Fuel Price Hike: FG, Labour Meet Today, to Continue Negotiations

Major marketers insist on full deregulation Mull investment in private refineries

Ejiofor Alike in Lagos and Paul Obi in Abuja
The federal government and the Nigerian Labour Congress (NLC) are expected to meet today in continuation of negotiations on the fuel pump price increment and removal of subsidy.

According to the Director of Press,  Ministry of Labour and Employment, Mr. Samuel Olowookere, the meeting would take place in the office of the Secretary to the Government of Federation (SGF).
Olowookere said: “The negotiation between the federal government and Ayuba Wabba-led NLC would reconvene today at 2p.m. and the venue is the conference hall of the Office of the SGF.”

THISDAY could not confirm the participation of NLC at today’s meeting. All efforts to reach the Secretary General of NLC were not fruitful as he was not available for comments.
Meanwhile, the ultimatum by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) to embark on a nationwide strike effective mid-night, of May 24, 2016, has been suspended.
This was sequel to the intervention of the Minister of Labour and Employment, Senator Chris Ngige, and the Minister of State for Petroleum, Dr. Ibe Kachikwu.

In a conciliatory, pre-strike meeting yesterday in Abuja, Kachikwu held talks with PENGASSAN and other stakeholders on the vexed issue of Joint Venture Cash Call, (JVCC), the arrears of which have not been paid to the Joint Venture partners, hence the threat by the International Oil Companies (IOCs)  to lay off their Nigerian workers while refusing to pay some of their allowances due to an alleged shortage of cash.

Kachikwu explained that his ministry was restructuring the operational modalities of the Joint Venture Cash Call especially in view of the low oil prices but assured the union, the JVCC partners and other stakeholders of positive and agreeable results when the meeting reconvenes in late June.

Ngige who hosted the meeting, promised  that the oil industry stakeholders’ committee dealing with the issues of labour malpractices like long contracting of staff, casualisation and unilateral declaration of redundancy by the oil contractors and the IOCs on the one hand, as well as the unnecessary and incessant issuing of threats of strike by the unions would resume next month.

“We all recall that this committee was headed by the late Minister of State for Labour and Employment, James Ocholi, but in view of the importance and the urgency of the committee, I will assume its full leadership in June to accelerate and bring its assignment to a fruitful completion, part of which is to generate some oil- labour regulations into laws for the Petroleum Industry Bill (PIB),” he said.

The National President of PENGASSAN, Francis Johnson, thanked the two ministers for the elucidative and insightful responses to their agitations and assured them that the union was quite satisfied with the position of government on issues in conflict, therefore, the decision to shelve the planned strike with immediate effect.

Inputs from the Ministries of Finance, Budget and Planning, and that of Works, Power and Housing on other issues raised by the union are expected at the next meeting scheduled for June 23, 2016.
Meanwhile, Major Oil Marketers Association of Nigeria (MOMAN) has insisted that only a full deregulation of the downstream sector would provide permanent solution to the perennial challenges associated with sourcing petrol and foreign exchange.

This is coming as some major and independent marketers are considering the possibility of investing in private refineries following the recent price adjustment by the federal government.
The Executive Secretary of MOMAN, Mr. Obafemi Olawore, however, told journalists in Lagos yesterday that deregulation and not the recent price fixing or price adjustment would permanently resolve the challenges in product supply and souring foreign exchange.
Olawore noted that the price adjustment was a necessary step forward but added that only a deregulated market would resolve the challenges permanently.

“To me, deregulation is not what happened. What has happened is price adjustment – what the government chooses to call appropriate pricing, which is a step along the line. To me, full deregulation should see us starting from the refining process,” he said.

He added that: “There was a time we had full deregulation in Nigeria. When we had full deregulation, the major marketers then were: Esso, Total, Agip, Mobil, Texaco, Shell and BP. Shell and BP built a refinery in Port Harcourt and operated the refinery. What the other marketers did was to buy their crude oil and take to the refinery to refine and they pay the refining fee. When pay the refining fee, you take the product to your own tanks.

And in those days, apart from Apapa, Shell had tanks in Port Harcourt, while Mobil had tanks in Bukuru, Jos. Port Harcourt refinery was linked to these tanks by the rail system. So, you take your product to your tanks and store it there and from there, you move your product to your retail outlets. So, deregulation should start at the point you source for your crude and take to a refinery. When this happens, Marketer A will have different overhead and refining fee from Marketer B, so that each marketer will sell at different price,” he explained.
Olawore recalled that in those days, Agip use to sell petrol at the lowest price among all the marketers.

“Deregulation should enable each marketer decide the price it wants to sell. Deregulation should enable each marketer to sell different grades of the same product. You may have come across the fact that in Nigerian filling stations in those days, we use to sell Regular Petrol, Super Petrol, Premium Petrol and Five Star Petrol, which was meant for big SUVs. So, you could go to filling stations to buy the type of petrol that suits your car and these products were sold at different prices. That is deregulation, not price fixing,” Olawore said.

Olawore pointed out that but for the support being provided by the international oil companies (IOCs) in the supply of foreign exchange under an arrangement brokered by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, the major marketers would have found it very difficult to access forex at reasonable price.

“ExxonMobil supported Mobil; Total Upstream support Total; Shell supported Conoil; Agip is supposed to support Oando because Unipetrol bought Agip downstream, which became Oando; NNPC is supposed to support Forte Oil and MRS,” Olawore said.
He added despite the support, the marketers were still experiencing serious challenges because of the high cost of foreign.

According to him, while the N145 per litre pump price was based on exchange rate of N285 per dollar, the major marketers are sourcing for dollar at N320, which translates to N165 per litre.
Olawore, however, revealed that the recent price adjustment was a big incentive to investors, who are now discussing the possibility of making investments in private refineries.
He called on the federal government to avoid policy reversal to boost investment in the downstream sector.