TheNewsGuru

Tag: Debt

  • FIRS shuts MRS Oil over N497m tax debt

    The Federal Inland Revenue Service on Wednesday closed down an MRS Oil’s facility in Lagos over a tax debt amounting to N497.1m, an action the agency described as part of measures being taken against tax-defaulting companies in the country.

    An enforcement team, led by Mrs. Anita Erinne, reportedly sealed off the premises of the MRS Oil and Gas Company Limited at 2,Tin Can Island Road, Apapa, Lagos.

    But the company said through its accountant, who identified himself simply as Samson, that it had cleared the debt.

    A statement by the FIRS said the chief security officer of the oil company ordered security guards to prevent the FIRS team from going beyond the reception area, leading to a two-hour argument during which the MRS Oil’s workers refused to vacate their offices as directed by the FIRS officials.

    When the argument ended, Erinne ordered the main gates to the company to be sealed off.

    “The team also visited Kaplan International College Limited situated at 1, Adeola Odeku Street, Victoria Island, which was also sealed over a N50.5m tax debt,” the statement added.

    The enforcement team had, on Tuesday, shut the premises of Amyn Investment Limited, situated at 21/25 Broad Street, Lagos. The company is said to be indebted to the tune of N12.5m.

    A similar fate befell Floorenzo West Africa Limited, situated at 6, Boyle Street, Lagos, which owes N310m, it stated.

    The FIRS gave the names of others affected by the closure as the FDHL, situated at 9/11, Osborne Terrace House, Udi Street, Osborne Ikoyi, said to own N22.3m; and Nadabo Energy Limited, whose debt was given as N24.9m.

    The enforcement team of the FIRS had last month sealed off four companies in Lagos and Port Harcourt for reportedly failing to meet their tax obligations totalling N630m.

    Erinne had told the defaulting firms that the companies’ premises would be unsealed when they cleared their outstanding tax bills.

    She warned the workers not to unseal or tamper with the FIRS seal until the debts were cleared and warned that any attempt to remove the seal would be a contravention of the law.

  • Banks remove $1.2b 9Mobile debt from records

    The 12 banks involved in the $1.2 billion 9Mobile loan are setting aside a large part of the debt from their books ahead of the December 31 end-date for the fiscal year.

    The mobile company took the loan four years ago from a consortium of banks. It failed to repay the loan due to a currency crisis and the economic recession.

    In the deal are: Zenith Bank, GTBank, First Bank, United Bank for Africa, Fidelity Bank, Access Bank, Ecobank, First City Monument Bank, Stanbic IBTC and Union Bank.

    TheNewsGuru.com reports that Zenith Bank had on Monday announced that it had made a provision on 30 per cent of its loan to 9Mobile, the country’s fourth largest telecoms group formerly known as Etisalat Nigeria.

    The bank’s Chief Executive Officer, Peter Amangbo, said: “We have taken about 30 per cent … as a provision, which we believe is very prudent as the company is undergoing restructuring … to prepare for a new investor.”

    According to a reliable source, Zenith Bank is the largest lender to 9Mobile. The bank has declined to disclose its exposure to the telecoms group. The Tier-1 lender had last week reported a pre-tax profit of N92.18 billion for its half year against N53.91 billion a year ago.

    TheNewsGuru.com recalls that the Central Bank of Nigeria (CBN) and the Nigerian Communication Commission (NCC) in July saved Etisalat Nigeria from collapse, stopping the company from going into receivership. But the telecom giant witnessed a board, management and name change.

    Former Keystone Bank Executive Director Richard Obire said many other banks were likely to provide for certain percentage of the loans, depending on their profitability positions.

    He said Zenith Bank, being a highly profitable bank, was thinking that it might not be able to recover the full money. “Zenith may be considering that when it gets down to negotiation with 9Mobile, it may end up giving about 30 per cent of the debt. The debtor may ask for more restructuring and loan forgiveness,” Obire said.

    According to him, some banks are conservative and may want to stay within the five per cent regulatory non-performing loan threshold while some may want to exceed the limit. “Banks that are making more money are more likely to provide for their loans than those with less profitability,” he said.

    Obire said by exceeding the 10 per cent peg for sub-standard loans to go for 30 per cent provision, Zenith Bank was indirectly saying that although the loan was not doubtful, but it was more than sub-standard. “If the bank does 30 per cent provision on the loan in 2017, it may do 50 per cent in 2018 while considering the variables surrounding the loans,” he said.

    Head Treasuries at Ecobank Nigeria Olakunle Ezun said it is expected that the banks will provide for the loan, which he described as a bad debt. “For now, 9Mobile loan is like a non-performing loan for the banks. I understand that the banks are trying to restructure the loan. If they succeed, it will become a performing loan; otherwise it will have to be provided for in their books,” he said.

    He said more banks may provide for the loan by year-end, but such a decision will be determined by the boards and their interpretation of the future of 9Mobile.

    According to CBN Prudential Guidelines, banks are expected to review their credit portfolio continuously (at least once in a quarter) with a view to recognising any deterioration in credit quality. Such reviews should systematically and realistically classify banks’ credit exposures based on the perceived risks of default.

    To facilitate comparability of banks’ classification of their credit portfolios, the guidelines said assessment of risk of default should be based on criteria, which should include, but are not limited to, repayment performance, borrower’s repayment capacity on the basis of current financial condition and net realisable value of collateral.

    The CBN prudential guidelines stipulate that a credit facility should be deemed as non-performing when interest or principal is due and unpaid for 90 days or more; interest payments equal to 90 days interest or more have been capitalized, rescheduled or rolled over into a new loan.

    The guideline said a loan can be substandard, doubtful or lost. A loan is subs-standard when unpaid principal and/or interest remain outstanding for more than 90 days but less than 180 days. Credit facilities which display well defined weaknesses which could affect the ability of borrowers to repay, such as inadequate cash flow to service debt, undercapitalisation or insufficient working capital, absence of adequate financial information or collateral documentation, among others, are said to be sub-standard.

    According to the CBN guidelines, a loan is classified as doubtful when unpaid principal and/or interest remain outstanding for at least 180 days but less than 360 days and in addition to the weaknesses associated with sub-standard credit facilities reflect that full repayment of the debt is not certain or that realisable collateral values will be insufficient to cover bank’s exposure.

    A loan is classified as lost when unpaid principal and/or interest remain outstanding for 360 days or more and in addition to the weaknesses associated with doubtful credit facilities, are considered uncollectible and are of such little value that continuation as a bankable asset is unrealistic.

     

  • AMCON, EFCC collaborate on recovery of N4.6bn debt nationwide

    The Asset Management Corporation of Nigeria (AMCON) says it is collaborating with the Economic and Financial Crimes Commission (EFCC) as strategy to recover N4.6 billion from debtors across the country.

    The corporation said this in a statement issued after a meeting with the management of the EFCC on Thursday in Lagos.

    It said the decision was for both agencies to consolidate on the gains in the areas of investigating, prosecuting and compelling all obligors of AMCON in accordance with the relevant statutes.

    The agencies said they were working on taking another look at some banks and their officials that were instrumental to the abuse and violation of internal processes that led to the huge non-performing loans in AMCON’s portfolio.

    “The agencies are planning to revisit, reinvestigate and duly prosecute such banks and the responsible officials,” the statement said.

    The EFCC Acting Chairman,Mr Ibrahim Magu, who welcomed the Managing Director,AMCON Mr Ahmed Kuru, and his team described the assignments of both agencies of government as “very tough, overwhelming and challenging.”

    He however added that he was happy that AMCON under Kuru is doing everything within its mandate to confront the obligors with all the risks involved in the process of doing so.

    He said it was for that reason that EFCC established AMCON Desk with dedicated EFCC officials that ensured that all AMCON related cases in EFCC received speedy attention.

    Magu assured Kuru that the AMCON Desk at EFCC would continue to be functional adding that the EFCC was willing to increase the number of personnel on the desk if so required.

    He said that the agency would be willing to establish a Lagos branch if necessary to make sure these huge loans are recovered in the interest of the Nigerian economy.

    The EFCC boss affirmed that some of those obligors “who took loans without the intention of paying back” did not envisage that someday an agency like AMCON would come knocking on their doors seeking to recover the loans.

    Magu, therefore, condemned the impunity with which those transactions were done.

    According to him, giving the similarity in the objectives of both agencies, the acting EFCC boss said there was need for joint training towards fostering better understanding between AMCON and the EFCC.

    While reaffirming the commitment of the EFCC to cooperate and provide the much needed support to AMCON, Magu urged AMCON to ensure justice is done in all cases.

    He said that was because most of the obligors might not have acted alone in their unwillingness to repay, but might involve the connivance of some of the bank officials whose motive was to cheat the banks ab-initio.

    He, however, disclosed that “in appropriate circumstances, these bankers would also be called upon to account for their roles in granting these questionable facilities.”

    Kuru thanked the Acting Chairman of EFCC for receiving the AMCON delegation and appreciation for his passion and cooperation in the collaboration with AMCON toward recovering the enormous bad debts from recalcitrant obligors of AMCON.

    He also thanked the acting chairman for creating that unit that had led to several recoveries while appreciating the contribution of the AMCON Desk at EFCC.

    He said that AMCON was willing to provide the required support to the AMCON Desk at EFCC by providing information, logistics and training to the team.

    Recounting AMCON’s role in the economy especially in the banking sector, Kuru said that since its establishment, AMCON acquired debts from 22 banks worth N3.7 trillion and provided financial accommodation to 10 banks of about N2.2 trillion.

    He observed that despite AMCON’s recovery efforts, the corporation still holds unresolved loans in excess of N4.6trillion which represents about 75 per cent of total national budget.

    The managing director expressed concern that failure on the part of AMCON to resolve the debts will have far reaching implication for the nation at large.(NAN)

  • Nigeria’s debt rises by N7.1tn in two years

    Nigeria’s debt rises by N7.1tn in two years

    The nation’s total indebtedness to foreign and local creditors now stands at N19.16tn, the Debt Management Office has said. This is N1.8tn increase from the N17.36tn recorded at the end of December 2016.

    As of March 31, 2015, the country’s total debt stood at N12.06tn. This means the debt level increased by N7.1tn in two years.

    Segmenting the national debt, the DMO put the Federal Government’s domestic debt at N11.97tn. Two years ago, as of March 31, 2015, this component of the debt burden stood at N8.51tn.

    This means that within a period of two years, the Federal Government has borrowed a total of N3.46tn from domestic creditors. This shows that the domestic debt of the Federal Government has increased by 40.71 per cent.

    In the same period, the country’s external debt (for the federal and state governments) rose from $9.46bn to $13.81bn. This means that within the two-year period, the country’s external debt rose by $4.35bn or 45.98 per cent.

    The external debt component, however, has been affected by exchange rate variations as the last two years have witnessed noticeable changes in foreign exchange rates.

    According to the DMO, the official exchange rate of N306.35 to $1 was used in calculating the country’s external debt for March 31, 2017, while the official rate of N197 to $1 was used in determining the foreign debt for March 31, 2015.

    The domestic debt component of the states stood at N2.96tn as of March 31, 2017, up from the figure of N1.69bn at the same time in 2015.

    This means that within the period of two years, the domestic debt of the states rose by N1.27tn or 75.15 per cent.

    Amidst drying revenues from oil and gas, the government has in the last two years increasingly depended on borrowing even to carry out routine responsibilities.

    Although foreign debts are accounted as cheaper than domestic debts, the government has increasingly depended on domestic sources of borrowing as foreign donors place more stringent conditions before granting credit facilities to the government.

    To raise the required funds from the domestic debt market, the Federal Government has been active in the market with a number of instruments, including FGN Bonds and the Nigeria Treasury Bill. It recently floated a new instrument known as the FGN Savings Bond.

    The International Monetary Fund had recently projected that Nigeria’s indebtedness would climb to 24.1 per cent of the nation’s Gross Domestic Product by 2018. It said that the country’s current indebtedness would have reached 23.3 per cent of the GDP by the end of 2017.

    The country closed 2016 with a debt to GDP ratio of 18.6 per cent. By the end of 2015, Nigeria’s debt to GDP ratio stood at 12.1 per cent, according to the Bretton Wood institution.

    Nigeria’s GDP for the year ended December 31, 2016 stood at N67.98tn, according to the National Bureau of Statistics.

    Going by the projection of 24.1 per cent for 2018, within three years, the nation’s debt to GDP ratio would have gone up by 100 per cent, from 12.1 per cent in 2015.

    Although Nigeria’s debt to GDP ratio is considered among the lowest in Africa, some experts have expressed worries about the increase in debt accumulation in recent years, while others are worried about the quality and utilisation of the debts.

    The World Bank recently expressed concern over the debt servicing to revenue ratio, saying that reduced earnings might render the country’s debt unsustainable. A total of N1.84tn was provided in the 2017 budget for debt servicing.

    Nigeria’s debt profile is dominated by local debts, which are characterised by high interest rates. Efforts are being made to secure more foreign debts and reduce the exposure of the Federal Government to the domestic debt market.

  • Nigeria’s debt profile now $57.39bn — DMO

    The Debt Management Office, DMO, on Sunday said the nation’s total debt profile currently stood at $57.39 billion.

    Director-General of DMO, Dr. Abraham Nwankwo disclosed this when he appeared before the Senator Shehu Sani’s Committee on Foreign and Local Debts to defend his agency’s budget proposal.

    The DG said the total debt stock comprised external and domestic debts of the federal government, those of the 36 states of the federation and the Federal Capital Territory, FCT, as at December 31, 2016.

    Nwankwo explained that of the total debt stock, external debt stood at $11.41 billion, while domestic debt stock was put at $45.98 billion.

    According to him, the 36 states and FCT accounted for about 32.45 percent of the total external debt as at December 31,2016, while the federal government accounted for about 67.55 percent.

    He added that the disaggregated external debt stock of the 36 states and FCT as at June 2016 was $3.65 billion, while the disaggregated domestic debt stock of the states and the FCT as at September 2016 was N2,822.89 billion.

    Explaining the increase in the debt profile, Nwankwo said: “We observed that the increase was about 6.5 percent and this was as a result of additional disbursement because we don’t disburse a good number of the external loan we take at a go.”

    Nwankwo who noted that the domestic debt stock by instruments as at 31st December, 2016 stood at N11,058,204,296,592.00, adding that federal government bonds were N7,564,937,465,592.00; Nigerian Treasury Bills, N3,277,278,831,000.00; and Treasury bonds, N215,988,000,000.00.

    When chairman of the committee, Senator Sani asked why the debt profile had not been forgiven, at least with the goodwill of the present government, the DMO boss said Nigeria would not beg for debt forgiveness, since the economy was in good shape.

    Senator Sani, who was apparently not comfortable with the position of the DMO Director- General, said: “It is shocking that in 2016, people don’t find it easy to feed their families, pay the fees of their children, pay their rents.

    ‘’Now things are in very bad shape, but not typical of somebody who lives with the people, but somebody speaking from an expert point of view to say we are not in a bad position to ask for forgiveness.

    ‘’These are two things, if you are talking from the point of how our people live nowadays, you will not be able to say such things. But you are speaking naturally as an expert.

    ‘’Our most concern is the fact that most of the states simply collect money, piled up so many debts for their children and grandchildren and there is nothing to show for it. Many of them couldn’t pay salaries and we have seen how some new sets of cash disbursement were done to them from excess crude account to ecological funds.”

     

  • More facts on AMCON’s aquisition of Arik Air

    More facts on AMCON’s aquisition of Arik Air

    The Asset Management Corporation of Nigeria,yesterday took over the operations of, Arik Air, and appointed Capt. Roy Ukpebo Ilegbodu as its new manager.

    TheNewsGuru.com gathered that the embattled airline was indebted to alone to the tune of over N300bn, with AMCON alone owed N135bn.

    Officials of the aviation arm of the Federal Ministry of Transportation and AMCON revealed yesterday that Arik was immersed in a heavy financial debt burden that was threatening to permanently ground the airline.

    AMCON stated in a statement that for some time now, the airline, which carries about 55 per cent of the load in the country, had been going through difficult times, attributable to its bad corporate governance, erratic operations, inability to pay staff salaries and heavy debt burden, among other issues.

    This, it said, led to calls on the government to intervene before Arik would go under like many before it.

    It stated that the takeover, which underscored the government’s decision to instil sanity in the nation’s aviation sector, had prevented a major catastrophe that would, among other factors, protect and preserve Arik Air as a going concern.

    The development, AMCON said, would afford Arik to go back to regular and undisrupted operations, avoid job losses, protect investors and stakeholders’ funds as well as ensure safety and stability in the already challenged aviation sector.

     

    “The airline will now be managed by Capt. Roy Ukpebo Ilegbodu, a veteran aviation expert, under the receivership of Mr. Oluseye Opasanya SAN,” AMCON said in the statement.

    Explaining the reason for the takeover, the Minister of State for Aviation, Senator Hadi Siriki, was quoted to have said, “We believe that this appointment (of Ilegbodu) is timely and will stabilise the operations of the airline.

    “This will enhance the long-term economic value of Arik Air and revitalise the airline’s ailing operations as well as sustain safety standards in view of Arik Air’s pivotal role in the Nigerian aviation sector.”

    The minister pledged that the Federal Ministry of Aviation would support the new management of the strategic carrier, adding that all necessary steps had been taken to ensure that there would be no undue disruption to Arik’s regular business operations or activities of other stakeholders on account of the change in the leadership and management of the airline.

    Ilegbodu also assured both the staff members of the airline and all other stakeholders that his appointment would enhance the value of the airline, improve customer experience, and sustain the safety, reliable and secure operational history of the airline before all those were eroded.

  • Controversial OAP, Freeze exposes lady indebted to him

    Cool Fm’s controversial presenter, Freeze has called out Kiibati Bankole a sports presenter on Instagram asking her to pay up the debt owed him.

    Daddy Freeze who has been trying to reach her to no avail decided to call her out on social media. He said she has been ignoring his calls, text messages which resulted to him resorting to social media.

    Meanwhile Kiibati who is obviously unperturbed by Freeze’s revelation recently uploaded a video of herself dancing to a song in her car.

    2017 is already looking like the year of controversies in the Nigerian entertainment industry.

     

     

     

  • Ekiti civil servant commits suicide over unpaid salary, accumulated debts

    Ekiti civil servant commits suicide over unpaid salary, accumulated debts

     

    Tragedy struck in Ao Ekiti, the Ekiti State capital on Thursday as a civil servant Tope Afolayan, said to be on Level 12, committed suicide over unpaid debt.

    Afolayan, a native of Oye Ekiti, worked in the office of the Accountant General of the State until the incident happened last Thursday.

    He is survived by a wife, who is a teacher at a public school in Ado Ekiti and three children. Afolayan was also a final year Law student at the Ekiti State University (EKSU).

    The deceased was also said to be an interpreter at a Christ Apostolic Church (CAC) branch in Ekute area of Ado Ekiti.

    His colleague, who spoke on the condition of anonymity on Sunday disclosed that Afolayan committed suicide by hanging himself in the ceiling of his house, located on Peace Avenue, Olorunda, Ado Ekiti.

    Afolayan, who has since been buried, did not leave any suicide note before taking his life.

    He was, however, said to have consistently complained of failure to pay his debts because of the non-payment of arrears of salaries owed government workers.

    A source said: “Although he didn’t leave any suicide note before hanging himself, he had been very moody and heartbroken for a couple of weeks before the incident happened.

    “He had been complaining about the debts he owed which he was unable to defray because of the arrears of salaries. In fact, he was among the last batch of applicants for car loan but his name did not come out.

    “We are shocked by Tope’s death because nobody thought he would go to that extent, we are still mourning his death.”

    Police spokesman Alberto Adeyemi confirmed the incident which, according to him, was reported at New Iyin Road Police Station in Ado Ekiti.