A Review of the Nigerian Energy Industry

Oil workers threaten strike over N800bn owed marketers

*Petrol dispenser nozzle.

Oscarline Onwuemenyi

06 October 2017, Sweetcrude, Abuja – Oil marketers have said the Petroleum and Natural Gas Workers Senior Staff Association and the National Union of Petroleum and Natural Gas Workers are threatening to embark on a nationwide strike over the backlog of salaries owed their members.

The marketers, in a communiqué after their joint National Executive Council meeting, said the salaries were owed following the inability of Federal Government to settle the accumulated debts of over N800bn owed oil marketers.

According to a statement, the unions said the strike had become absolutely necessary following the continuous deteriorating welfare of their members working in the various companies owned by oil marketers.

The marketers under the following groups, the Major Oil Marketers Association of Nigeria, Independent Petroleum Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association and Independent Petroleum Products Importers, said most banks were planning to take over their tank farms.

They said this was as a result of their inability to pay back money borrowed to import products, for which the government had not paid.

According to the statement, many of the oil marketing companies are owed up to nine months’ salaries while some marketers have resorted to retrenchment of workers.

It stated, “There is a need for President Muhammadu Buhari’s government to keep improving governance, especially by correcting wrongs of previous governments and making government responsive to its contracts and responsibilities.

“For the banks, their action is to see how they can avert another round of banking system failure that could be triggered by this huge non-performing loans owed them by oil marketers who cannot pay because the government is yet to pay them outstanding indebtedness.”

The statement said the Federal Government in June 2017 concluded the reconciliation with the marketers and the Petroleum Products Pricing Regulatory Agency and made a commitment to pay before the end of July.

It said, “This was following the intervention of the Vice President (who was Acting President at that time). The reconciliation team was led by the Chief of Staff to the President and the Minister of Finance.

According to the marketers, the first source of the N800bn debt is the non-payment of the balance of over N300bn under-recoveries under the PPPRA importation template owed the marketers, which has been reconciled and audited since 2015 and provided for in the 2015 supplementary budget as well as the 2016 budget.

They said the second source of the N800bn debt was the failure of the government and the Central Bank of Nigeria to provide foreign exchange to banks that financed the importation of the petroleum products, particularly the Premium Motor Spirit, in 2015 by marketers on behalf of the government.

According to the statement, the banks used their dollar confirmation credit lines with foreign banks to open Letters of Credit at exchange rates between N168/$ and N198/$, in line with the approved PPPRA template as of the date of each import.

They said when the LCs became due, the Nigerian banks defaulted in their obligations because the central bank did not provide the dollars. The marketers said that the defaults by Nigerian banks made many foreign banks to withdraw their dollar confirmation lines to the Nigerian banks and they started insisting on dollar cash for the LCs from Nigeria.

The statement said, “Following this development, the CBN then did the so-called intervention by providing dollars to local banks for the payment of past due Letters of Credit to their foreign creditor banks.

“For reasons best known to the central bank and the government, they provided the dollars for these Letters of Credit at rates between N285/$ and N320/$ as against the N168 $ and N198/$ that was the government approved template for the LCs. This resulted in an additional N500bn in debt; this debit balance the banks quickly passed into the account of the marketers instead of asking the central bank to take responsibility.”

In this article

Join the Conversation