The last may not have been heard of the 2012 fuel subsidy probe, as management of financial institutions in the country may have decided to embargo further lending to non-oil majors.

The development, which may be a setback to government’s local content initiative, was revealed by the Managing Director/Chief Executive Officer, Access Bank Nigeria Plc., Mr. Aigboje Aig-Imoukhuede, at a recent risk management conference held in Lagos.

Speaking at the forum, Aig-Imoukhuede said the banks took that line of action following their unpleasant experiences with some of the transactions that bothered on financing of premium motor spirit.

According to him, flagrant abuses noticed in the subsidy process had compelled most of the banks to stop lending to both local and foreign non-oil majors, stressing that going forward credit to local oil importers must ensure that there is a level of governance within the benefiting company that could show that they would not be susceptible to a weak subsidy regime.

Furthermore, he stated that the operations personnel of such companies involved in processing of fuel import/subsidy documentations must be alive to red flags.

Such red-flags he said include constant changes in shipment locations, Form ‘M’ and irregular payment of loans which points to a pattern of possible abuse and should not be tolerated when they are seen. Aig-Imoukhuede said experience has shown that banks that fail to take precaution in lending to oil importers are likely to pay a huge price for their oversight.

It would be recalled that the Federal Government had so far recovered over N14 billion, sequel to audit exercise conducted on fuel subsidy claims.

The audit exercise was part of the efforts being made by the administration to block areas of leakages within the system, even as it has also initiated new strategies to curtail payment for bogus claims on contract jobs.

Under the new dispensation, a two-step audit claim before payment has been established, unlike the previous arrangements where payments were made relying only on witnesses. Also, the Petroleum Products Pricing Regulatory Agency (PPPRA) had reduced the number of oil importers to 32.

This agency said, is to give it enough leverage to supervise the process in a fair and transparent manner. The Access Bank boss therefore calls for a meeting of all Chief Risk Officers of banks, where ideas would be shared on the best ways to manage risk especially in the oil and gas sector.