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  "documentTitle": "Olam International Ltd. (SGX:O32)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson Block",
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  "presentationDate": "2012-11-27 00:00:00",
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  "notes": "The slide discusses the volatility and regulatory risks associated with government grants, specifically EEGs in Nigeria and grant income in Gabon.",
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      "text": "If Olam were really passing along EEG benefits on to suppliers, their disappearance would have little to no effect on Olam's bottom line.",
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      "text": "Additionally, the EEG faces pressure from both the Nigerian Customs Service and local businesses. As recently as 2011, the Nigerian Customs Service has rejected NGN60 billion of EEGs issued to companies like Olam, rendering them worthless. Having spoken to an EEG expert, we understand the Nigerian Customs Service has been given a quota for the amount of duties it must collect, and the EEGs hinder their ability to meet the quota. This has affected the NDCC's market value. Third parties had been charging a 5% discount when purchasing the EEGs from exporters, however, this has now increased to 20% in light of the increased risk of rejection and this reduces Olam's recoverability on the EEGs.",
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      "text": "EEGs do not significantly impact its P&L. In 2008, the Managing Director of Olam Nigeria appealed to the Nigerian Senate to review the EEG, which was suspended at the time. In 2010, Olam presented a position paper to improve the EEGs, which contained the phrase \"EEG policy - essential for survival and growth of value added exports\". Another example is the swift response to suggestions that customs are rejecting EEGs by stating that all their EEGs remain valid. If Olam were really passing along EEG benefits on to suppliers, their disappearance would have little to no effect on Olam's bottom line.",
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      "text": "The grant income from the Republic of Gabon, which relates to \"the conceptualization, marketing and promotion of the special economic zone in Gabon\", decreased from S$32.7 million in 2011 to S$25.9 million in 2012. As the special economic zone is filled up, we would not be surprised if this grant income continues to decrease.",
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      "text": "The EEGs have had a colorful history of being suspended, changed, and not being honored by Nigerian Customs. While the present Nigerian government appears to stand strongly behind the EEGs, this is not concrete. Since 2007, the EEG has been suspended twice - in 2008 and 2011 - for various reasons, including possible abuse of the EEG by exporters. This has also created a backlog of approximately NGN100 billion that is yet to be paid by the Nigerian government.",
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      "text": "\"EEG policy - essential for survival and growth of value added exports\" — Olam position paper (2010)",
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      "text": "Footnotes 44-53 detailing sources for the claims made in the text.",
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      "text": "Are EEGs Sustainable?",
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