Oil, Gas Suppliers Risk N320bn Loss
The Natural Oil and Gas suppliers Association of Nigeria (NOGASA) have pleaded with the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) that the planned protest over the new petrol pump prices will make them lose N320billion.
In a statement that the association issued to reporters in Abuja yesterday, they said any reduction in the cost price will cause them losses.
They said : “The industry incurred heavy losses of over N320billion after purchasing products at government specified prices, only to be compelled to sell at reduced prices, which could not be justified by the costs of transaction.”
According to them, the last reduction in pump prices during the month of March at the height of the Covid-19 global pandemic, was disastrous for most business investors in the downstream sector.
NOGASA said many businesses have been dying in silence since the last downward review of pump prices.
The association said the adjustment caught its members unawares as government refused to inform them before the reduction was effected.
The statement noted that the Federal Government failed to refund them the shortfall.
NOGASA said “Those losses were never refunded by the government and some companies were forced to shutdown operations and lay off workers.
“It is in light of these negative outcomes to the entire Nigerian economy that we appeal to the NLC/TUC to reconsider their proposed action over the increase in petroleum pump price and electricity rates by the government.
“We believe at that it will be counter- productive at this juncture, because it will create far more problems for workers and businesses that employ them than it seeks to solve.”
The statement also reads “NOGASA is seriously concerned about recent trends and developments in the down stream sector of the industry, which if not properly handled will adversely affect their businesses, workers and the Nigerian economy at large.
“Of most serious concern is the price instability plaguing the market.
Since the onset of Covid-19 , we have been hit hard with a very drastic downturn in business revenue which has been exacerbated by the unpredictability of the pricing regime for trading in PMS.”
According to the oil and gas suppliers, “For an already embattled sector to recover from the ravages of the Covid-19 global pandemic, we plead caution at this critical stage to avoid creating more problems than solutions – we seek to avoid actions that can trigger more lay offs, and loss of revenue to businesses and workers alike.
“There is a need to appreciate the fact that NOGASA are the employers of the workers in the Natural oil and gas downstream sector, and we increase our wages commensurately in response to the overall economy.
“Kindly remember also that: NOGASA sacrificed significant resources during the height of the Covid-19 Lockdown period to keep fuel supplies stable across the nation.
“We made sure that our members safeguarded the livelihoods of our workers by never opting to lay them off during those difficult months.
We don’t mind price reductions per se, and we believe it is possible to have much more reduced prices with full deregulation.
“Rather than government price control, we believe that the government should leave the prices of these products to be determined by market forces.
“The government should not be involved in price -fixing, particularly when we buy from their depots.
The truth also is that the government has a great deal of political and sociocultural variables to contend with to make efficient input in pricing.
“For the suppliers, it is a matter of investments and return on investments, and the way it stands now, growth in this sector is badly hampered because of heavy losses on investment.
“Indeed we agree whole heartedly with NLC that the government should repair our refineries and also allow others to build private ones to encourage a more robust competitive business environment.
“This will provide more jobs for workers and bring prices down. When there are a multiplicity of sources that are ready to provide the products and services, prices will naturally stabilise around the most efficient producers; to the benefit of the consumers and the entire economy.”