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Banks yet to honour FG’s promissory notes as subsidy arrears payments linger

Two months after the Federal Government the first tranche of N236 billion out of an estimated N800 billion subsidy arrears owed oil marketers, indications have emerged that Deposit Money Banks (DMBs) have yet to honour the financial instrument.

A promissory note, often referred to as a note payable, is a legal instrument (particularly, a financial and debt instrument), in which one party (the maker or issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time.

On December 14, 2018, the Federal Government had said the N236 billion payment was the first tranche of the outstanding N348 billion subsidy claims it owed members of the Major Oil Marketers Association of Nigeria (MOMAN) and the Depot and Petroleum Products Marketers Association (DAPPMA).

The Chief Operating Officer, Downstream, Nigerian National Petroleum Corporation (NNPC), Henry Ikem-Obih, disclosed this to journalists after a meeting with officials of petroleum product marketers in Abuja.

Ikem-Obih stated that the remaining portion of the claims would be paid in 2019.

Confirming the development to Daily Sun in a telephone interview, Executive Secretary of DAPPMA, Mr. Olufemi Adewole, said the government action was regrettable as its members were yet to access the funds from the respective DMBs.

He lamented that at the moment, majority of DAPPMA members are still struggling to remain in business due to the nation’s harsh operating environment, while those that can no longer cope with the trend have retrench some of their workers to cut cost.

He further said that some banks have commenced asset stripping procedures against some of its members who have failed to meet their financial obligations to them.

‘‘The banks, as I speak, have not effected payments on the promissory notes approved by the Central Bank of Nigeria (CBN). It is a though one for those of us operating in the downstream sector of the petroleum industry. We are not finding the situation palatable at all.’’

A top management staff of a second generation bank who spoke to Daily Sun in confidence said it was unfortunate that government has turned around blackmailing oil marketers as saboteurs, when in actual fact it was not being sincere.

The official said no bank in Nigeria will be willing to act on promissory notes from the Federal Government because the document is as worthless as a piece of paper, adding that government had in the past failed to fulfill its obligations on promissory notes it issued.

He explained further that oil marketers had initially rejected the promissory notes because it will amount to discounted invoice due to the time value of money as government would not be paying the money immediately. They (marketers) cannot get the actual value as some percentage would have been knocked off the amount to cover for time lost.

Source: The Sun