Tuesday, January 29,2019
About 3,000 contract employees at depots, marine storage facilities and retail outlets of the major oil marketers in Nigeria are jittery as the business ties between lenders and fuel marketers hit record low.
The fear that this situation could lead to salary cut and outright loss of job, New Telegraph gathered exclusively at the weekend, is rocking the downstream sector.
The sector had earlier been declared bearish by stakeholders.
Executive Secretary of MOMAN, Clement Isong, told this newspaper on the side-line of a press conference in Lagos that most of his members’ businesses were now running at a loss.
With this development, the lenders, he said, were not in best of relationships with marketers.
According to him, the return on investment (RoI) in the downstream made with loan facilities from banks is very low and the future of the downstream sector is very bleak, if the economic situation is allowed to continue.
A marine storage contractor for one of the major marketers, however, told New Telegraph at the weekend that contract staff bloc was unsettled by what is playing out.
“Direct staff on the payroll of major marketers in Nigeria are well over 1,500. They are protected by unions in case of salary cut or outright job loss. Don’t forget that it is natural that the first set of workers that usually suffer from a situation like this are the contract staff. As we speak, over 3,000 staff are in this category and everyone is jittery of likely unpleasant outcome of the situation,” he said after his anonymity was guaranteed.
Although MOMAN was silent on effects of their dipping ties with lenders, the association peopled by 11 Plc., Conoil, Forte Oil, MRS, OVH Energy and Total validated the figure of staff strength as given by the contractor.
MOMAN staff strength, a document by the association showed, comprises of 1,500 direct staff, 3,000 indirect staff and over 100,000 indirect staff.
These members of staff are engaged on key assets of MOMAN across the country, including 23 depots nationwide, 2,454 retail outlets, 11 lubricant blending plants and seven marine storage/jetty installations.
Other assets where employees are engaged are four bitumen plants, 511,480 MT gas storage facilities and 50 admin officers, 5,182 drivers of trucks under contract and three LPG installations.
Meanwhile, fuel marketers and gas retailers are bickering over licences issued by Department of Petroleum Resources (DPR) for cooking gas kits at filling stations.
The National Association of Liquefied Petroleum Gas Marketers (NALPGAM) had earlier called on the DPR to withdraw licences issued to filling stations for the construction of LPG kits and sale of cooking gas in the premises of their station.
Raising a red flag over what it claimed to be alleged looming danger, the gas marketers stated that having a petrol station, eatery and gas plant in the same location must be discouraged.
Major marketers, however, bemoaned this claim, describing it as selfish and erroneous.
Fielding questions from New Telegraph, Chairman of MOMAN, Adetunji Oyebanji, said that the DPR was peopled by professional, who know the right from their left and could not be spoon-fed by anyone on how to do their jobs.
“Every member of MOMAN with LPG plant has licences issued to them by DPR and other appropriate agencies,” he said, declaring that “no group has monopoly of how to operate gas plant and kits.”
Everybody, he said, “must follow the laid down standards.”
Asked about the state of business in the downstream sub-sector, Oyebanji, who doubles as Managing Director of 11 Plc., a leading private importing and trading firm, stated that the credit rating of most of private importers had dropped drastically.
“One thing that is certain is that we are business men and you cannot invest in any venture where return on your investment is not guaranteed. As we speak many businesses in the sub-sector are folding up. Based on the financial crisis we had, we are no more banks’ favorite customers,” he said.
On refining, he said: “You need between $1 billion and $10 billion funding for the refining business and because of our history with the lenders it is extremely difficult to get loans from the lenders for this venture. Therefore, we cannot continue with any investment in refinery for now.”
He stated that NNPC was now the major importer of fuel with over 90 per cent margin. The Corporation has been bearing the under-recovery emanating from this.
“NNPC did not ask anyone of us to stop importation of fuel, what we only found out is that the market is extremely unfavuorable to fuel importation by private investors,” Oyabanji said.
Under-recovery of premium motor spirit (PMS), also known as petrol, recently dropped to N20 per litre from over N80 in the last quarter of 2018.
NNPC, which confirmed this in a document sighted by this newspaper, however, noted that the Federal Government was still committed to bearing the additional cost above the regulated price of N145 per litre.