margin that would have accrued upon the sale of the petroleum product in the market, if the government have kept strictly to the said deregulated policy by allowing a level playing field where market forces should be allow to determine the appropriate pricing of the petroleum product.

Consequently, the deponent stated that  the plaintiff has suffered, and 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, thereby putting the plaintiff's investment in serious jeopardy.

The deponent therefore urged the court for 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 to the exclusion of other importers of Independent marketers, including the plaintiff, Spot Market Oil (Overseas) Limited, as the damages that would occur to the plaintiff, if the defendants are not restrained, would be irreparable, which will result into massive jib losses to her employees, and social economic losses to the country, and as such cannot be adequately compensated in monetary terms, if the plaintiff succeeds at the trial of the suit.

After hearing the plaintiff's Motion on Notice on Friday, the presiding judge, Justice (Professor) Chuka Obiozor, ordered the plaintiff to put all the defendants in the suit on Notice, while adjourned the matter till June 8, 2017, for hearing.

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