The Managements of Africa Petroleum (AP) and Access Bank are at each other’s jugular over a $35 million facility, with Access Bank asking the court to grant it relief to wind up the petroleum company.
Trouble started when Access Bank asked for repayment of the facility in dollars due to exchange rate fluctuation.
According to the Chief Operating officer of African Petroleum Plc, Mr. Tunde Falasinnu, Access Bank had requested that the petroleum marketing firm be wound up for failure to pay a debt of about $35 million.
Access Bank, it was learnt, had told a Federal High Court sitting in Lagos that AP is insolvent hence it could not pay the $35 million debt.
The bank therefore asked that the company be wound up. Falasinnu, however, told newsmen yesterday that AP refused to pay the debt because the bank was allegedly requesting that the debt be paid in dollars and at the prevalent open market rate.
Giving details and genesis of the crisis, he said that the debt arose from a facility the bank granted AP to finance the importation of petroleum products. He told newsmen that pursuant to financing of the vessel, AP registered a Form M with the Central Bank (CBN) and a letter of credit was opened at the rate of N116 to the dollar.
According to him, trouble started when Access Bank on December 2, 2008 sent a debit advice, saying that the money should be paid using an exchange rate of N127 to the dollar. He said that AP objected to the rate and petitioned the CBN, saying the company was willing to adhere to the final decision of the apex bank on the issue.
He said “We are still awaiting the decision of CBN on the matter before we saw the advertorial requesting for the winding up of the company. The request sounds very ridiculous. We cannot just allow ourselves to be cheated because if we pay that amount, the bank is ripping us off to the tune of N440 million in just one transaction”, he said.
The AP boss said that the company has never denied owing Access Bank, “but consider the demand inappropriate since it will amount to round tripping to use the same documents to purchase foreign exchange from the CBN.”
He said that AP made this position known to the Access Bank via a letter dated June 3, 2009. He said that the action of the bank might have ulterior motives. In its petition to Director, Banking Supervision Department, CBN, dated May 15, 2009, AP had explained that, “We opened an account with Access Bank in 2007.
They availed us a $50 million facility on May 12, 2008 for the purpose of importing petroleum products through letter of credit. On July 25, 2008 a letter of credit was opened in favour of Glencore Energy UK Limited on our behalf by Access Bank.
The receiving bank — BNP Paribas SA. Amount on the letter of credit was $38,973,000. The actual amount negotiated and paid was $35,153,822.15 as contained in the commercial invoice dated August 2008 by Glencore Energy.
On December 2nd December, 2008, Access Bank advised through a debit note dated 1st December that our account has been debited with N4,464,353,413.05 being the Naira value of $35,153,822.15 at N126/$. We objected to this rate and informed them of the official rate of N116.67 by CBN as at that date through our letter dated 2nd December 2008.
The bank has done four LCs before this disputed one. The LCs were paid according to normal documentary credit through the CBN bid options.”
AP told the CBN that the request by the Access Bank to pay them in foreign currency is inappropriate for following reasons: The Form M and Proforma Invoice were used to open a Letter of Credit for the import; the suppliers have been paid using the CBN fund at the rate as at November 2008 or earlier; using the same forms to purchase Forex will amount to round tripping, an offence the company said it will not associate itself with.