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
The National Pension Commission (PenCom) has defended its decision to allow Pension Fund Administrators (PFAs) to invest in the parent companies of their custodians, insisting that adequate safeguards are in place to protect contributors’ funds.
The director-general of the pension regulator, Ms Omolola Oloworaran, speaking on Tuesday during the Meet the Press Briefing at the Presidential Villa, Abuja, said the commission’s decision to relax the investment restriction followed a comprehensive risk assessment that found minimal conflict of interest.
She explained that under PenCom’s investment regulations, PFAs are only permitted to invest pension assets in carefully selected instruments that meet stringent criteria, including profitability, strong credit ratings and proven track records.
According to her, the commission regularly reviews its investment regulations, conducts routine examinations and spot checks on PFAs to ensure strict compliance with established risk management guidelines.
“PFAs cannot just go into the stock market and buy any kind of stock. There are strict guidelines. Companies must demonstrate profitability, have a proven track record and satisfy other criteria before pension funds can invest,” she said.
Ms Oloworaran noted that each PFA also operates under the oversight of a board, an investment committee and a risk management committee, providing additional layers of governance to safeguard contributors’ funds.
She said PenCom recently issued a circular allowing PFAs to invest in the parent companies of their custodians after determining that the potential conflict of interest was negligible.
The PenCom boss explained that the parent companies involved are largely Tier-1 banks, including First Bank, United Bank for Africa (UBA) and Zenith Bank, which she described as A-rated institutions with strong financial foundations.
She said the policy was intended to widen investment opportunities for pension funds without compromising safety.
Using Stanbic IBTC as an example, Ms Oloworaran explained that if its custodian is Zenith Bank, the previous restriction prevented the pension administrator from investing in Zenith Bank shares despite the bank’s strong performance.
“We reviewed the risks and any potential conflict of interest and found the risks to be very low. That is why we opened that investment window,” she said.
By Aduragbemi Omiyale
Analysts at Meristem Research have predicted that the inflation rate for June 2026 in Nigeria should marginally rise to 15.95 per cent on a year-on-year basis from the 15.93 per cent reported in May 2026.
The National Bureau of Statistics (NBS) is expected to release inflation numbers for last month later today, Wednesday, July 15, 2026.
In its report sighted by Business Post, Meristem Research said it expects inflationary pressures to re-emerge across key economies in the near term, as the re-escalation of the US-Iran conflict has reignited upward pressure on global oil prices.
It disclosed that this marks a sharp reversal from most of June, when the ceasefire between the two countries helped drive oil prices lower, raising expectations of some relief on the inflation front.
With conflicts now flaring up again, oil prices are likely to increase again, and the anticipated easing in energy-driven inflation may not materialise as broadly as earlier envisaged.
“Nonetheless, some relief is likely from the food segment, where robust supply conditions across major producing regions and softening demand should continue to ease food price pressures,” it stated.
The team also explained that it projected a 15.95 per cent inflation rate because of the lingering effects of persistent food price pressures.
“However, we expect core inflation to moderate as the sharp reversal in energy prices begins to filter through to transportation, distribution, and other energy-related costs, easing underlying price pressures.
“On a month-on-month basis, the combined effect of lower petrol prices, a relatively stable Naira, and the gradual pass-through of reduced energy costs across the supply chain should exert further downward pressure on inflation.
“Based on our assessment, food inflation is expected to remain the key swing factor, as seasonal pre-harvest supply constraints are likely to offset some of the gains from lower logistics costs,” it said.
By Adedapo Adesanya
The duo of Central Securities Clearing System (CSCS) Plc and Afriland Properties Plc weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.61 per cent on Tuesday, July 14.
CSCS Plc saw its stock value drop N9.08 to close at N82.40 per share compared with the preceding session’s N91.48 per share, and Afriland Properties Plc slid by 17 Kobo to sell at N15.00 per unit versus N15.70 per unit.
The losses recorded by the two securities pulled back the market capitalisation by N41.64 billion to N2.546 trillion from N2.587 trillion, and cracked the NASD Security Index (NSI) by 69.36 points to 4,242.31 points from 4,311.67 points.
It was observed that the exchange witnessed two price advancers during the session, led by FrieslandCampina Wamco Nigeria Plc, which gained N1.37 to end at N151.37 per share compared with the previous day’s N150.00 per share, and Food Concepts Plc chalked up 5 Kobo to settle at N2.50 per unit versus N2.45 per unit.
The volume of securities traded by market participants surged by 50.7 per cent to 13.7 million units from the previous 9.1 million units, while the value of securities went down by 79.7 per cent to N65.2 million from N320.4 million, and the number of deals crashed by 3.6 per cent to 27 deals from the previous session’s 28 deals.
At the close of transactions, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with the sale of 3.4 billion units for N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc, which exchanged 2.3 billion units valued at N6.5 billion, and CSCS Plc with 73.9 million units transacted for N5.2 billion.
GNI Plc also closed the trading day as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
