20 July 2012

Nigeria: Re - No Deal Between Labour, Govt - PHCN Not Threatened

press release

OUR attention has been drawn to page 42 of your publication, Vanguard, of Thursday July 12, 2012 on the above subject matter. We wish to assure all Nigerians including PHCN workers that the PHCN Privatisation faces no threat from PHCN workers. The transaction is very much on course as the privatisation of the Successor Companies of PHCN holds great promise for sustainable economic growth and development in our country.

Government, after fourteen months of eight rounds of painstaking and patient negotiations with the labour unions of PHCN, has made the best offer to the Unions on behalf of their members, and has concluded the negotiations.

In these months of negotiations with the Unions, government recognized the strategic place of PHCN and its workers in the ongoing reforms of the power sector and the transformation agenda of President Good luck Jonathan's administration and ensured that their rights and all legitimate claims and entitlements were protected, promoted, defended and paid up as at when due.

We are, however, surprised at the disingenuous portrayal of the offer of Government as a fixed position. It is pertinent to note that while the Unions were inflexible in their demands for payment of severance as part of a package comprising other items already agreed to, Government shifted its position twice to take cognizance of the concerns of the Unions with respect to years of service and seniority.

Thus, while Government moved from its initial offer of five weeks for every year of service with a ceiling at twelve months as is prevalent in similar industries, the Unions held on to their position of five weeks for every completed year of service with no capping. Government subsequently reviewed its position and made a final offer of 20 per cent (up from an initial offer of 10 per cent) of total accrued pensions and gratuity.

This final offer was made in consideration of the need to ensure that the employees received an enhanced package and also to remove the ceiling of 12 months for all staff categories.

Rejection of offer

Despite this consideration by Government, the Unions rejected the offer. In addition, the unions insisted on being paid gratuity and pensions under the Defined Benefit Scheme which is to be funded through the PHCN Superannuation Fund which is grossly underfunded even by the admission of the President General of SSAEAC in the same publication.

More importantly, the Pension Reform Act 2004 required all active workers to comply to its provisions regarding pensions in the country with effect from July 1st 2004by opening Retirement Savings Account (RSA) with Pension Fund Administrators of their choice.

Only workers who had "three or less years" to retire were exempted from the Scheme (PRA 2004 Section 8.1). The problem in PHCN has been with the Unions' insistence on remaining in an unfunded pension scheme in clear breach of the law.

Notwithstanding this position of the Unions, and in spite of the underfunding of the PHCN superannuation fund, Government offered to provide all accrued benefits of gratuity and pension under the Defined Benefit Scheme up to June 30th 2004, in addition to the 15 reply contribution under the Contributory Pension Scheme from July 1st2004 to 30th June 2012, in view of the fact that no deductions had been made or paid on behalf of PHCN workers.

In the same edition of Vanguard on page 43 under the banner headline "N331 bn PHCN workers' pension raises dust" the President General of SSAEAC admitted "unfortunately the management of PHCN has over the years not been funding that account properly.

Funding of scheme

If they have not been funding the scheme properly, it is not our business it is that of the Federal Government because they are the ones that appointed the management of the scheme."

The President General must know how the scheme was mismanaged and who to hold responsible and accountable for the state of affairs of the funding deficit. It is evident that PHCN Management and representatives of the Unions who are the Trustees of the fund failed in their fiduciary duty to ensure that it was well managed and are therefore to be held responsible for this lapse.

In the light of the foregoing, Government has been fair in the negotiation process in general and in its final offer in particular.The Unions must ensure that their members' interest are paramount and accept Government's magnanimous offer.

Dr Timiebi Koripamo-Agary, OON, Government Spokesperson.

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