A Review of the Nigerian Energy Industry

Unpaid subsidy dispute pushes NUPENG to the brink

Emmanuel Edukugho

25 August 2012, Sweetcrude, LAGOS – FOR some time now, Nigerians have been living in fear of an impending national strike by the National Union of Petroleum and Natural Gas Workers, NUPENG, over unpaid subsidy claims of oil marketers who imported fuel into the country as agreed with the government.
Indeed, NUPENG had commenced the strike in the Federal Capital Territory of Abuja over a week ago, with the resultant fuel scarcity and long vehicle queues at fuel stations across the city.

While some of the oil marketers have been paid, the government is insistent not to pay subsidy claims to the others without proper verification. NUPENG had issued ultimatum to the government to commence a nationwide strike by Friday, August 24, 2012 if government failed to settle the outstanding claims to the oil marketing and trading companies.

To avert the looming strike, NUPENG, representatives of the Nigeria Labour Congress, NLC, Trade Union Congress, TUC, had been meeting with the government team led by Senator Pius Anyim, Secretary to government.

It was on the auspices of this meeting that a truce was reached just before the weekend with the parties deffering further meetings by two weeks. This paved the way for NUPENG to suspend the strike on Thursday.

NUPENG President, Comrade Igwe Achese had at a press conference on Monday, August 20, 2012 called on the Minister of Finance, Dr. Ngozi Okonjo-Iweala to pay all outstanding subsidy payments to the NNPC and the private depot owners who have been asked by the same government to import fuel.

“We state that the failure of the Minister to meet NNPC and marketers payment obligation is a ploy to create hardship on Nigerians. This is a plan for them to put up the refineries for privatisation to their cronies at ridiculous rates. That is why we are asking the Minister on the rationale behind the selective payments of the subsidy claims if her hands are clean,”he said in an address at the press parley.

Achese stated that if the government is sincere in its subsidy payment without having any selfish interest, why are they not fully implementing the finding of the ad hoc committee on subsidy, set up by the House of Representatives.

“We are happy of the revelations of corrupt practices involving some ministers in the whole exercise of selective payments”.

On the strike in Abuja, he endorsed the industrial action to demand for payments of subsidy because of “our traditional role of protecting workers who are Nigerians and members of NUPENG in the mid and downstream sector of the oil and gas industry, especially those working at the private depots.”

The NUPENG president added: “Their jobs are at stake as the marketers can no longer keep them due to huge debts owed as a result of the non-payment of subsidy. Our members are even been owed five months salaries as a result of the problem.”

He condemned the illegal diversion of crude oil meant for our refineries which is being sold at the open market.

“This is a clear case of economic sabotage and must stop especially at the Port Harcourt Refinery.”He called on the Federal Government to commence Turn-Around-Main tenance of the Port Harcourt Refinery to boost fuel supply in the country and other refineries.

Also of concern to him is the issue of bad roads as he called on the Federal Government to immediately commence the rehabilitation of depot roads and our national highways that are in terrible state.

“This will go a long way to reduce tanker accidents and fire disasters.”
Before the most recent meetings between government and NUPENG, there was meeting on July 27, 2012, involving the Federal Ministry of Labour and Productivity, Federal Ministry of Finance, Nigerian National Petroleum Corporation, NNPC, Petroleum Products Pricing Regulatory Ágency, PPPRA, Jetties and Petroleum Tank Farm Owners Association, JEPTFON, and the National Union of Petroleum and Natural Gas Workers, NUPENG.

After extensive deliberations, a communique was issued and signed by Igwe Achese, NUPENG President, Engr. Andrew Yakubu, GMD, NNPC, Enoch B. Kanawa, JEPTFON; Mr. Reginald Stanley, Executive Secretary, PPPRA; Dr. Yerima Lawan Ngama, Minister of State, Finance; and Chief Emeka Wogu, Minister of Labour and Productivity.

It was agreed as follows:
*Payment of 2012 Petroleum Subsidy – Government after noting the concerns expressed by NUPENG and JEPTFON, affirmed that the payment of Petroleum subsidy for 2012 has commenced. The issuance of Sovereign Debt Notes (SDN) for verified and processed batches will be concluded within two weeks.

*NUPENG expressed its dissatisfaction on the state of the Refineries in the country and requested for TAM of the refineries to commence as scheduled. That NNPC will ensure availability of crude oil to all the refineries.

*Bad roads that are so deplorable in and out of refineries and the danger posed by such roads. The Government assured NUPENG that immediate attention would be given to the access roads leading to the refineries in Port Harcourt and Warri.

Achese had blamed misinformation for the negative attitude of the public to the looming strike, saying NUPENG is not against the prosecution of marketers who defrauded government, but those who supplied fuel genuinely should be paid in order to settle their workers owed several months salaries.

Dr. Okonjo-Iweala, in her reaction said payment can’t be made at the expense of national interest, alleging that the union is being used by oil marketers to embark on strike in respect of the non-payment of subsidy claims.

According to the Federal Ministry of Finance, the position of Federal Government on fuel subsidy payment is clear: We will do our best to encourage honest efforts by genuine companies engaged in fuel importation but will not fall for cheap blackmail of indicted marketers who are using all kinds of subterfuge to escape sanctions. That the money belongs to all Nigerians and it is important that the correct steps are taken to protect the public interest.

Government pointed out that marketers with legitimate and unencumbered claims have been paid and will continued to be paid.

Sweetcrude checks showed that between April and May 2012, claims to the amount of N17 billion were fully settled, and since early July, about N25.6 billion paid. In all, between April and August 2012, a total of N42.666 billion had been paid to 31 oil marketing companies.

It will be recalled that following the work of the presidential committee on Fuel Subsidy Payments led by Mr. Aigboje Aig-Imoukhuede, some companies are being investigated based on evidence of fraudulent activities under the fuel subsidy regime.

The report recommended that such oil marketing and trading companies should refund various amounts to the national treasury. About 25 firms are listed to be prosecuted accordingly.

Dr. Bright Okogu, Director-General Budget, explaining government’s position on television, urged Nigerians to stand up and not allow NUPENG take the country for a ride, saying that if a union has problem, it should clear it with the government. That the strike is like trying to block those genuine oil marketers who want to do business with government.

He said that President Goodluck Jonathan has directed that the claims of all the companies be properly verified and those with infractions which can be reconciled be settled and cleared as well as payment of the honest ones.

Okogu affirmed that the presidential committee had done a forensic work, excellent job completed. Therefore for NUPENG to say government should just go ahead and pay every marketer is not what the people want. They should come with documents and clarify their claims for payment. Many companies were cleared, but some had infractions in their documents.

“We cannot pretend all is well and let government funds go down the drain. Some companies claimed they brought in products in vessels which were discovered to be in Europe and Asia at the time. How? We want to solve this problem. It’s a defining moment, if resolved, we will have a bright future,” he said.

Okogu disclosed that the committee is still verifying marketers and paying the honest ones even after the sallah and hoped it would soon be brought to conclusion as everything has been done to expedite action and won’t be a long process.

President of TUC, Peter Esele says strike action by NUPENG is not the best option. The issue can be settled amicably, insisting that all marketers cannot be fraudulent. The good ones should be identified and paid.

Galtiman Liman, an energy expert and public policy analyst, who spoke on the issue said the Federal Government had been in weak position in relation to the gas and oil sector because it is critical to the national economy.

Unless the issues are strategically tackled the nation will continue to have such crisis.
He called on president Jonathan to declare a state of emergency in the oil sector. Fuel crisis has lingered for too long. There is need for sanity.

There is need to address the structural deficiencies like building more refineries, which may not be high-tech ones, stop land based haulage of petroleum products, replace obsolete pipelines.

Nigerians are hoping that the current two-week truce between the government and NUPENG will see a permanent solution to the subsidy claims imbroglio, thereby saving Nigerians from the fuel scarcity and sufferings they are likely to face if NUPENG embarks on its planned nationwide strike.

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