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Business News

Supreme Court orders Conoil to pay N13.2 billion to Vitol S.A

Downstream petrol retailer, Conoil Plc, may end 2018 on a negative note, going by a recent judgment awarded against the firm.

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Mike Adenuga, Chairman, Board of Directors, Conoil Plc

Downstream petrol retailer, Conoil Plc, may end 2018 on a negative note, going by a recent judgment awarded against the firm.

In the company’s annual report for the 12 months ended December 2017, the downstream oil firm disclosed that a Supreme Court judgment had ordered it to pay the sum of N13.2 billion to Vitol S.A.  The case had dragged on in the legal system for close to 10 years before judgment was given by the Supreme Court.

Judgement was recently given against the Company in the earlier disclosed suit between Conoil Plc and its former suppliers of Automotive Gas Oil (AGO); Vitol S.A. The commercial dispute which arose in 2008 had been contested through the High Court and the Court of Appeal but was finally decided by the Supreme Court in the month of December 2017. The board has resolved that the judgement sum of $43,322,497.57 (N13.2 billion) should be shared between the Company and Synopsis Enterprises Limited and disbursement be made to the Judgment Creditor in the ratio of 85% (N11.2 billion) by the Conoil Plc
and 15% (N2 billion) by Synopsis Enterprises Limited. The reason for this being that Synopsis Enterprises Limited as a sister Company to Conoil Plc consummated the transaction on behalf of the Company that led to the commercial dispute

Why the judgment is a heavy blow

Conoil’s retained earnings as at December 31, 2017, amounted to N13,721,190,000. Deducting its share of the judgment (amounting to N11.2 billion) leaves the company with just N2,521,190,000 in its kitty. In the event of the second judgment sum of N4.3 billion being awarded against the firm, this would leave the company with negative retained earnings.

Companies with negative retained earnings are barred from paying dividends.

The company’s auditors had also flagged the litigation and claims by suppliers as a key audit matter.

Good times continue

Despite the heavy judgment sum and another hanging like the sword of Damocles, Conoil intends paying shareholders dividends for the 2017 financial year. For the 2017 financial year, it has proposed a dividend of N2.00 per share amounting to N1,387, 904,000.

Poor corporate governance

While the terms of the agreement between Conoil Plc and Synopsis are unknown, it is puzzling that Conoil would bear the bulk of the judgement sum.  Conoil’s Chairman, Mike Adenuga, also has significant interests in Synopsis Enterprises Limited.

One would have expected that the firm would have made some provision for the judgement as the case dragged through several courts.

Conoil’s late release of financial statements has become a tradition of some sort. The company’s financial statements for the 2017 financial year were submitted to the Nigerian Stock Exchange (NSE) on June 1, 2018.

2016 financial statements were uploaded to the NSE portal on June 21, 2017. Financial statements for the 2015 financial year were submitted on September 8, 2016. The firm is yet to release its financial statements for the first quarter ended March 2018, which other listed majors have since done.

Conoil closed at N32 on Thursday, during trading session on the Nigerian Stock Exchange (NSE). Year-to-date, the stock is down 14.29%.

About Conoil Plc

Conoil Plc (formerly National Oil and Chemical Marketing Plc) was incorporated in 1960 as a private limited liability company. The company was converted to a public company on August 21, 1991.

In the year 2000, the Federal Government, through the Bureau of Public Enterprises (BPE) bought 40% of the issued ordinary shares of the company held by Shell Company of Nigeria (UK) Limited.

Following the privatisation of the company, Conpetrol Limited acquired 60% of the issued shares of the company. Following a rights issue by the company in 2002, Conpetrol Limited now holds 74.4% of the issued capital, while members of the Nigerian public hold the remaining 25.6% stake in the company. Conpetrol Limited is ultimately controlled by Mike Adenuga.

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The principal activities of the company are the marketing of refined petroleum products, manufacturing, and marketing of lubricants, household and liquefied petroleum gas for domestic and industrial use.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

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Business

Customs Apapa Command generates revenue of N65.4 billion in April

This indicates a 64% increase in collection and an unprecedented record that has never been achieved in the history of Apapa Area Command.

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Border closure: Amid N5bn daily revenue, Customs officials lament allowance slash  

The Nigerian Customs Service (NCS) Apapa Area Command has announced a revenue of N65,463,398,355.85 for the month of April—an increase of N25,585,561,139.92 compared to the same period last year.

This was disclosed by Comptroller Ibrahim Yusuf, Area Controller of Apapa command, in a press briefing on Thursday.

What Ibrahim Yusuf is saying

“This indicates a 64% increase in collection and an unprecedented record that has never been achieved in the history of Apapa Area Command.

In line with the provision of extant laws, trade guidelines and enforcement of government fiscal policy measures, the command was able to further strengthen its anti-smuggling operations against economic saboteurs through credible intelligence-driven operations.

This led to the seizure of 4×40 feet containers laden with unregistered pharmaceuticals (674 cartons of tramadol tablets in 225mg and 120mg, and 805 cartons of codeine syrup in 100ml) at APMT and SIFAX 3 bonded terminal respectively.

Other items seized in the period under review include: two containers of unprocessed wood and one container of scrap copper wire,” he said.

He added that the progress the Apapa Command made in the month of April was possible due to the resilience of the officers, citing that the Command had taken steps to ensure efficient revenue collection by creating an enabling environment for legitimate businesses to thrive.

What you should know

Recall Nairametrics reported that the Nigeria Customs Service (NCS) Apapa Command stated earlier that it generated a revenue of N159.58 billion in the first quarter of 2021.

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Business

Why prices of Iron Ore, others may rise soon

The underdeveloped mining of iron ore in Nigeria has led the nation to import the mineral which can be produced locally.

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Iron ore is an important commodity currently in high demand, due to population and infrastructure growth in developing countries, especially Nigeria.

The underdeveloped mining of iron ore in Nigeria has led the nation to import the mineral which can be produced locally. This development is expected to lead to an increase in the price of the commodity, as the nation relies solely on imported iron ore.

Why is the increase imminent

A surge in steel consumption is certain, as the world emerges from its pandemic-induced slump. This is set to drive iron ore to an unprecedented high as the biggest miners struggle to keep up with the frenzied pace of demand.

An Estate Surveyor and Developer, Tunji Lawal, told Nairametrics that expectations are that benchmark prices can get to $200 a ton – topping the record $194 hit more than a decade ago.

According to him, this is happening as Chinese steel producers ramp up production in defiance of government attempts to rein in output to control the industry’s carbon emissions.

He said, “That’s tightening an iron ore market that hadn’t fully recovered from a supply shock more than two years ago.

Iron ore prices could go higher in the short-term and exceeding $200 a ton is definitely possible and that will also push the price up in Nigeria. The price here, which is about N325,000/ton (8mm), is bound to go northward and may increase by N100,000 within a month.”

He added that the increasing demand had been boosting steel prices from Asia to North America.

Hotflex

The hike is not limited to steel, as other building materials are also expected to rise further.

Meanwhile, Dangote Cement, which increased from N2,600 to N3,800 barely a month ago, stands at N4,000/bag and still counting. The price may rise over N4,000 depending on market forces.

Lafarge Cement and BUA Cement also increased from N2,400 and N2,250 to N3,600 and N3,250 respectively, within the same period. Their prices may also rise further.

Tunde Oluwole, a fellow of the Nigerian Institute of Builders, explained that the development was caused by high-interest rates, inflation, increasing exchange rate and scarcity of forex in the country.

He said, “The increasing prices in Nigeria is a result of the combined effects of high-interest rates, devaluation of the naira, inflation, and non-effective distribution network of the materials.”

What you should know

The mining of minerals in Nigeria accounts for only 0.3% of its gross domestic product, due to the nation’s overdependence on its vast oil resources.

China accumulated a majority of the global iron ore imports in 2019, with a 69.1% share of total global imports. Japan followed behind distantly with a 7.5% share of iron ore imports.

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