This Day (Lagos)

Nigeria: Financial Crisis Hits Oil Marketers

Oil marketing companies and other independent importers of petroleum products are facing hard times following the recent probes of the fuel subsidy scheme and the black-listing of some of the companies by the Central Bank of Nigeria (CBN).

Investigation also revealed that some of the companies have concluded plans to right-size their workforce due to low sales and lack of credit.

THISDAY gathered that oil marketing companies have an estimated workforce of 8,000 in Lagos alone.

The Western Zonal President of the National Union of Petroleum and Natural Gas Workers (NUPENG), Alhaji Tokunbo Korodo, however, told THISDAY yesterday that the union would map out strategies to resist the planned sack of its members.

He disclosed that some of their members were owed salaries of three to four months because the companies claimed that the volume of lifting had fallen drastically.

Korodo also noted that some of the companies had indicated plans to rationalise their workforce, adding also that NUPENG would resist the action.

"We are approaching the issues unofficially because we know the true situation of fuel importation in the country today," he said.

Korodo however said the union had not received any report of retrenchment of workers by any company.

THISDAY gathered that the fuel subsidy probes have exposed some of the companies in bad light thereby affecting their capacity to access credits to import products.

The situation, it was learnt, was aggravated by the CBN's directives to the banks to stop extending credit facilities to some black-listed oil marketing companies that were considered over-exposed.

Before the latest directives, the apex bank had also directed the banks to restrict funding of fuel importation to avoid the reoccurrence of the 2009 financial crisis, which nearly collapsed some banks due to the inability of oil marketing companies to repay loans.

Oil marketers and other independent importers of petroleum products that placed order for new cargoes when crude oil price hit a peak of $145 per barrel in July 2008 recorded huge losses when the price abruptly dropped to about $82 per barrel, leading largely to the financial crisis of 2009.

When THISDAY visited one of the companies, which belongs to the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMA) in Apapa, the loading gantry where trucks are loaded with fuel was empty as the company had no stock of petroleum products.

Explaining the situation, the Chief Executive Officer (CEO) of the company confirmed that his company could no longer access credit from the banks because the subsidy probes had made it difficult to repay old loans.

"We used to load between 100 and 150 trucks daily but you can see how everywhere is empty," he said.

He said the situation has not only made new employment opportunities unavailable but has also threatened the existing jobs in his company.

However, another chief executive of Apapa-based oil marketing company told THISDAY that the companies facing financial crisis were the ones indicted in the fuel probe and others that were black-listed by the CBN.

He disclosed that his company has continued to enjoy credit facilities for fuel importation from Access Bank and the Union Bank due to his capacity to provide collateral for the loans.

"It is either that the names of the companies complaining are on the CBN list or they were indicted in the subsidy probe. Those companies are already over-exposed and no bank will give loans to any of them. Before any bank gives you loan, it must be 100 per cent collatised," he said.

A Presidential Committee on Verification and Reconciliation of Subsidy Payments headed by the Managing Director/Chief Executive Officer of Access Bank Plc, Mr. Aigboje Aig-Imoukhuede, had indicted and recommended 25 oil-marketing and trading companies (OM&Ts) for criminal investigations over N382 billion fraud.

Some of the affected companies pay between N100million and N140 million monthly to service old loans, without accessing new credits to fund fresh importation.

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