Fuel Hike: NLC, TUC Make U-Turn, Resolve to Shut Down Nigeria

• PENGASSAN , NUPENG back FG, demand N90,000 minimum wage
• Osinbajo: we can no longer provide forex for fuel importation
• Oyegun begs Nigerians for understanding
• Naira closes at N350 yesterday

By Tobi Soniyi, Onyebuchi Ezigbo and Paul Obi in Abuja; Ejiofor Alike, Obinna Chima in Lagos and Bassey Inyang in Calabar

After being consulted prior to the deregulation of the downstream sector of the oil industry, the Nigeria Labour Congress (NLC) yesterday resolved to join forces with the Trade Union Congress (TUC) to mobilise Nigerian workers to shut down the whole country starting from next week Wednesday should the federal government fail to reverse the recent hike in the price of petrol from N86.50 to N145 per litre.

However, in a sign of a major crack in the labour family, The National Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) yesterday applauded government’s decision to deregulate and  scrap fuel subsidy, describing the decision as courageous and long overdue.

They made their positions known at a press conference staged at the end of their joint National Executive Council (NEC) meeting held at the Transcorp Hotel in Calabar.

 In a related development, Vice President, Prof. Yemi Osinbajo yesterday stated the rationale behind  the federal government removal of fuel subsidy, saying it could no longer provide the foreign exchange for the importation of the product.

The NLC threat to shut down the nation was made after its National Executive Council (NEC) meeting held at the Labour House, Abuja.

The NLC NEC gave the federal government till midnight of Tuesday within which to revert to the old prices of petrol products and electricity, or face a total nationwide strike.

The congress said there would be formal communication today in Abuja about the strike option, and that labour will address all the issues at stake and plans to ground the whole country.

“The NLC has deliberately delayed their press conference till today (Saturday) in order to liaise with their TUC counterpart, harmonise their positions and jointly address the media,” said a source.

Labour also directed all its affiliate unions across the states to put in place a monitoring team to ensure the success of the planned strike.

Osinbajo: we can no longer provide forex for fuel importation

Meanwhile, the Vice President, Prof. Yemi Osinbajo has clarified that the federal government removed petrol subsidy because it could no longer provide the foreign exchange for the importation of the product.

Osinbajo said the issue was not subsidy removal but foreign exchange problem, and described President Muhammadu Buhari as one of the pro-subsidy advocates.

In a statement made available yesterday  by his spokesman, Mr. Laolu Akande, the vice president revealed that since last year, the private marketers had imported little or no product because they had been unable to get enough foreign exchange from the Central Bank of Nigeria (CBN).

He noted that until three months ago, the marketers had sourced their foreign exchange from the apex bank at the official rate.

“However, since late last year, independent marketers have brought in little or no fuel because they have been unable to get foreign exchange from the CBN. The CBN simply did not have enough. (In April, oil earnings dipped to $550 million. The amount required for fuel importation alone is about $225million!),” Osinbajo said.

“I have read the various observations about the fuel pricing regime and the attendant issues generated. All certainly have strong points.  The most important issue of course is how to shield the poor from the worst effects of the policy,” he added.

Providing further explanation to justify the measure, Osinbajo said the real issue was not a removal of subsidy, adding that a $40 a barrel there was not much of a subsidy to remove.

He described President Muhammadu Buhari as probably one of the most convinced pro-subsidy advocates.

“What happened is as follows: our local consumption of fuel is almost entirely imported. The NNPC exchanges crude from its joint venture share to provide about 50 per cent of local fuel consumption. The remaining 50 per cent is imported by major and independent marketers,” he said.

According to him, the NNPC tried to cover the 50 per cent shortfall by dedicating more export crude for domestic consumption.

He said besides the short term depletion of the Federation Account, which is where the federal government and States are paid from, and further cash-call debts pilling up, the corporation also lacked the capacity to distribute 100 per cent of local consumption around the country.

Osinbajo added that previously, NNPC was responsible for only about 50 per cent.

“We realised that we were left with only one option. This was to allow independent marketers and any Nigerian entity to source their own foreign exchange and import fuel. We expect that foreign exchange will be sourced at an average of about N285 to the dollar, (current interbank rate). They would then be restricted to selling at a price between N135 and N145 per litre.

“We expect that with competition, more private refineries, and NNPC refineries working at full capacity, prices will drop considerably. Our target is that by Q4 2018 we should be producing 70% of our fuel needs locally. At the moment even if all the refineries are working optimally they will produce just about 40% of our domestic fuel needs,” Osinbajo explained.

The vice president said he did not mention other details of the PPPRA cost template because he wanted to focus on the cost component largely responsible for the substantial rise, namely foreign exchange.

“This is therefore not a subsidy removal issue but a foreign exchange problem, in the face of dwindling earnings,” he added.

PENGASSAN, NUPENG back FG, demand N90,000 minimum wage…

National President of NUPENG, Comrade Igwe Achese, who addressed journalists on behalf of both bodies, described government’s decision to deregulate the downstream sector as a courageous policy that was long overdue.

“The deregulation of the sector is what we have been agitating for, for the past eight years or more. But each time we want to react, Nigerians want to live on the bedrock of lies. And that has been our problem. We have been living on the bedrock of lies. Successive governments come in, what we hear are full of lies. The oil and gas sector must have transparency and it is only when it is transparent that the nation’s economy will begin to grow and job opportunities would be created.

NUPENG and PENGASSAN however said that they would push for a new minimum wage of N90,000, given the new development. “With the new pump price of N145 per litre, government must speed up the negotiation process for a new minimum wage of N90,000 to cushion the effect of the envisaged inflation. As the price of fuel increases, there should also be an increment in workers’ salary as the old minimum wage of N18,000 has no effect again,’’ they stated.

Oyegun Begs Nigerians for Understanding…

Following negative reactions to the sudden increase in the price of premium motor spirit, the National Chairman of the All Progressives Congress (APC) has appealed to Nigerians, labour unions and other civil society groups to show understanding on the situation that has led to removal of subsidy.

Oyegun who spoke to journalists in Abuja yesterday said Nigerians have a right to subsidy on oil but that over time, the subsidy regime had become so abused that it was no longer operating in the interest of the Nigerian public.

Meanwhile, an industry expert who declined to be named speaks further on the fuel subsidy controversy: “A lot of people have been asking the question about the difference between the attempt by Jonathan to deregulate in 2012 and what Buhari has done in 2016. Some people are trying to be partisan with this issue but the truth of the matter is that we are talking about two very different situations and I will break them down to economic and political.

“On the economic standpoint, let’s first start from the beginning. Nigeria’s petroleum consumption is about 40 million liters per day. Our four refineries working at hundred per cent capacity only provide 18 million liters per day therefore we must import the balance of 22 million liters per day more than our local production capacity. So anybody that says we are only importing because the refineries are not working is not correct factually. We are importing because our refineries cannot provide the consumption capacity.”

Naira Depreciates Further on Fuel Subsidy Removal…

The Naira continued its downswing on the parallel market yesterday as it fell to N350 to a dollar yesterday, lower than the N341 to a dollar it closed the previous day as oil marketers scramble for foreign exchange following the new template for petrol importation that was fixed by the PPPRA.

The sharp decline was once more blamed on the government’s announcement of the removal of fuel subsidies and the green light given to oil marketers to source their forex requirements from parallel or autonomous market sources.

Some currency traders predicted that the currency would continue to depreciate on the parallel market in the coming days as pressure of forex demand mounts.

The CEO, Financial Derivatives Company Limited, Mr. Bismark Rewane had said the parallel market does not have the depth to fund the importation of petroleum products, arguing that the central bank needs to find a way to continue to fund petrol importation.

“If they say they can’t fund the importation of petrol from the official market, then why do we have that market?

“But the government cannot push the funding of petrol to the parallel market because the market does not have the depth to fund the importation of petrol. “What we will see is a situation where the NNPC will be selling petrol at a different price while other marketers would be selling at a different rate, thereby creating a dual exchange rate regime,” he added.