Economy
Mass Sack Looms in Oil Industry over N720b Debt
By Guardian
Except the Federal Government pays all petroleum subsidy arrears of over $2 billion (N720 billion) owed oil marketers, many employees in the downstream sector may soon be thrown into the labour market.
Already, the oil marketers have disclosed plans to embark on mass retrenchment of workers as government fails to pay the outstanding subsidy owed on the importation of petroleum products, accrued interest on loans from banks and exchange rate differential.
The government’s delay in the payment of the over N720 billion debt has made marketers to halt the importation of petrol, leaving the Nigerian National Petroleum Corporation (NNPC) to become the sole importer of the essential commodity. The marketers said as a result of the non-payment of interest and foreign exchange differentials, they had gradually become financially handicapped to continue operating profitably.
Both the Ministry of Finance and the Petroleum Products Pricing and Regulatory Agency (PPPRA) could not be reached for comments last night. Text messages sent to the mobile phones of their spokesmen — Lanre Oladele (finance ministry) and Salisu Saleh of the PPPRA— did not elicit any response as at press time, even as several calls put to their phones rang out. But presidency sources had confirmed to The Guardian that efforts were being made to settle all outstanding issues in the sub-sector.
The marketers, who operate under the aegis of Major Oil Marketers Association of Nigeria (MOMAN); Independent Petroleum Marketers Association of Nigeria (IPMAN); Depot and Petroleum Products Marketers Association (DAPPMA); and Independent Petroleum Products Importers (IPPIs), added that government’s delay in settling all the debts was threatening massive investment in the downstream sector.
A statement by the marketers after their joint meeting in Lagos yesterday which was signed by their legal adviser, Patrick Etim Esq, revealed that many petrol sellers and oil companies are owing their workers over eight months’ salaries due to the inability of the Federal Government to pay the debt.
The marketers appealed for an urgent intervention of government by the authorisation to pay outstanding interest and foreign exchange differentials owed them to date to save their businesses from total collapse. They alleged that government violated the agreement reached with them on payment schedule.
They claimed that the commercial banks that lent money to them for the importation of petrol were still in despair following the weight of the indebtedness of the oil sellers, even as their operations nationwide were fast grinding to a halt. They said the hope that the outstanding subsidy would be paid following the intervention of the Vice President, Yemi Osinbajo, appeared to have been shattered as the payment promised to be effected in July 2017 was yet to materialise.
The statement reads in part: “This is devastating to marketers as we are being dragged daily by banks on debts owed and under threat of putting our tank farms under receivership.
“The condition of the contract is that the government shall pay the difference between the landing cost and the selling price of petrol (as fixed by government) provided that the landing cost is higher than the selling price.
“The government approved the landing cost which fluctuated as it depended mainly on the international price of petrol and exchange rate of naira/dollar. A key term of the government’s contract with marketers is that the under-recovery payments shall be paid to marketers within 45 days of submission of documents evidencing discharge of petrol cargo and trucking out from storage.”
According to the marketers, it was also agreed that after 45 days, the government should pay the interest charges on the loans taken to finance the importation of petrol.
Explaining their ordeal, the marketers said they opened letters of credit at the approximate exchange rate of N197/$1.00 while petrol cargoes were supplied and sold at the selling prices approved by government and the repayment was calculated using the above exchange rate.
The marketers stated that it was only in the first quarter of 2017 that the banks were able to liquidate the letters of credit from 2014/ 2015 at N360/$ as against the N176-195/$ at the time the LC’s were opened because of lack of foreign exchange from the government, leaving their accounts with the huge differential.
“The recent further devaluation of the naira from N195 to N305, and later to over N365 to US$1, while the Federal Government agencies based their reimbursement calculation on N197 to $1, left petroleum marketers within our association with additional debt burden in excess of N600 billion. This is in addition to the over N250 billion arrears owed.
“The downstream sector as a whole, is now saddled with a debt burden of over N850 billion which keeps rising because the banks are still charging interests until the total debt is fully liquidated,’’ the marketers claimed.
On the implication, they said the operations of the marketers had been halted with a backlog of staff salaries remaining unpaid for about eight months now.
But the other stakeholders called for dialogue, emphasising the need for the government to provide incentives and create an enabling environment for the establishment of private refineries.
The Chairman, Lagos Chamber of Commerce and Industry (LCCI) Petroleum Downstream Group, Ken Abazie, described the planned retrenchment by oil marketers as a normal business decision in a challenging environment.
He said that the oil marketers were in business to make profit and therefore may be forced to retrench if there were no returns on investment.
According to Abazie, “if you are no more making money, I wonder why you should still be keeping employees in the company. The current fixed price of N145 a litre for petrol is not profitable for marketers. If we are not importing, automatically, we are not in business and if we are not in business, there is no need to keep the workforce. This is the current challenge for every investor in the downstream sector.”
He said that businesses were crumbling, as NNPC became the sole importer of petroleum products in the country.
To Abazie, the funds the government is using for the importation of petroleum products should be directed to capital projects.
The Executive Secretary of the association, Obafemi Olawore, urged the Federal Government to pay the outstanding debts of $2 billion owed on the importation of petrol products and the accrued interests on bank loans.
According to him, the delay in the repayment of the loan debts owed the banks by marketers has led to the retrenchment in the banking and the oil and gas sectors.
“The debts have impacted grossly on marketers. Only a very few are presently importing insignificant quantity of petroleum products into the country,’’ he said.
Olawore said that the plea was to avert the scarcity of petroleum products in the country.
According to him, the inability of the marketers to import fuel has impacted negatively on loading activities at the Apapa and Dockyard private depots in Lagos.
Head, Programmes and Membership, Institute of Directors’ Centre for Corporate Governance, Nerus Ekezie, said that government should verify and pay all the subsidy arrears.
He said that the impact the retrenchment would have on the economy would be too much for the country to handle, especially during this period of economic recession.
Ekezie pleaded with the oil marketers to exercise patience and engage in a dialogue with the Federal Government in respect to the settlement of the subsidy arrears.
He stressed the need for the Federal Government to find a lasting solution to the issues of fuel subsidy arrears.
He said that government should encourage the establishment of private refiners through the provision of incentives to bring a lasting solution to the issue of petroleum imports. “Government should pay what it is owes the oil marketers and fully deregulate the downstream sector.,” he added.
By Adedapo Adesanya
Nigerian businessman and chief executive of Dangote Industries Limited, Mr Aliko Dangote, has unveiled plans for a new phase of investments and acquisitions as the conglomerate pushes towards its target of generating $100 billion in annual revenue by 2030.
Mr Dangote disclosed this while receiving a delegation of senior executives from global investment banking and financial services firm Goldman Sachs, led by co-chief executive of Goldman Sachs International and Global Co-Head of Investment Banking, Mr Anthony Gutman, during a tour of the Dangote Petroleum Refinery & Petrochemicals and Dangote Fertiliser Limited complex in Lagos.
Speaking after the visit, Mr Dangote said the refinery and associated industrial facilities underscore the transformative impact of long-term investment in Africa, stressing that the group’s ambitions extend beyond its current strategic plan.
“No matter how we try to explain what we have built, you cannot fully appreciate it until you see it. But this is only the beginning. We need to look beyond 2030.
“The next phase of our journey will include new investments and acquisitions as we continue to scale the business,” he said.
He added that detailed internal modelling had reinforced management’s confidence that the Group’s target of generating $100 billion in annual revenue by 2030 was achievable.
According to him, the projections were based on conservative assumptions and had strengthened the company’s conviction to pursue an even more ambitious long-term growth strategy.
Mr Dangote also revealed that the strong participation of employees in the refinery’s recent private placement reflected growing internal confidence in the company’s long-term strategy and future prospects.
The Goldman Sachs delegation, after an extensive tour of the 700,000 barrels-per-day refinery, described the project as an extraordinary achievement.
“It is extraordinary what Mr Dangote and the whole organisation have achieved. The ambition, the scale of the project, the quality of the project and the culture of the people is very impressive,” the executives said.
According to a statement issued by Dangote Group on Friday, the delegation was led by Mr Anthony Gutman and included Mr Adib N. Zouein, Co-Head of EMEA Emerging Markets Regional Sales and Head of the Middle East and North Africa region for Global Banking & Markets Public; Mr Ryad Yousuf, Global Head of FICC Sales Strats and Structuring; and Mr Jimi Adesanya, Head of Sub-Saharan Africa Sales (excluding South Africa).
The visitors were received by Dangote; Group Vice President, Oil & Gas, Mr Devakumar Edwin; Managing Director and Chief Executive Officer of Dangote Petroleum Refinery & Petrochemicals, Mr David Bird; Group Executive Director, Oil & Gas, Ms Fatima Aliko Dangote; Chief of Staff to the President/CEO, Ibrahim Dikko; Group Chief Branding and Communication Officer, Mr Anthony Chiejina; Group Chief Economist, Mr Hassan Mahmud; Group Chief Strategy Officer, Mr Aliyu Suleiman; and Head of Administration, Dangote Petroleum Refinery & Petrochemicals, Mr Musa Bala, among other senior executives.
By Adedapo Adesanya
The Senate Public Accounts Committee has heard that Nigeria spent N1.16 trillion on fuel subsidy in 2021, while N1.20 trillion was deducted from federation crude oil sales proceeds during the same period.
The disclosure came from the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mr Mohammed Bello Shehu, during the committee’s ongoing investigation into the 2021 to 2023 Nigeria Extractive Industries Transparency Initiative (NEITI) audit reports on the oil and gas sector.
According to the commission, crude and petroleum product losses cost N16.2 billion, pipeline repairs accounted for N22.05 billion, while strategic stock holding attracted N6.75 billion.
The revelations come against the backdrop of Nigeria’s long-running fuel subsidy regime, which successive governments maintained to keep the pump price of petrol artificially low despite mounting fiscal pressures.
Over the years, subsidy payments consumed trillions of Naira, significantly reducing revenues available to the three tiers of government and contributing to widening budget deficits.
The issue reached a turning point in May 2023 when President Bola Tinubu announced the removal of fuel subsidy during his inauguration speech, declaring that “fuel subsidy is gone.” The decision followed years of concerns over the rising cost of the programme, allegations of fraud, and repeated recommendations by fiscal authorities and international financial institutions that the subsidy had become unsustainable.
The removal triggered a sharp increase in the pump price of Premium Motor Spirit (petrol), leading to higher transportation and living costs across the country. In response, the federal government introduced a series of palliative measures, including cash transfers, support for mass transit, and wage-related interventions, while arguing that savings from the subsidy would be redirected to infrastructure, education, healthcare, and other critical sectors of the economy.
The commission also argued that the current method of calculating the 13 per cent derivation fund undermines the constitutional intention of the policy.
Meanwhile, the committee stood down the Niger Delta Development Commission’s presentation until next Wednesday to allow lawmakers review its submission.
The committee also expressed displeasure over the absence of the Auditor-General of the Federation, warning that he must appear before lawmakers next Tuesday or face compulsory appearance through the constitutional powers of the National Assembly.
By Adedapo Adesanya
Businesses in the country expect the Naira to gradually appreciate against the US Dollar between now and January 2027, according to the Central Bank of Nigeria’s (CBN) July 2026 Business Expectations Survey Report released on Thursday.
The report showed that the Business Confidence Index (BCI) remained positive throughout the review period despite perceived macroeconomic challenges. It noted that all sectors expressed optimism about the economy, with the electricity, gas and water sector posting the highest Business Confidence Index of 59.4 points and the strongest expansion prospects for August 2026.
According to the report, “In July 2026, the Business Confidence Index was 5.7 points, reflecting continued optimistic sentiment among formal businesses.”
It attributed the positive sentiment mainly to increased demand (22.3 per cent), economic diversification (21.4 per cent), and improved access to finance (15.0 per cent). However, respondents identified inflation (27.7 per cent), energy-related challenges (23.4 per cent), insecurity (22.4 per cent), and heightened geopolitical uncertainties (16.5 per cent) as the major factors weighing on business confidence.
On the outlook by broad sector, the central bank said confidence remained positive across all sectors in July. The Industry sector recorded a modest improvement, with its index rising to 11.5 points from 10.5 points, while the Services sector increased to 3.6 points from 2.9 points.
By contrast, the Agriculture sector recorded a significant moderation, with its index falling to 3.4 points from 12.2 points.
Despite this, the apex bank said the six-month outlook remained upbeat, with confidence indices across all sectors indicating positive expectations over the review period.
On the macroeconomic outlook by region, the report noted a divergence in sentiment, with businesses in Northern Nigeria expressing stronger confidence than their Southern counterparts in July. Nevertheless, respondents across all regions maintained positive expectations for August.
