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Nairaland Forum / Nairaland / General / FUEL IMPORTS: The Real Cabal By Henry Boyo (539 Views)
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FUEL IMPORTS: The Real Cabal By Henry Boyo by sammiestar: 10:00am On Jul 07, 2015 |
A cursory survey of media reports on the downstream oil sector suggests that the prevailing popular belief is that a predatory cabal has a vice grip over the business of fuel importation. There is concern, therefore, that this, presumably, vicious class of businessmen would do everything to ensure that refineries will never work, and that the subsidy regime would subsist, while fuel supply will continue to be carefully manipulated to regularly induce artificial scarcity so that bountiful profits can be harvested from the attendant sufferings and economic dislocation deliberately caused by the oil cabal. Nonetheless, it will be useful to examine the process of fuel importation more closely to actually identify the real beneficiaries in this business. Indeed, the major oil marketers, Total, Mobil, Oando, Conoil, NNPC inclusive, and a few others have not been fingered for collecting subsidy with fake import papers. However, it may be more difficult to vouch for the innocence of the motley subset of hundreds of indigenous independent marketers, as this class also accommodates the ubiquitous briefcase importer, who is clearly, a more footloose buccaneer.It would probably be more difficult to find a contrary view to the above popular perception, than it is to find the proverbial needle in a haystack. Besides, the widely reported ‘extreme’ annual subsidy values seem to also confirm that these fuel barons make a kill on the back of fellow Nigerians. Furthermore, despite several allegations that marketers collect billions of Naira as refund of subsidies on fuel supplies which were never delivered, no convictions have, surprisingly, so far resulted from EFCC’s tenuos efforts. Sadly, much to the chagrin of the public, the snail speed procedure for prosecuting financial crimes, may, postpone judgment day for fuel subsidy racketeers, while a judicial process that is allegedly compromised may actually also set the guilty free. However, let us examine, hereafter, how profitable the fuel supply business is for bonafide importers, who have to borrow billions of dollars and Naira to finance their operations. The available data from the National Bureau of Statistics indicates that fuel accounts for over 40% of Nigeria’s total foreign exchange expenditure on imports annually. Thus, the consolidated forex requirement for genuine importers will exceed $5bn annually. Instructively, commercial banks would buy the required dollars, predominantly, from the Central Bank at the official rate and then add between 1-2% premium on their purchases before selling forex to importers; the banks could easily earn up to $100m from such simple exchange transactions. However, the premium on each dollar sold may well exceed N10 per dollar, whenever dollar is relatively scarce and the parallel market exchange rate is over N220 while official rate remains below N200/$ as is currently the case. It is also not immediately obvious to non business persons, that the same banks lend fuel importers the Trillions of Naira which they subsequently exchange for dollars; presently, marketers would pay between... CONTINUE : http://www.beriahng.com/2015/07/fuel-imports-real-cabal-by-henry-boyo.html |
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