15th September, 2014
The management of Nigeria National Petroleum Corporation on Monday moved to prevent a potentially crippling industrial unrest as it workers threatened to embark on national strike over unremitted pension payment put at over N133 billion and lack of supply of crude to the nation’s four refineries.
It was gathered that the National Pension Commission (PENCOM) had last week revoked the licence granted to the NNPC Pension Fund over failure to meet its requirements.
In a letter dated 8 September 2014, addressed to the Group Managing Director NNPC, and signed by its Acting Director General, Chinelo Anohu-Amazu, PENCOM said as at December 31st 2012, the deficit in the pension scheme of NNPC was N133.56 billion (inclusive of the N182.26bn receivable from NNPC).
PENCOM had granted temporary approval for NNPC Pension Fund to operate as a Close Pension Fund Administrator (CPFA) pending compliance of guidelines issued by the commission and the provision of the PRA in 2006.
But in the letter, the commission said it has come to the conclusion that the NNPC is unwilling to comply with the provisions of the Pension Reform Act (PRA) 2014 and the conditions attached to the approval granted it to continue with the existing scheme.
PENCOM noted for instance that NNPC has not been able to meet any of the five provisions of operating the CPFA.
In the letter, PENCOM noted that Section 50 (1) (g) of the PRA, 2014 and clause b) (i) of the approval conditions provide that the scheme shall be fully funded at all times and that any shortfall shall be made up within ninety days.
“NNPC has breached this condition considering that the scheme has remained in deficits since inception in 2006. NNPC made an undertaking to transfer additional assets to address the deficit. Despite several commitments, NNPC has failed to provide the additional assets.
“As at December 31st 2012, the deficit in the scheme was N133.56bn (inclusive of the N182.26bn receivable from NNPC).
“The commission is concerned that eight years after the grant of approval to continue with the existing scheme, NNPC has failed to honour its promises to fund the deficit despite several commitments.”
PENCOM also said NNPC has consistently violated Clause b) (ii) of the approval conditions provides that the funds and assets of the scheme shall be passed to licensed Pension Fund Administrator(s) of NNPC’s choice for management by failing to transfer all funds and assets to licensed Pension Fund Administrators for managements.
PENCOM noted that based on the actuarial valuation as at 31st December 2012, only N97.52bn or 26.43 per cent of the assets has been transferred to the PFAs for management by the oil corporation.
PENCOM also accused NNPC of failure to transfer real estate properties based on the excuse that the PFAs were not adequately equipped for its (real estate) management, failure to transfer all pension fund assets to the custodian, failure to provide any undertaking to the commission since the approval of the scheme in July 2006 and that NNPC did not provide evidence that employer and employee pension contributions were being remitted to the licensed operators as required by the PRA 2014.
It was gathered that some workers of the Corporation NNPC blamed inaction of the Board of the Corporation headed Mrs. Dieziani Allison, the Minister of Petroleum Resources for the revocation of the PFA license.
Already, the workers’ leadership under the auspices of PENGASSAN and NUPENG as at press time were holding a close door meeting with the NNPC management in other to amicably settle the issue.
The workers had last Friday issued a three-day ultimatum to NNPC management over its management’s refusal to fund the pension system as stipulated in the PENCOM Act.
The ultimatum expired on Monday morning and all workers of the Corporation have been asked to embark on indefinite strike.
But in a move to avert the planned industrial action, the management of NNPC on Monday evening assured members of staff and the general public that it is taking steps to avert a looming industrial action by the Corporation’s arm of the National Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN).
In a statement by Ohi Alegbe, its Group General Manager, Public Affairs Division, the NNPC also said PENCOM has given a twelve-month window for the Corporation to comply with the Pension Reform Act 2014 as amended.
According to NNPC, in a fresh directive dated 15 September, 2014, PENCOM stated that: “In order to accommodate your concerns, the Commission hereby grants the NNPC a transition period of twelve (12) months within which to ensure full compliance with the provisions of the PRA 2014”.
“The Corporation appealed to the leadership of the industrial unions to exercise restraint while it embarks on extensive engagement with PENCOM to resolve the issues.
The NNPC noted that since the commencement of the scheme in 2006, the management and its staff have made a lot of sacrifices to maintain the existing Scheme and any premature cancellation of the Scheme may lead to avoidable labour disaffection across board.
“While acknowledging the existence of some funding gaps in the scheme, the Corporation informed stakeholders that measures have since been put in place to steadily bridge the funding deficit which stood at N298 billion in 2010 and has now been provisionally reduced to N85 billion as at June, 2014.
NNPC also said it is in the process of transferring additional real estate property valued at several billions of naira to the scheme which is currently before the NNPC board for approval.
Alegbe noted in the statement that NNPC Pension Fund Limited has complied with the provisions of the PRA 2014, by transferring assets in equities, bonds, Certificates of Deposits and other marketable securities to the custody of Pension Funds Administrators for management as directed by PENCOM since 2006.
“The NNPC Pension Fund has demonstrated its capacity to manage the Scheme successfully by managing pension assets of over N250 billion for over eight years and maintaining an excellent record of administering and paying over 9000 retirees as and when due,” the Corporation said.
While it is not clear if the workers will heed appeal of the Corporation as at the time of writing this story, NNPC has asked members of the public not to engage in panic buying assuring further that plans are on top gear to address the situation.