Oil prices, which have been rising for three straight weeks on Wednesday, touched two-and-a-half year highs of $67 per barrel boosted by an explosion on a crude pipeline in Libya and voluntary OPEC-led supply cuts.
According to weekly data from Baker Hughes Inc. Dr Diran Fawibe, chairman and chief executive officer of International Energy Services Limited, the rising price of crude oil was as a result of the strategy of the Organisation of Petroleum Exporting Countries (OPEC) not to cut output so as not to lose market share to non-OPEC members
With the Nigerian economy being almost 100 per cent dependent on oil revenue, this development, should be cherry news, after the price fell below $30 in 2015. But recent Nigerian history, shows that whatever oil prices is rising, there is seeming inability of the government to sustain a stable price for the petroleum products for domestic consumption; unfortunately, this is playing out again with this rebound of oil prices in the international market.
This has been attributed to the land price of refined petroleum products rising in pari-pasu with the rising oil prices.
Experts say that the only way out of the quagmire is total deregulation of the downstream sector and the country developing its domestic refining capacity.
Nigeria’s FOUR REFINERIES NOT WORKING
The current petrol scarcity, the nation’s worst in years, has marred the 2017 Christmas celebrations and has lasted weeks has again raised the key question about why Africa’s largest oil producer continues to import petrol, and why its four refineries in Port Harcourt, Warri and Kaduna don’t work.
On assuming power in May 2015, President Muhammadu Buhari pledged to revive Nigeria’s minimally performing refineries to optimum capacity, in what appeared a recap of same promise as contained in the manifestoes of the then opposition All Progressives Congress, APC, during the 2015 electioneering period.
In September 2015, the NNPC in its report said Nigeria’s refineries worked at a combined capacity utilisation of a measly 1.96 per cent.
The report stated further that the combined value of output by the refineries amounted to N9.9 billion for crude processed in September 2016, adding that the associated crude plus freight cost stood at N6.3 billion.
This, the report said, represented a loss of N8.8 billion after an overhead cost of N12.4 billion.
In December 2016, the NNPC promised that the three refineries will work at “full blast” by 2017.
Ndu Ughamadu, the corporation’s spokesperson, said in a statement that NNPC would embark on a comprehensive rehabilitation of the refineries to achieve optimal capacity utilisation.
“The plan for next year (2017) is to get the comprehensive rehabilitation programme done,” Mr. Nghamadu quoted Anibor Kragha, NNPC’S Chief Operating Officer, Refineries, as saying. Kragha added that the corporation would also draw up a chart for routine Turn Around Maintenance (TAM) of the refineries.
But in September 2017, nine months after the announcement, NNPC’s Group Managing Director, Maikanti Baru, again announced the government’s plan to shut down the refineries for overhaul.
Baru said the government planned to embark on comprehensive rehabilitation of the refineries in order to bring them to their nameplate production capacities.
He also announced that eight committees had been inaugurated to monitor the exercise, with the mandate to conduct day-to-day check on the work streams.
Sunday Telegraph reports that with successive administrations failing to address the issue of fixing Nation’s oil refineries, the Dangote’s 650,000 barrels per day capacity refinery in Lagos, which is slated to come on stream in 2019; is the sure bet the country has for overcoming this reoccurring problem.
This came as a former Minister of Interior and Chairman of Integrated Oil and Gas, owners of a major oil tank farm in Ibafo, Apapa Lagos, Capt. Emmanuel Iheanacho (rtd) has attributed the persistent scarcity of premium motor spirit (PMS) also known as petrol; to the monopoly of the product by the Nigerian National Petroleum Corporation (NNPC).
Capt Iheanacho, who stated this in Lagos on Tuesday, said that the inability of NNPC to create a window for private importers to import petrol also contributed to the scarcity.
According to him, the current shortage in fuel importation gap was caused by the landing cost margin of N171 per litre and the selling cost pegged at N 145 per litre.
Iheanacho said that this was not realistic for marketers to import and sell at that rate.
“The selling of the product at N145 per litre is no longer feasible with the current exchange rate.
“Shortage of foreign exchange and increase in crude prices has made it unprofitable to import petrol and sell same at N145 per litre.
“The problem is that importation of petrol is being handled, almost 100 per cent, by NNPC, while private importers backed out because the increase in crude price has made the landing cost high,’’ he said.
Iheanacho said that the marketers’ huge debts of over N800 billion had also contributed to their inability to import petrol. He said that most independent marketers had closed their companies due to inability to pay their workers.
He urged the Federal Government to settle all the outstanding debts owed marketers since 2015. According to him, commercial banks have started taken over the property and tank farms of some companies that could not pay back their loans.
The Minister of State for Petroleum, Dr Ibe Kachikwu, admitted before the before the scarcity snowballed to normal national problem, that there was shortfall in supply.
It is against this backdrop that a former Minister of Education and co-convener of BringBackOur Girls Campaign, Dr Oby Ezekwesili, in a series of tweets on her verified Twitter handle, said total deregulation of the oil sector was the way to ensure a permanent solution to the crisis.
“Dear President .@MBuhari of @AsoRock It is not Rocket Science to FIX the Distortion in the Oil Sector. It is the underlying cause of the annual #FuelScarcity.
“It’s time to LET GO of the “politically beloved petroleum sector”. Sir, the SOLUTION is FULL DEREGULATION. Just. Do. It!” she said.
However, opponents of full deregulation have argued that it would lead to price increase as government would no longer be able to fix the selling price of the product. In a full deregulated situation, marketers, governments and businesses could bring in petrol at their own cost and sell at any price they deem fit.
While urging the president to ensure good governance, the Bring Back Our Girls leader said ensuring full deregulation would bring about productive incentive to the nation’s oil and gas sector.
“P @MBuhari, unleashes the Productive Incentive that FULL DEREGULATION would bring to the Oil & Gas Sector of our economy immediately and severe the umbilical cord that has tied up the sector in the knots of Politics. Free that sector NOW. End the poor governance & suffering,” she added.
Ms. Ezekwesili added that “no matter the depth of complexity of any Problem in a country, there are options of Solutions that can be mobilized to resolve them. Problems persist these days not for want of ideas to solve them but only because someone is FAILING to make a TOUGH CALL on the RIGHT SOLUTION.
THE BLAME GAME
According to Ndu Ugbamadu, General Manager Public Affairs, Nigerian National Petroleum Corporation (NNPC), the NNPC Group Managing Director, Dr Maikanti Baru, had, during a meeting with the heads of Nigerian Association of Road Transport Owners (NARTO) and Petrol Tanker Drivers (PTD), last Thursday; blamed diversion of the products for the scarcity.
He had disclosed that a nation that consumed 35 million litres suddenly increased consumption to 85 million litres due diversion to neighbouring countries.
He added that the scarcity was artificial as the corporation “as at today (Thursday last week) has adequate products and a 25-day sufficiency’’.
But the Depot and Petroleum Products Marketers Association (DAPPMA) in its reaction to the claims by NNPC said that the corporation lied to Nigerians on the on-going nationwide shortage of petrol.
DAPPMA stated this in a statement issued on Monday, signed by its Executive Secretary, Mr. Olufemi Adewole, the Association rejected accusations of product hoarding levelled against DAPPMA members.
While DAPPMA explained that it can neither confirm nor dispute NNPC’s claim of having sufficient product stock, the association said it can confirm that the products are not in the tanks of its members.
According to DAPPMA, there are always hitches in product distribution any time the NNPC assumes the role of sole importer of products. DAPPMA added that 80 per cent of the country’s functional product receptive facilities are owned by its members and such do not currently holds products.
“The NNPC imports and distributes products through DAPPMA, Major Oil Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN). Our members pay NNPC/PPMC (Petroleum Products Marketing Corporation) in advance for petroleum products and fully paid up PMS orders that have neither been programmed nor loaded are in excess of 500,000 metric tonnes (about 800,000 litres) as at today and enough to meet the nation’s needs at a daily estimated consumption of 35,000 litres.
“Our members’ depots are presently empty. However, if the NNPC/PPMC provides us with PMS, we are ready to do 24 hours loading/truck out to alleviate the suffering of Nigerians until the fuel queues are eliminated,” said DAPPMA. The association maintained that the NNPC has been the sole importer of the product since October for various reasons.
Among these, DAPPMA said, is the fact that the country currently runs a fixed price regime without any recourse to subsidy claims. It noted, however, that the international price of crude oil is beyond its control. DAPPMA stated that the current price of PMS is about N170 per litre, with the NNPC, importer of last resort, absorbing the attendant subsidy on behalf of the federal government.
“We understand that NNPC meets this demand largely through its DSDP platform framework. However, due to price challenges on the DSDP platform, some participants in the scheme failed to meet their supply quota of refined petroleum products, especially PMS, to NNPC. This is the main reason for this scarcity,” explained DAPPMA.
It added that the current exchange rate of naira to the dollar is N306 for PMS importation, stating that banks also charge interest at a rate above 25 per cent.
The statement came in the wake of allegations that the current crisis was instigated by the marketers. Some Nigerians including government officials accused marketers of taking advantage of controlling the bulk of the fuel distribution facilities and outlets to divert and hoard products supplied by NNPC.
But, in its reaction on Wednesday, the NNPC in a statement accused DAPPMA of insincerity, describing as “very unfortunate” the association’s claim that the crisis was as a result of its members being denied products.
“NNPC wishes to affirm that it has supplied appreciable volume to DAPPMA, Major Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers of Nigeria (IPMAN) to rid the challenges currently being experienced in the supply and distribution of petroleum products in the country,” the NNPC said in a statement by its spokesperson, Ndu Ughamadu.
“NNPC regrets that DAPPMA, which members had taken receipts of products from Petroleum Products Marketing Company (PPMC), a subsidiary of NNPC, and owe the company to the tune of N26.7 billion as at December 21, 2017, has the audacity to indict NNPC unjustifiably,” Ughamadu said.
Ughamadu said DAPPMA’s claim that the current fuel scarcity was due to the inability of the DSDP partners of NNPC to deliver was “unfounded and self-indicting.” He said many DAPPMA members also patronise the same DSDP partners.
The NNPC said it became the sole importer and supplier of petrol to the Nigerian market because DAPPMA members were unable to meet expectations. This is despite the concession by government giving DAPPMA access to foreign exchange to import petrol at an official rate of N305 to the dollar, the spokesperson said.
On what the corporation was doing to resolve the crisis, the NNPC said in addition to the increase in the supply of petrol since the beginning of this month (December 2017), it has also programmed to supply over 1.2 billion litres of the white products in January next year.
“This will translate to about 40 million litres of PMS supply per day, against about 700 trucks (about 27million – 30million) litres per day that Nigerians ordinarily consumes,” Mr. Ughamadu said.
Despite the current challenges, he reassured Nigerians that there was no plan to increase pump price of petrol above N145 per litre.
“The NNPC will continue to maintain ex–depot price of N133.28 per litre, which guarantees the pump price not exceeding the N145 per litre capped by the government.
“All stakeholders are implored to support the efforts of government to bring a speedy end to the current fuel distribution challenges being experienced in parts of the country as this is not the time to play the blame game,” he said.
However, Sunday Telegraph reports that as at Friday, NNPC and DPPMA continued to trade tackles over accusations of indebtedness and cause of the scarcity.
The NNPC claimed the marketers owed over N26.7 billion for product supplied. But DAPPMA shot back last Thursday night, saying none of its members is indebted to the corporation.
“DAPPMA is not aware of any indebtedness to PPMC (Pipelines and Products Marketing Company)/NNPC by our members,” the group said in a statement sent to Sunday Telegraph Thursday night. “The PPMC/NNPC does not transact business with marketers on credit.
“It is indisputable that DAPPMA members have paid for petrol supply (with bank funds) for over one month, the value of which is in excess of N90 billion, yet PPMC/NNPC had no cargo to allocate to them,” Adewole insists. “As such how can we be held responsible for hoarding?”
“We again reject any attempt to blame marketers for the shortfall in supply as it is not our making since NNPC has been the sole importer since October 2017.
The organisation said marketers had always sacrificed to keep the country running, despite over N600 billion debt owed its members, and over N800 billion owed marketers as a whole.
CONTROVERSY TRAILS Return Oil SUBSIDY
But in another twist, the Ekiti State Governor, Ayodele Fayose, faulted Vice President Yemi Osinbajo, over his claim that the NNPC is the one bearing the cost of fuel subsidy and not the Federal Government.
What is the difference between NNPC and the Federal Government? Who is NNPC and who is Federal Government? Is NNPC now an autonomous agency of the Federal Government?” were Fayose’s posers in a statement signed by his media aide, Lere Olayinka on Wednesday.
The vice president had told journalists in Lagos on Monday that NNPC and not the Federal Government was paying the N26 subsidy per litre of petrol.
This followed the confirmation by the GMD of NNPC, Maikanti Baru, that the landing cost of petrol was now N171 as against the official pump price of N145 per litre, and that the federal government was paying N26 as subsidy on every litre of petrol imported to retain the pump price of N145.
Fayose said: “Fact is, NNPC does not have the right to spend money it generates from the sales of crude oil. It does not have the right to swap crude oil for subsidy”.
“Where is NNPC getting the money with which it is subsidising petrol with N26 per litre? Is NNPC spending money from the sales of crude oil that should be paid into the federation account to pay subsidy?”
“If subsidy is being paid by the NNPC as claimed by Vice President Osinbajo, where is the money coming from? Is it from sales of crude oil? Does it now mean that the NNPC is spending part of the proceeds of the sale of crude oil outside allocation to the federal government by the Federation Account Allocation Committee (FAAC)?
“We were all in this country in 2012 when chieftains of the APC, including President Buhari led protests across the country against removal of fuel subsidy.
“Before he became President, Buhari maintained that fuel subsidy never existed and when he became President, he said he did not know what fuel subsidy meant.
“We were also in Nigeria in May 2016; when the Federal Government announced the removal of subsidy on petrol and went on to increase the pump price of petrol to N145 per litre.
“The same APC people, who protested against removal of subsidy and increment of petrol price to N140 in 2012, defended the removal in 2016 and increment of pump price to N145.
“In 2017 budget of the Federal Government, provision was not made for the payment of fuel subsidy, so also that of 2018. So where is the N26 they are subsidizing one litre of petrol with coming from? Is the Buhari-led government spending fund not appropriated by the National Assembly?”
But the NNPC GMD, Maikanti Baru, said on Friday that President Muhammadu Buhari authorised the Corporation to subsidise petrol for Nigerians.
Baru, who said this during a brief interview with State House correspondents at the Presidential Villa shortly after he performed Friday Islamic prayers; was reacting to the confusion thrown up by his revelations that government is paying N26 subsidy on a liter of petrol .
“Do you want me to remove subsidy?” he said in response to questions demanding clarifications on the subsidy.
“What I am saying is that the landing cost as should be sold in the pump without under-recovery should be N171.40.
“However Mr. President has directed that we should maintain all the parameters to ensure that it is sold at N145 per litre. And that is why we are selling at depot at N133.28.8,” he explained.
CALL ON BUHARI TO RESIGN
However, the on-going fuel scarcity all over the country has sparked criticisms from Nigerians all over the nation. This is as Nigerians on social media have blasted President Muhammadu Buhari for being incompetent and inattentive to the plight of Nigerians. They called for his resignation. Some Nigerians urged Buhari, who is Minister of Petroleum, to take responsibility and stop blaming others by finding a quick solution to the fuel crisis, adding that there should be no scarcity after removal of subsidy. Here are some comments: @aligthebaptist “Buhari is the most incompetent President we have ever elected in the history of Nigeria. You can’t hide incompetence; just drive around the country and you’ll see the level of hopelessness this govt has brought upon the already impoverished citizens#fuelscarcity @joeydozie “At N145 per litre, this Moronic @APCNigeria led government can’t ensure that there’s no #fuelscarcity.
A rudderless, directionless joke of a government. @tenovertrn “Does Buhari still remember that he’s the petroleum minister?#fuelscarcity @matthewottah “This is the 3rd fuel scarcity under Buhari in 2 1/2 years. First one was in Sept-December 2015. For three months Nigeria suffered but PMB didn’t blink. Second one was in April/May 2016 which he cunningly increased fuel from N87 – N145 and now December 2017. Buhari and #fuelscarcity @timi “I don’t even know who to blame for this #FuelScarcity Pengassan Strike,Greedy Oil Marketers, Daura farmer?But I choose to blame buhari since we blamed Jonathan for everything @michaelkerry@mbuhari himself is the minister of petroleum. It wouldn’t be partisanship to blame #fuelscarcity on him. Or is @GEJonathan …..
He should take responsibility for the first time @igweleoWhen we have finally adjusted to the $145 per litre, now #fuelscarcityhas engulfed us. What an incompetent govt! Nigerians are sorry GEJ. @itsyomie Nigeria is so fucked Up, Christmas should be d talk of the country instead it’s petrol..
Stupid government#yomie #fuelscarcity #Christmas @misterlarrie The Government/ President’s silence is the most annoying thing about this#fuelscarcity. Thank you for teaching us a political lesson, Muhammadu Buhari, we won’t make the same mistake again. Incompetent President! @badrappar #fuelscarcity I think buhari’s ear have started paining him again.
Didn’t say anything on #endsarsand still haven’t said anything on the#fuelscarcity @fk147I like how we keep shifting D Goal Post During Gej Tenure.When there is#fuelscarcity we held him responsible that he is the President& in Charge @iykimo It’s been bleak Christmas every year since Buhari took over in May 2015.Nigerians slept in fuel stations across the country yesterday.Sai Buhari Sai suffering #FuelScarcity @timiakegbejo No statement on#EndSARSNo statement on #fuelscarcityNo Presidential media chat… Impeach yourself you fraud @MBuhari @Mahrthins “People who voted for Muhammadu Buhari shouldn’t be allowed to make life decisions. #fuelscarcity.
JOHESU: Unresolved strike with many issues
Year-in-year-out, labour and trade unions have tried to ensure their members’ rights are protected, especially on improved welfare. However, that of health workers, currently on-going, appears not to be on the popular side. REGINA OTOKPA reports
For decades, Nigerian workers have continued to press for better welfare packages and prompt payment of their entitlements from the government. This has led to series of strike actions by various unions fighting for workers’ rights.
The most recent is the agitation by health workers under the umbrella of Joint Health Sector Union (JOHESU). JOHESU comprises of Medical and Health Workers Union of Nigeria (MHWUN), National Association of Nigeria Nurses and Midwives (NANNM), Senior Staff Association of Universities, Teaching Hospitals, Research Institutes and Associated Institutions (SSAUTHRIAI), Nigeria Union of Allied Health Professionals (NUAHP) and Association of Medical Laboratory Scientists of Nigeria.
JOHESU’s Demands The first major bone of contention among the 15-point demands is the payment of over N20 billion adjusted Consolidated Health Salary Structure (CONHESS), which the government had already agreed to pay in 2017.
Others are immediate release of the harmonised scheme of service and circular on internship for nurses and midwives, upward adjustment of the CONHESS salary structure, immediate and full payment of arrears of salaries of CONHESS 10 skipping outstanding, payment of promotion arrears, same scale promotion/ redesignation, prioritisation of employment in the critical professional areas and enhanced entry point to accommodate all other graduates of other health care professionals.
Others are advertisement of CMD/MD’s appointment without prejudice to any particular profession, nonseparation of teaching hospitals from their teaching hospitals and the eligibility for specialist allowance to accommodate two members of JOHESU.
The demand also include board appointment to institutions, promotion of health workers at Federal Medical Centre Owerri, who were being punished for embarking on strike to same level with their counterparts, adjustment of retirement age from 60 to 65, and immediate set up of a collective bargaining agreement committee to look at headship allowance, administrative allowance, professional allowance, excess work load allowance, health and safety site allowance for JOHESU members.
The aggrieved workers claimed that previous administration of President Goodluck Jonathan agreed to implement these demands in 2015, but the Minister of Health, Prof Isaac Adewole, recently insisted that such was not the case, as there was no agreement between the Federal Government and JOHESU prior to the administration of President Muhammadu Buhari.
He maintained that what JOHESU brandished as 2014 agreement were minutes of meetings held with organs of Federal Government to reach a compromise, adding that JOHESU’s demands to be at par with doctors in terms of salary was neither practicable nor acceptable.
He said: “As a responsible government, we will do everything within our power to bring the ongoing strike action to an end as quickly as possible, but what JOHESU is asking for is parity with medical doctors which is neither practicable nor acceptable to the federal government.”
Adewole had said out of the 15 demands presented by JOHESU in September 2017, the government had implemented 14 while the last demand was being attended to, noting that the implication of when the agreement was reached is that JOHESU wants the government to pay arrears from 2014, and not September 2017, which the Buhari administration agreed to.
However, this is not the case, some of the 15-point demand by JOHESU has not been implemented contrary to claims by the Minister of Health. For example, the government has not increased the retirement age of JOHESU members from 60 to 65 years, skipping of Consolidated Health Salary Scale (CONHESS 10) arrears has not been paid as well as the implementation of the scale to scale promotion, especially on CONHESS 14 to 15. Other demands yet to be implemented includes employment of health workers to address the shortage of manpower in critical professional areas.
Poised to drive home their demands, especially the non-implementation of the new salary structure for other workers just as was done for doctors since 2014, the national wing of JOHESU withdrew their services at all federal health institutions on April 18, 2018.
The Government’s failure to arrive at a compromise after several meetings with the aggrieved health workers, two weeks after, led to an expansion of the strike from federal health institutions to states and local government hospitals on May 9. Meeting to receive and analyse the report of a six-member technical committee set up about two weeks ago to unravel the modalities to implement the adjusted CONHESS, the government and leadership of JOHESU, however, rejected the report and dissolved the committee, on the grounds that the report did not meet both parties’ expectations.
The national incomes, salaries and wages commission was immediately mandated to meet with JOHESU to produce a more acceptable template for implementation and to be presented at a rescheduled meeting.
Despite government’s effort to reach an agreement with the striking health workers, the Nigerian Medical Association, NMA, has been a bone in the throat. Only recently, the new leadership of the union led by the President, Dr Francis Faduyile, had threatened to down tools should the Federal Government accede to any of JOHESU’s demands that violates its collective bargaining agreement with government in January 2014.
While claiming that allowing JOHESU assess to leadership positions in health facilities would only put the life of more Nigerians at risk of preventable deaths, NMA insists that JOHESU’s demands were not only an aberration considering international best practice that will add no value to clinical/patients’ care, but certainly worsens morbidity and mortality indices in Nigeria. “It is also pertinent to once again remind the government about the concluding part of our letter no.
NMA/PRE/SG/03/0751 of 21st March 2014, which states, “In view of the above, the NMA painfully wishes to inform the Federal Government of Nigeria that any award to the non-medically qualified health professionals that violates the January and July agreements of 2014 shall result in the resumption of the suspended withdrawal of service of 2014.
Please take this as a notice sir,” NMA said. “The above reminder is predicated on the extension of the ongoing strike action embarked upon by the amorphous body called JOHESU, to States and Local government areas, the basis of which is to strengthen its callous and ill motivated agitation for pay parity between her members and doctors with the resultant erosion of relativity and further hierarchical distortion in the health sector vis-àvis her clandestine romance with some top government officials.
“We oppose vehemently, any adjustment in CONHESS salary scale with resultant pay parity between doctors and healthcare professionals allied to medicine, and hereby reaffirm that relativity is sacrosanct. “The demand for Headship of Departments/units in the hospital by members of JOHESU/AHPA will lead to unprecedented chaos in the health sector with ripple effect on the health of Nigerians.
We reaffirm our rejection of this demand.” Uncomfortable with NMA’s interference, the Minister of Labour and Employment, Sen. Chris Ngige, advised the association to be cautious in interrupting and meddling with the ongoing discussions between the health workers and the government to allow for a more peaceful and generally acceptable resolutions.
JOHESU had earlier accused Ngige and Adewole, who are both medical doctors, of bias and meting out unfair treatment to members of the union, with claims JOHESU was soliciting for equal rights with medical doctors.
The national Chairman of JOHESU, Comrade Josiah Biobelemoye, had noted that the lingering strike was as a result of the unfavourable moves by the Federal Ministry of Health to frustrate all efforts of the union and the government from reaching an amicable settlement.
“The Federal Ministry of Health treat us like slaves; one of the lies they are telling Nigerians is that we are asking for equal salary with the doctors . Can you imagine that a doctor entering Civil Service enters with grade level 12 while we enter with level 8 and it takes nine years for our members to get to grade level 12,” he said.
“Since government has not shown enough commitment to tow the part of honour and meet our demands, especially, the core demanding for the upward adjustment of CONHESS salary structure as agreed in the Memorandum of Terms of Settlement signed on 30th September, 2017 with JOHESU.
“After three rounds of meetings held on Thursday, 26th April, 2nd and 7th May respectively, at the instance of the Minister of Labour and Employment to find a way forward, the Federal Ministry of Health is thwarting all efforts at reaching an amicable settlement of the issues of our demands, especially the upward adjustment of COHNESS salary structure.
“CONHESS review is the upward adjustment of the CONHESS Salary table on-line with the same principles used in adjusting the CONMESS table for medical doctors who work with use n the health team.
“Our own demand for the adjustment of CONHESS that affects over 85 per cent of the workforce nationwide has been frustrated, and part of the reason for this is that the minister of health as well as the minister of state for health are all medical doctors, while the minster of labour labour and employment, who should be neutral umpire in trade disputes is equally a medical doctor.”
If these issues are not properly attended to and addressed urgently, prospects of the ongoing strike being called off would continue to be a mirage. This has a huge consequence on the health of a vast majority, as the poor masses who are unable to attain health care services from private health facilities will continue to suffer unjustly.
Reinsurers’ stake in short-term investment rises by N3.48bn
Nigeria’s indigenous reinsurance firms, Continental Reinsurance Plc and Nigeria Reinsurance Corporation, have increased their stakes in short-term investment by N3.4 billion. Data released by the National Insurance Commission (NAICOM) revealed that both reinsurers had earlier committed a total of N8.17 billion into the portfolio before increasing it to N11.65 billion as part of their assets.
A searchlight on their assets revealed that out of the total investment, Continental Reinsurance put in N9.23 billion while Nigeria Reinsurance came far behind with a total of N2.43 billion. Further analysis of the data also revealed that their investment in real estate also grew from N17.94 billion to N18.54 billion.
Despite the competition for premiums with highly sophisticated and capital backed offshore reinsurers, the duo has been able to steadily grow their assets over time to remain in business. A recent report detailing global reinsurance rankings left Nigerian firms out despite having the potential to carry out and dominate business transactions in Africa and possibly beyond. They were conspicuously missing in the list as the N896.24 billion gross premium written within a period of five years was far below the ranking parameter, leaving only Africa Reinsurance Corporation among the top 50.
The ranking, which revealed that Swiss Re supplanted Munich Re as the world’s largest reinsurer, was based on the gross premium written within a period of time. In this case, Munich Re’s significant primary operations accounted for just over 30 per cent of its total GPW.
On the other hand, Swiss Re’s reinsurance/primary insurance split is more modest, with just over 15 per cent of GPW coming from insurance operations, putting it under the threshold to split out its insurance and reinsurance premiums.
Apart from Africa Reinsurance having its headquarters in Nigeria, jobs are also ceded to offshore firms due to fragile capacity among local industry players. According the Nigerian Insurers Association’s (NIA) digest, which gave a breakdown of performance within a period of five years, the total amount realised as premium by the reinsurers was N896.24 billion.
The transactions, according to the report, were specifically for general business, wherein the gross premium comprises mainly of businesses accepted from Nigeria by direct offices while local cession covers business ceded to reinsurance companies within Nigeria as well as direct companies for co-insurance jobs. According to the details, the areas covered include Motor, Fire, General Accident, Marine and Aviation, Workmen Compensation/ Employers’ Liabil-ity, Oil and gas, and Miscellaneous.
In 2011 precisely, the reinsurers accepted jobs worth N6.23 billion while it also ceded transactions valued at N44.80 billion. Following the same step in 2012, the operators accepted transactions worth N3.15 billion and ceded others amounting to N55.47 billion. Similarly, in 2013, while transactions worth N4.89 billion were accepted, the operators ceded N63.65 billion worth of deals. For the 2014 transactions, N1.98 billion worth of business was accepted as against N75.33 billion that was ceded out.
In the final year (2015) within the period, transactions worth N1.96 billion were accepted as against N75.44 billion that were ceded. Further details also revealed an increase in reinsurance ratio in 2015 (0.43) as against that of 2014 (0.42).
The reinsurance ratios for other years within the review period are 0.31 in 2011, 0.32 in 2012 and 0.37 in 2013. According to market statistics, European and other overseas reinsurers currently control about 65 per cent of the Nigerian business while African Re controls about 20 per cent.
The remaining 15 per cent is shared between Continental Re and Nigerian Re. Last year, the management of Africa Re pointed out that the dominance of foreign reinsurance firms in the country was due to total low underwriting capacity as reflected in shareholders’ funds compared to the size of total risk exposure.
Nigeria’s agric and the challenges
Recently, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, linked private sector investments to the growing transformation in Nigeria’s agric sector. But these investors still have to contend with myriad of challenges. TAIWO HASSAN reports
On attaining the mantle of leadership as Nigeria’s president on May 29th, Muhammadu Buhari, without compromising his administration’s role, explained that he would give top priority to the agric sector. Particularly, President Buhari wooed the private sector to invest in agriculture, saying that this is the next ‘big thing’ in the country and it is being positioned to increase the country’s revenue generation.
Since President Buhari’s clarion call, the private sector have keyed in into the Federal Government’s diversification agenda, through their investments in Nigeria’s agric sector. Ogbeh has consistently reiterated that his ministry is fully committed towards the development of the agricultural sector, stressing that key developments in the sector would continually be private sector driven.
He said that the Federal Government would provide the necessary incentives to grow the sector by facilitating financing and support for Small to Medium Scale Enterprises (SME) through investment vehicles such as FAFIN.
Fixing Nigeria’s agric sector
The minister said that the burden of fixing Nigeria’s economy has fallen squarely on his ministry as the oil industry has floundered and the revenue originating from it had taken a plunge, adding that no serious government will fold its arms and watch without doing something. According to him, to fix agriculture and the Nigerian economy, what the administration need to do is to harness the good policies it met on the table and blend with those that they are currently fashioning out, in a coherent and consistent manner such that it will instill confidence in the citizens, investors, market operators, farmers, traders and everyone along the various agricultural value chains.
He said that President Muhammadu Buhari has given his support for the interventions that could move agriculture forward and contribute to repositioning the economy and diversifying it away from overreliance on oil.Ogbeh said : “We have taken up the challenge of boosting local production of food as we reduce our dependency on food imports, boost domestic food production, revive rural economy and expand export earnings.
“With the huge agricultural potential of over 84 million hectares of land, abundant water bodies, particularly the various rivers, all-year-round favourable weather conditions and a variety of agro-ecologies suitable for agriculture, Nigeria is well positioned to feed its population as well as produce for export.
“The policies of my ministry will be proactive and responsive to the stakeholders’ peculiar needs. We will be nationalistic and patriotic in our approach. “We will support genuine investors and we will ensure that food is produced in abundance while we also boost the prospects of investors in the agricultural sector.”
Private sector investments
The increasing attention of the private investors in agriculture is a testimony to the fact that there is a lot of prospect in the sector. Particularly, the private sector investment in various agricultural value chains in Nigeria has re-positioned agriculture in the country in all ramifications. Indeed, the private sector investment has also provided an opportunity for the national agriculture community to familiarize themselves with the Federal Government’s priorities and plans for the sector.
No doubt, statistics revealed that private sector investments in the country’s agric sector has surpassed N1 trillion. Hence, agric experts have advised that the government needs to give more support to the private sector in order not to lose the goodwill the country had been enjoying in agriculture.
“There is risk of reduced investment spending that can lead to loses of opportunity for job creation by 16 priority investors due to lack of satisfaction with government support,” the UNDP Deputy Country Director of Programmes, Mandisa Mashologu said. He added that nascent system of coordination and inconsistency of policies, regulations, laws and administrative practices, which were key challenges, must become a thing of the past, if Nigeria must maintain its enviable leadership position in Africa’s agricultural transformation. Some of the multi-billion naira private sector investments in Nigeria’s agric sector are geared towards guaranteeing abundant food sufficiency and security.
Cosmas Maduka, Chairman of Coscharis Group, a foremost automobile dealer in Nigeria, has invested a fortune on rice production in Anambra State to the tune of 3,000 hectares and promised to increase it to 6,000 hectares soon.
Alhaji Sani Dangote, the vice chairman of Dangote Group, has indicated the commitment of his conglomerate in agricultural mechanisation. Dangote Group was among the investors who witnessed the flag-off of the second phase of the Mechanisation intervention of the Federal Government.
The company is among others taking up Agricultural Equipment Hiring Enterprise centres in Nigeria. Sani Dangote, who is also the chairman of the Nigeria Agriculture Business Group (NABG), said: “There is an urgent need for private sector stakeholders in agriculture to work together towards growing Nigeria’s agriculture, diversifying from oil and gas dependency, encouraging agricultural industrialization, and creating an enabling environment for agribusiness to thrive.”
On rice production, Africa’s richest man, Dangote, announced earlier this year that he was making a $1 billion investment in Nigeria’s rice production, which seemed to vindicate the government’s approach.
The Dangote Group plans to produce one million tonnes of parboiled milled rice over the next five years, equivalent to 16 per cent of domestic demand. Other big players have also jumped in, including the Lagos- based conglomerate TGI, which opened a rice mill in August with a capacity of 120,000 tonnes, and Olam Nigeria, part of Singapore-based Olam International, which plans to boost its existing rice output.
However, despite the efforts of the private sector investors to boost Nigeria’s agriculture, they are still facing challenges in their farming businesses, including access to credit, access to land, land analysis, land management and security on farms. Also included are market access, standardization and post-harvest losses. All these challenges are currently affecting their huge investments in the sector.
With the huge private sector investment in Nigeria’s agriculture, experts have called for creation of enabling environment from government in order to safeguard their investments in the sector.
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