In the, past when the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) spoke, the Federal Government listened. This is because of the strategic position of the sector to the economy as the country’s main money spinner. At its National Executive Council (NEC) meeting recently, the leader of the oil workers addressed many issues, namely the high cost of foreign exchange, and why Nigerians may not enjoy the anticipated benefits of local refining, among others, and charted the way forward. TOBA AGBOOLA writes.
Leaders of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) are not happy.The reason for the sadness is not farfetched.The Federal Government’s policies aimed at taming hyperinflation are not yielding fruits.
It has, therefore, suggested some factors as the way out of the woods. One of them is lowering the cost of foreign exchange (FX). The workers have pleaded with the government to address the high cost of FX, now hitting over N1,600 to $1, saying the highly priced FX has denied Nigerians the expected benefits of local refining. Also, it has negatively impacted the cost of the product, thereby making its price jump up and evaporating Nigerians’ hope of lowering the cost of PMS.
To the union, the weakness of the naira is responsible for this huge problem.
The workers also stated that in future the product is likely to sell at a more expensive price, if the naira continues to dwindle in value against other currencies.
Speaking at its National Executive Council (NEC) meeting in Lagos, PENGASSAN President, Comrade Festus Osifo, argued that the only factor that could arrest the prohibitive cost of petrol was a drop in international price of crude.
Osifo, also the President of Trade Union Congress (TUC), however, called for an improvement in FX liquidity supply to support growth in its sectoral utilisation.
He said: “In PENGASSAN, we believe that imports to Nigeria are likely to remain constrained by elevated inflationary pressures and expected reduction in petroleum imports due to increased domestic refining, which could tether growth in overall FX utilisation we believe that imports to Nigeria are likely to remain constrained by elevated inflationary pressures and expected reduction in petroleum imports due to increased domestic refining, which could tether growth in overall FX utilisation.
“We are worried that the downturn is likely to be driven by weakened demand induced by sustained currency depreciation and a highly inflationary environment despite the increases in utilisation for food products and in the oil sector by +40.1% y/y to USD$1.25 billion,” he said.
According to him, the disturbing weakness of the country’s naira explains the rising cost of petrol, despite the birth of Dangote Refinery and the resuscitation of the country’s old Warri Refinery and Port Harcourt Refinery.
“If the exchange rate is about N1,000 to a dollar, the price of PMS (petrol) will not be more than N500 a litre.The same thing will be applicable to diesel and kerosene. God forbid the exchange rate goes beyond N2,000 to one dollar, the pump price of PMS may rise to N1,300 or above a litre. As of today, what the local refining has done to us is just the elimination of the logistics that are associated with importation of refined products. Unless the foreign exchange is properly managed, whoever says the price of fuel will come down is lying.
He continued: “Crude is a USD (United States Dollar) international product. Even if the crude is sold to local refiners in naira, nothing will change because it is paid in the USD equivalent. So, it is based on international market value.
“In December, there was a slight downward adjustment in the pump price of PMS and others because of the appreciation of the naira in the international market. Today, the naira is depreciating and there is every indication that there will be an upward adjustment in pump price because the crude price has gone up.Therefore, that we are producing locally does not mean that the pump price of PMS will go down.’’
The oil workers’ leader advocated the need for the new Port Harcourt and Kaduna refineries to come on stream to deepen the value chain in the oil and gas sector.
He added that the full resuscitation of the national refineries and the creation of the enabling environment for the private one to thrive would add value to the country’s Gross Domestic Products and create more job opportunities in the sector.
Osifo wants the government to be deliberate, strategic and purposeful in driving the sector, as it has what it takes to produce four million per barrels of crude oil in a day.
He scored the recent oil bid round conducted by the Federal Government high on the strength of its transparency and commercial viability, which was historic in the history of sales of oil averages.
He said the transparency and commercial viability tied around the sales of the oil acreages will have multiplier effects on the country’s oil and gas sector.
Osifo also addressed other isues at the forum.
They are:
2025 Budget
Osifo described Nigeria’s 2025 budget proposal before the National Assembly as abysmal, noting that the budget of N49 trillion translating to roughly $30 billion is too small to address the challenges facing a country of over 230 million people.
“Although the 2024 budget of N27 trillion was smaller, the real value of that was quite higher in dollar terms.
“The proposed 2025 budget is very low for us as a country. When you compare this with South Africa, a country with just 60 million people and a budget exceeding $120 billion, it becomes clear how far behind we are,” he submitted.
He called for a substantial increase in the country’s budget to reflect its potential and resource endowment.
“As a country blessed with human and material resources, we should be talking about a budget of at least $200 billion. This requires harnessing our mineral wealth which includes bitumen, tin, gold, and limestone, not just for export but for value addition that generates revenue and jobs,” he added.
Osifo emphasised the inadequacy of the proposed budget in tackling Nigeria’s infrastructure deficits, citing a previous study on the nation’s road network.
“A study conducted under a former Minister of Works revealed that fixing federal roads alone would require $120 billion.
“If you allocate the entire $30 billion budget to roads, it would still take four years to complete the task. How then can we address other critical sectors like education, healthcare, and salaries?”
No problem with divestment
Osifo confirmed that the divestment of onshore assets by four International Oil Companies (IOCs) did not lead to job losses or reduced remuneration.
The international oil companies, which recently offloaded their onshore oil assets, including their human resources to Nigerian companies, include TotalEnergies, ExxonMobil, Eni and Equinor.
He said the achievement was in line with their earlier strategies to secure their members’ jobs and welfare during the divestment.
It would be recalled that in multi-billion dollar oil and gas assets divestments that were concluded last year with their final approval by the government, Italian oil giant, Eni sold its Nigerian Agip Oil Company (NAOC) to Oando Plc while ExxonMobil sold its Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy.
Moreover, French oil major, TotalEnergies divested its onshore assets to Chappal; Norwegian energy company, Equinor divested to Project Odinrin, while Shell sold its Nigerian onshore business, Shell Petroleum Development Company (SPDC) to Renaissance Africa Energy Company Limited, a consortium of five oil firms .
According to Osifo, former employees of TotalEnergies, Eni, ExxonMobil and Equinor in the divested assets have transited to their new employers without any job security or remuneration concerns.
He said: “So, on the divestment, for us, as PENGASSAN, and we wish to also announce to you, as we stated in Abuja in December, that we came up with strategies to ensure that none of our members will lose their job as a result of divestment.
“And we will announce to you that by the grace of God, today, there is none of our members that has lost his or her job because of divestment.The job has been 100 per cent guaranteed.
“We have transited from Nigeria Agip Oil Company to Oando Energy Resources Limited with zero loss to membership. We have transited from Equinor to Chappal, with zero loss of membership. We just transited from Mobil Producing Nigeria Unlimited to Seplat Energy Producing Nigeria Unlimited, with zero loss to membership.
Solution to incessant grid collapse
Osifo also spoke on the need for the appointment of experienced professionals to lead critical sectors to achieve better results.
He expressed frustration with the power sector, citing last year’s 12 to 15 power grid failures and the recent grid failure this year.
According to him, inefficiencies in this sector underscore the urgent need for competent leadership to drive improvements.
Osifo attributed these challenges to the absence of skilled and knowledgeable professionals in key positions in the Ministry of Power, the Nigerian Electricity Regulatory Commission (NERC), and related agencies. He urged the government to prioritise merit-based appointments to ensure effective leadership in the sector.
“The power sector is highly technical. Without capable individuals in critical positions, we cannot achieve sustainable solutions,” Osifo added.
He, however, commended the Federal Government’s efforts to decentralise the power sector but stressed the need for strategic leadership to complement these reforms.
Debt burden
Beyond the budget, Osifo highlighted Nigeria’s mounting debt burden, warning of its dire economic implications.
Opposing the huge deficit financing of the budget, he affirmed that a situation in the past where the country was spending about 90 per cent of its revenue to service debt was unprogressive.
His words: “So, we are calling on the government to-do everything possible to expand our revenue base. On that expansion of our revenue base, we must know how to harness our natural and mineral resources.
“Nigeria is extremely blessed with huge mineral resources.These are laying fallow. We need to tap into these mineral resources, and not just to export them as raw materials but to create value to them.
“With that, we could generate enormous jobs, and we would earn huge revenue. “Examining the budget that was submitted to the President to the National Assembly, you happen to see that it is a deficit budget where we are going to borrow a humongous amount of money, and this is also going to add to our debt profile.
“When you hear of the debt profile of the country rising periodically, they do tell us that our debt-to-Gross Domestic Product (GDP), we are doing well. But the challenge is debt to revenue.
“At a time as a country, we were spending over 90 per cent of our revenue to service debt and not to repay the debt. There is no country that will make meaningful progress by spending 90 per cent of its revenue in servicing debt.”
“So, as a country, we must be serious. As people, we must be able to examine what the government is doing and proffer solutions to them.”
Tax Reform Bills: A call for public hearings
Osifo called for a public hearing on the tax reform bills.
He said: “Other issues are those bothering on the Nigerian Tax Reform Bills before the National Assembly. We are calling on the Senate as well as the House of Representatives that public hearings should not just be jamborees.
“It should not be when they have made up their minds on what to do, they just call us for a public hearing and after that, they go back and do what they intended.
“That is not how public hearings are conducted in many parts of the world. Public hearing is for information to be collated, data to be analysed and they will form input to the bill.
“But, we have observed that in Nigeria, public hearing is just a show whereby they listen to you and they go ahead to do what they had planned to do.’’
