About 5,000 refinery, steel workers receive salaries despite zero production

About 5,000 refinery, steel workers receive salaries despite zero production• Ajaokuta gulps N2bn yearly on salaries without producing steel
• Workers are busy, not idle, says Osifo
• ‘Sacking workers will increase unemployment rate’

Despite producing nothing and adding zero value to the nation’s economy, the Federal Government has continued to pay the salaries of about 5,000 workers operating in the nation’s ailing refineries and Ajaokuta Steel Complex.

With 1,898 staff strength, the refineries’ workers represent about 28.7 per cent of the Nigerian National Petroleum Corporation (NNPC) group’s total workforce domiciled at the Kaduna, Port Harcourt, and Warri refineries.

The Guardian gathered that while 758 workers operate at the Kaduna Refining and Petrochemical Company (KRPC), the Port Harcourt Refining Company (PHRC) has 655, while Warri Refining and Petrochemical Company (WRPC) has 485 staff.

Though details of the workers’ emoluments are yet to be ascertained, the government has been incurring huge costs to keep the workers operating at the wasting assets.

Similar to the refineries in the stalled Ajaokuta steel plant located in Kogi State, with estimated staff strength of 3,000.

While successive governments have plunged about $8 billion into the complex since 1979, the Federal Government has been spending N2 billion on payment of staff salaries every year for not producing. The $8 billion structural investment has never produced a single bar of steel since reaching 98 per cent completion as far back as 1994.

Some experts have said that keeping most of the workers employed for doing nothing does not contribute anything significant to the economy and to their professional development.

According to them, it is a waste of scarce resources and unsustainable at a time government is in dire need of money to fund its budget.

Chairman and Managing Director of Energy Services Limited, Sunny Onuesoke, after visiting the plant earlier in the year, lamented that the FG has been wasting the huge sum of N2 billion for payment of staff salaries every year for doing nothing. He queried why the government keeps promoting and paying staff salaries and pensions for doing nothing.

More so, official figures compiled from NNPC’s operation reports showed the four refineries with a combined capacity of 445,000 barrels per day (bpd) stopped producing crude in March 2019. Kaduna refinery, the worst performer, has not received or processed crude since 2017, while Warri refinery stopped in June 2019.

The report by NNPC further showed that the refineries lost N123.25 billion between January and October 2019; while KRPC posted a loss of N49.3 billion, PHRC and WRPC lost N36.7 billion and N37.24 billion respectively.

Findings showed that in the past five years, about N1.47 trillion was spent by the Federal Government on maintaining, revamping, and running its three moribund refineries between 2015 and 2020.

The NNPC also incurred a loss of N473.3 billion in operating the refineries between January 2015 and February 2021 operating the three refineries, as claimed in a report by SBM Intelligence, a geopolitical and socioeconomic research firm.

The report, titled ‘Nigeria’s moribund refineries, said Nigeria’s refineries had become a costly pastime, adding that they have been unproductive since July 2019 despite the huge costs of maintaining them.

“In that time, only 6.73 per cent of their capacity has been utilised on average. In fact, none of the three refineries has produced a drop of refined petrol since July 2019, raking up over N185 billion in losses,” it added.

In their separate reactions on why the government has continued to keep the workers despite the refineries producing zero oil and agitation for the refineries to be privatised, president of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, said the refineries, being a national asset, had not worked because of many issues, among which is, the lack of will from the government.

On the workers receiving salaries as at when due for doing nothing while the refineries remain idle, Osifo said: “There is some maintenance you have to keep doing. You won’t just abandon the refineries 100 per cent. If not, the money that would have been expended in fixing the refineries would have been much more than what was announced. But with that little maintenance that the employees have been undertaking, the figure announced has remained like that, if not it would have been more.”

He said it was not really the fault of the workers as they had agitated that the government should give them the tools to work and to maintain the refineries, but it fell on deaf ears. “If you employ me to work for you, you have to give me the tools to work. At the refineries, I have interacted with the workers, we have excellent people with good skills set, capacity, and competence to run refineries.”

He, however, said most of the workers have been moved to other Service Business Units (SBUs) that are functioning very well, adding that when the refineries come back on stream, they will bring back all the workers from their various SBUs to run the refineries.

Similarly, the union’s secretary-general, Lumumba Okugbawa, also noted that the refineries’ workers, who are highly skilled, should not be made sacrificial lamb as they have put in their best to ensure the refineries work.

“As unionists, our job is to defend our workers, they should not be made the scapegoat of bad administration. You have to go to the root cause to solve the problem, otherwise, the next workers too will be punished for doing our job, because we did not fight on their behalf. It doesn’t mean that when you have a challenge you now throw all of them into the market and when the need arises, you will be looking for them to hire,” he said.

President of the Association of Senior Civil Servants of Nigeria (ASCSN), Dr. Tommy Okon, blamed the idle refineries on the government’s unstable policies. He noted that the government was not being sincere, if not, importation of petroleum resources would have been a thing of the past.

According to him, “a worker deserves his wage.  What will it take us to make our refineries work? If an individual can build a refinery, which is near completion, I don’t think it is a difficult thing for the government to fix. Government needs to look at the operational feasibility of the policy, rather than the political feasibility that is derailing its operation.”

On the union’s position, he added: “Our workers should be paid because it isn’t the workers that cause the government not to fix refineries. You cannot send the workers away. Workers are ready to work and you cannot because of your negligence fail to pay them.”

Public Affairs Analyst, Jide Ojo, said sacking the workers would compound the unemployment rate in the country. He said the way forward was for the government to redeploy them to other areas, parastatals, or the parent ministry of petroleum resources.

He also suggested that government could retrench them and pay them their severance benefits immediately so that they can venture into entrepreneurship.

An economist, Dr. Muda Yusuf, said the reason public enterprises collapse in Nigeria and in many parts of the developing world was that bureaucrats and politicians are wired to manage a business, commercial or economic enterprise even when they do not have the capacity to do so.

Yusuf, who said their processes, competencies, skills sets, discipline, and orientation are not in alignment with what a sustainable enterprise demands. He pointed out some Nigerian government-owned institutions like refineries, steel companies, paper mills, Nigeria shipping line, Nigeria Airways, Nigeria Railways, NIPOST, and NITEL that had gone down the drain.

For the government-owned refineries and steel companies to be sustainable enterprises, he said the business models have to change, with key features of a sustainable enterprise such as quality of staffing, talent management, regular auditing to check corruption and customer orientation must be embedded in the business model.

He said the organisations have to be completely disconnected from the bureaucracy of politicians, adding that the ownership structure will also have to change to protect the business from the menacing interference of the political class.

“Refineries and steel companies are core industries needed for economic development and economic diversification. The solution to the companies’ problems is not the sacking of workers, but rejigging of the business models. The assets are valuable and most of the staff have been well trained. These are investments that should not be allowed to go down the drain. There is also the social cost of sacking thousands of workers,” he said.

In his submission, the Director-General of the Nigeria Employers Consultative Association (NECA), Dr. Timothy Olawale, hinted at the technical losses and wasteful spending, noting that there was the issue of sustainability and financial prudence.

He said resisting termination of employment was not in the interest of both the redundant workers and the nation’s common treasury.

While calling on labour to have an understanding of the issues, Olawale said continuing on the same path constitutes a reflection of poor governance and injudicious use of scarce resources on the part of the government.

He added: “Consequently, privatisation in its absolute sense can foster the long-term resuscitation of both the refineries and Ajaokuta Steel Company. This has the tendency to result in wealth and job creation, productivity, human capital development, industrialisation and a paradigm shift from an importing country to a self-sufficient one.”


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