Banks to lose interest on petrol subsidy-induced loans

In a move to reduce the outstanding subsidy debts owed by the Federal Government to oil marketers, the Central Bank of Nigeria (CBN) has asked Deposit Money Banks (DMB) to forgo the interest charged on petrol subsidy-induced loans advanced to oil marketers from June 2017 to December 2018.

According to a report, the CBN conveyed the message to the banks in a meeting, involving the banks and marketers in December 2018.

An industry source said,

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“We had a meeting in December in Abuja and another one in Lagos where the CBN told the banks to reverse the interest from July 2017 till date. In the banks’ books, marketers owe N800 billion; so it is a negotiation, with the CBN acting for the government. That debt is too big.

“The CBN said to the bank, ‘Rather than lose all that money, reverse one-third of it, and we will find ways to pay the balance.’ The CBN did it on behalf of the ultimate debtor, which is the government.”

The Executive Secretary, Depot and Petroleum Products Marketers Association of Nigeria, Mr Olufemi Adewole, and the National Operations Controller, Independent Petroleum Marketers Association of Nigeria, Mike Osatuyi, however, confirmed the development.

“The request was from the Federal Government to the banks, to which the CBN Governor consented on behalf of the banks that all interest on subsidy-induced loans for Premium Motor Spirit would stop 30th June 2017,” Adewole said.

Asked if all DAPPMAN members owed subsidy debts had received promissory notes for the payment of the first tranche, he said some had, while some were trying to vacate court judgments.

Nairametrics had reported that DAPPMA directed all its members to shut down operations at midnight of Sunday, December 9, 2018, until the Federal Government pays all the outstanding debt which it owed the marketers.

However, some oil marketers had received promissory notes from the Debt Management Office (DMO), which would be due on December 31, 2019, for the payment of the first tranche of N236 billion.