Banks have confiscated and placed on sale 13 tank farms, scores of filling stations, landed properties and exotic cars seized as collateral from debtors in the downstream sector, it was gathered at the weekend, as recovery of $600 million loans in the sub-sector takes a new twist.
Head of Energy, Ecobank Plc., Mr. Dolapo Oni, who confirmed the development yesterday, lamented that the sale, which began some weeks back, was suffering low patronage and undervalue. “We have placed assets, including tank farms, filling stations and some landed properties obtained from the loan recovery efforts of banks for sale,” he said.
It was earlier reported that banks were making moves to declare some tank farm owners bankrupt and take over their collateral. Stating that the liquidity challenge in the system has also constituted a threat to the banks’ efforts to secure buyers for the seized assets, Oni said that most of those who have the financial muscle to buy the assets on sale could not come forward because of fear of anti-graft agencies. “The major challenge we now have is that the assets are suffering very low patronage because no one wants to bring out huge amount needed to purchase these assets without fear of being followed by anti-graft agencies,” he said.
The Asset Management Company of Nigeria (AMCON), which, according to him, is prepared to take over the assets is, on the other hand, under-valuing the assets. “Where we place N100 million on some of them, the commission usually values them at around N30 million,” he said. The lenders, a manager at the oil and gas unit of one of the Tier 1 banks said, have earlier scaled down the number of debtors in the tank farms investments from 34 to the 13, who have shown no signs of recovery. The banks could no longer bear the brunt of harsh liquidity problem “occasioned by their overexposure to oil and gas industry,” he said after his anonymity was guaranteed.
The source added that the banks have “scaled down their hunts for debtors and collateral take-over in the depot and jetty business peopled by about 34 investors to the 13, whose loans are irrecoverably bad.” Noting that this was even a tough terrain for banks and other lenders now, Oni maintained that the bottom line, however, is that the bad loans recovery moves in the downstream sector had gone beyond collateral/ assets take over in most cases where the debts are considered irrecoverably bad.
The debt figure in the oil and gas sector, he added, is still very large, and other measures that are now being taken by banks is the deal struck to get some of the debtors to sell some of their assets. The debt recovery approach, he said, “is now happening,” adding that the banks which are now feeling the heat more than before were acting fast. “The banks’ exposure to oil and gas sector is high and the debts are huge because they are in dollars and you will understand this when you look at the difference in the exchange rate then and now. “The loans were issued at 24.7 per cent, which is more than the 20 per cent requirement by the Central Bank of Nigeria (CBN),” he said on the sideline of a conference in Lagos.