PRESS BRIEFING BY THE NATIONAL PRESIDENT OF NIGERIAN ASSOCIATION OF ROAD TRANSPORT OWNERS (NARTO), ALH. (DR) KASSIM IBRAHIM BATAIYA (DURBIN ALBASU) AFTER AN EMERGENCY MEETING OF THE ASSOCIATION HELD AT THE NATIONAL SECRETARIAT ANNEX, PLOT 460 JOSEPH ADETORO STREET, UTAKO ON 19TH JULY, 2016
Executive Members of NARTO and PTD
Our highly represented transporters,
Distinguished Ladies and Gentlemen,
Members of the Press
I deem it necessary to address you today against the background of so many challenges faced by our members nationwide, especially as it affects their relationship with some critical stakeholders and regulators in the downstream petroleum sector in this Country.
The nation has just managed to go through a very trying period of acute shortages of petroleum products that greatly threatened the economic activities of the country. The situation was finally resolved when the government decided to deregulate the price of PMS, which allowed marketers to determine the price of the product through the interplay of market forces, subject to a maximum upper limit of N145 per litre. This decision was boldly taken by the government at very high social, political and economic costs. The rest, as they say, is now history.
Throughout the period, however, not much was known by the members of the general public about the plight of transporters whose services are not only important but critical to the success of the new liberalized price regime adopted in the Country. Despite the increase in the rate of inflation, the phenomenal increase in exchange rate of the Naira to the Dollar and other adverse economic conditions, the freight paid to transporters remained unchanged from 2011 until 31st December 2015. And when the review finally came in January 2016 the rate was actually reduced instead of increasing it. This became a source of worry for our members nationwide who, if not because of their maturity and patriotism, would have withdrawn their services in the downstream sector in protest. Our anger was however assuaged by assurances received from well-meaning industry players, stakeholders, regulators, and the expressed commitment of the Petroleum Equalization Fund (PEF) Management Board to reverse their decision and maintain status quo by withdrawing the contentious circular, while also promising to look into, and address, our concerns in the next freight review exercise billed for March, 2016. To this day the PEF has not actually withdrawn the contentious review done from 1st January, 2016 to 11th May, 2016 against all appeals to reason and good judgment, a situation that encouraged some marketers to insist on paying transporters freight on the basis of that rate.
Then on 20th May, 2016, the PEF released a circular containing a new freight rate review wherein the National Transport Allowance (NTA) was revised from N3.05k per litre to N3.36k per litre and the bridging fund was revised from N4.00 per litre to N6.20k per litre effective from the 11th May, 2016. The review indicated a percentage increase of 55% and 10% on bridging fund and NTA respectively. On closer examination however one would discover that the higher percentage recorded in the bridging fund was due to the adoption of the rejected N4.00 as the base rate for the review carried out from 1st January, 2011 to 10th May, 2016. Therefore the rate is rejected because PEF failed to objectively address the challenges of our operational costs and marginal costs. For this reason, a detailed analysis of our cost profile was made available to PEF with the hope that they would appraise the situation and come out with a favourable and acceptable rate for our members.
Similarly, the payment of Goods – In – Transit Insurance had hitherto been a contentious issue until in 2005 when a special committee set up by the Petroleum Products Pricing Regulatory Agency (PPPRA) was set up to carry out a scientific study of the entire cost structure in the transport subsector recommended that marketers should be responsible for the payment of insurance on their cargo while transporters should pay for the insurance of their vehicles as applicable in the other modes of transportation i.e. Airways and waterways. Notwithstanding the agreement referred above, however, marketers have continued to unjustly deduct insurance premiums from the freight payments due to transporters. This has persisted despite meetings and correspondences the Association held with Major Oil Marketers Association of Nigeria (MOMAN) in respect of the issue.
In view of the above developments therefore, after due consultation with our members across the country we resolved as follows:
1. That the Petroleum Equalization Fund (PEF) Management Board should immediately commence the full payment of transporters’ claims as well as the accumulated outstanding claims in respect of the period 1st January 2016 to 11th May 2016, at the rate applicable from 2011 to 31st December, 2015. Similarly, the Petroleum Equalization Fund (Management) Board should immediately conclude the review of the freight rate from 12th May, 2016 to date, in accordance with the bridging fund approved by the government of N6.20 per litre using all the criteria for the increase or decrease of the freight rate.
2. All marketers that settled transporters’ claims based on the rejected/withdrawn freight rate for the period 1st January, 2016 to 11th May, 2016 should reimburse their transporters immediately with the difference while those not yet paid should be paid immediately with the rate in operation between 2011 to 31st December, 2015. The management of NNPC Retail in particular is called upon to take note of this demand immediately. Moreover they should take all necessary steps to review and improve on their payment procedures because their present method is too slow and does nothing but ties down our working capital.
3. The Major Oil marketers Association of Nigeria (MOMAN) should prevail on their members to stop charging their transporters the Goods – In- Transit (GIT) Insurance premium forthwith in the spirit of agreement mutually reached in 2005 to which all marketers subscribed. All previous GIT deductions, from 2006 to 2016 should also be refunded to the affected transporters without further delay.
Consequently, we wish to place the above stated organizations on notice that we have exhausted our patience as our businesses are gradually been grounded. We are therefore giving them a notice that if after Seven (7) days from today they fail to address the aforementioned issues satisfactorily then we would be left with no option but to take all the necessary measures legally available to us, including the option to withdraw our services in the pursuit of these our legitimate demands. We would like to state that this decision was the last option available to us having held various meetings and written several correspondences on the issues raised with the concerned organizations. The general public is therefore called upon to show understanding in this regard, please.
In conclusion, we call on the government as represented by the Federal Ministry of Power, Works and Housing and the Federal Road Maintenance Agency (FERMA) for the umpteenth time to embark on massive road repairs and reconstructions across the country. Unless something drastic is done the roads may be rendered unusable completely with seriously devastating social, political and economic consequences on the country.
Thank you very much for listening
Alhaji (Dr) Kassim Ibrahim Bataiya