* PENGASSAN seeks salary review for oil workers
* Says subsidy removal saved NNPC from bankruptcy
Onyebuchi Ezigbo in Abuja
The Group Managing Director of the Nigerian National Petroleum Corporation Limited (NNPCL), Mele Kyari, has predicted that based on current policy interventions by the Federal Government, the country would most likely become a key exporter of refined petroleum products next year.
He also said that but for the pronouncement by President Bola Tinubu that gave vent to the removal of subsidy on petrol, NNPCL would have become bankrupt before the May 29th deadline provided in the budget.
Also the President, Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, has raised concern over the impact of the current economic policies on the salary of workers in the oil and gas sector, saying that the body will be pushing for a review of the salary of workers in line with current realities.
Kyari, who was the guest speaker at the ongoing Energy and Labour Summit organised by PENGASSAN, on Monday in Abuja, said that despite the challenges, the country is already witnessing some positive outcome of the subsidy removal.
For instance, Kyari said that most construction companies have started moving back to sites as more resources become available to execute projects.
He predicted that in 2024, Nigeria would become a net exporter of refined petroleum products based on ongoing policy interventions by the present administration.
The GMD, who said that what Nigeria needs today is to adjust our realities, further declared: “Today, we import 100 per cent of our production. No resource-dependent country does this and that is why we must deliver on our mandate.
“So it will be done and you will see. I don’t want to speak about it. We are tired of speaking about it. But what we must achieve is that this country must be the next exporter of petroleum product.
“I strongly believe, now without giving you a chance so that you don’t get angry again, that in 2024, this country will become a net exporter of petroleum product. The meaning of this is that we will have sufficient volumes in-country.
“When we refine locally, we do have advantages, creating wealth, creating taxes, and all forms of value chain, creating employment, and so on and so forth.”
With regard to transportation challenges arising from the removal of fuel subsidy, Kyari said there is need to fast-track the CNG initiative by embarking on mass conversion of fuel driven cars to CNG models.
He said that the country should focus more on clean energy-CNG driven transport system in the coming years, adding that the government is already working on bringing on a gas revolution by putting in place gas pipeline infrastructure aimed at making CNG gas available to all parts of the country.
Another area of focus, Kyari said, is the development of local refining capabilities.
Speaking on the vision for deregulation of the petroleum downstream sector, Kyari said that one of the unintended outcomes of the policy on removal of fuel subsidy initiated last year, was the crippling effect on the operations of the NNPCL which was forced to bear the cost of the subsidy not backed up by funds from the 2023 budget.
He said the policy decision to extend the fuel subsidy to May 29, 2023 was not backed with monetary allocation which forced NNPCL to stretch itself to its fullest and almost became bankrupt.
While recounting the issues that led to the eventual removal of fuel subsidy, Kyari said: “So by 17th of February, there is simply no legal basis, no legal provision to put subsidy on petroleum and that market should determine the price of PMS and that the state should take responsibility to ensure that consumers are protected from the price fluctuation.
“And of course, we are dealing with a very big country, over 200 million people in population. Huge issues around economic inclusion. And therefore, it became very obvious that it was not practicable to stop the placement of subsidy on PMS.
“So the National Assembly, in its wisdom, decided that ‘can we provide for financing until 30th of June 2023, so that we can now close that gap and then have the right conversation and get ready to ensure that we are addressing this appropriately? Obviously, budget is one thing. Funding is a different thing.
“And I can tell you, since 2022, when that provision was made, until the 29th of May, not a single naira was paid to the NNPC Limited as cost of subsidy. That means we are carrying it entirely on the balance sheet of the NNPC.
“We’ll hold back fiscal revenues, taxes, royalties, including properties, and yet, because we are seeing values exceeding N400 billion in a month of subsidy, there is no way even these fiscal obligations will cover for the subsidy.
“So we are heading towards what we can technically call bankruptcy of the NNPCL. Because we will go into negative cash flow. By the end of June 2023, we would have been in negative cash flow. What it simply meant was that the NNPC would have been bankrupt if that bold decision was not taken by Mr. President.”
On how to address the initial challenges accompanying deregulation of the petroleum downstream sector, the NNPC boss said that going back on the policy is not an option but that efforts should be directed on how to deal with the impact on ordinary citizens.
According to him, the federal and state governments are already taking some measures to provide palliatives and address the transportation issues.
He said that people will always cut corners as long as market does not determine the price of PMS.
Kyari revealed that as at today, the country cannot keep accurate record of fuel consumption due to absence of requisite technical capabilities.
He gave reasons Nigeria can’t have accurate record of domestic fuel consumption as cross border smuggling.
He also disclosed that the country has witnessed a drop of daily petrol evacuation from the depot by 30% since the removal of the subsidy.
“I always say that we do not have very credible data on fuel consumption in this country. The reason is very, very simple. Technology, access, cross-border smuggling, and all the other segments of our system that are still not optimum cannot allow us to have a total idea. So a fixed number around our consumption.
“So we know the evaporation. Evaporation means every litre of product that leaves the depot is known. So the trucks are known, the volume they carry, the truck driver, potential destination, fuel station, and so on and so forth.
“But we all know this. But once they get out of the depot, the next story is anybody’s case. Fuel station will have to sell to their customers because we have an energy efficiency gap. You know that. Everybody knows this. So you have to come with a tank to buy fuel in fuel station or to put in your small generator or any size.
“Then, water pumps for irrigation across the country. So it’s not possible to keep accurate data of all these except you have to have the right installations in all the fuel stations across the country. And I know this is work in progress, but it’s not there today. So we don’t have that total visibility,” he said.
In his remarks, the Minister of Labour and Employment, Mr. Simon Lalong, urged PENGASSAN members to use the opportunity of the summit to come up with ideas that will help drive the petroleum sector to greater heights.
He said that the Federal Government will continue to drive measures that will bring soccour to Nigerians and help bring relief and ensure industrial harmony.
A member of the panel of discussants at the summit, Mr. Peter Esele, said that there is need to shift the subsidy from fuel to transportation, healthcare and education so as to assuage the impact of the subsidy removal.
Esele, a former president of PENGASSAN, said that there is doubt that the government has reintroduced fuel subsidy as fuel is not selling at the appropriate rate currently.
Another panelist, the National President of National Association of Road Transport Owners (NARTO), Yusuf Othman, spoke of the challenges being encountered by the sector following the removal of fuel subsidy, saying that members have experienced depletion of resources due to inflation.
For instance, Othman said that there has been a significant reduction in the number of trucks nationwide from 50,000 to 30,000.
On his part, Frank Esonubi said that the present policy on palliative and social intervention to address the impact of subsidy removal does not adequately cover those being affected.
He suggested that government can work with local vehicle manufacturers like INNOSON Motors to fast-track the conversion to CNG vehicles.
While welcoming participants at the summit, PENGASSAN President Osifo raised concern over the impact of the current economic policies on the salary of workers in the oil and gas sector.
For instance, Osifo said that the policy on the floating of naira benefited only government and oil companies to the detriment of the workers.
He said that the situation has necessitated a call for a salary benchmark for oil and gas workers, aligning with the instrument of trade of the oil and gas commodity.
“The model practised in Angola, where legislation pegs workers’ salaries in dollars and pays them the legal tender equivalent, is a testament to the possibilities of safeguarding the interests of workers amidst currency fluctuations. The floating of the naira in the official market has exacerbated the challenges faced by our members.
“We must explore innovative solutions to forestall financial losses to workers and prevent undue gains to companies, ensuring a fair and equitable environment for all. PENGASSAN will do all it can to push for this just and equitable distribution across its branches,” he said.
