GEION: PENGASSAN, NUPENG to shutdown economy over FG’s order on debt

At stake is Debt of ₦1.8 b, USD 7.3m, EUR 328,189.32

Emmanuel Thomas l Thursday, November 07, 2019

LAGOS, Nigeria – Life as a worker can be very frustrating in Nigeria. Many who have worked hard in their prime often don’t live to see the reward of their labour. Even those who are laid off are most hit. They don’t receive their cheques at point of termination as expected. Such is the story of Buba Ali. He died in his sleep out of hopelessness. But he is not alone. Musa Hassan has also suffered same fate. He died in penury and that is story you hear even in the most unexpected quarters in Nigeria.

Ali and Musa are victims of crossfire between an indigenous oil company known as Arco Group and an American company known as General Electric International Operations Nigeria (GEION), both being operators in the oil and Gas industry.

Late Ali and Musa Hassan are among the several number of people who are being owed by Arco Group, an organization that was cheated out of a contract deal and forced by circumstances not to be able to make severance payment to exiting staff. 

Late Ali and Musa Hassan represents the agony that most of the ex staff are facing due to refusal by General Electric Operations Nigeria (GEION) to pay what is duly owed to Arco Group, despite intervention by the Ministry of Labour and Employment and the Federal Inland Revenue Service (FIRS).

This situation has infuriated relevant and most powerful labour unions in Nigeria. Leaders of the most powerful unions in the downstream sector, PENGASSAN and NUPENG have declared that hell will be let loose after the 14 day ultimate given to GEION to pay all arrears due ARCO Group by this weekend. 

The general anger has been provoked by the fact that no foreign organization has been so defiant to the authorities or any agency of the Federal Government. The labour unions are peeved and are set to go on a sympathetic protest to identify with ARCO Group an organization owed by GEION to the tune of ₦1,891,752,214.48, USD 7,326,125.99 and EUR 328,189.32, inclusive of accrued interests. These being accumulated reconciled monies, said to have been dubiously concealed by the American company.

According to our investigations, the issue dates back to 2006 and 2015, when ARCO General Electric International Operations Nigeria (GEION) had a joint contract for the maintenance of Nigeria Agip Oil Company (NAOC)’s gas plants in different locations in Delta and Rivers state. 

Somehow along the line, GEION is said to have changed ARCO Group’s position to that of a sub-contractor, reducing its work scope, and making all manner of unjustified deductions from Arco’s invoices.  But the major bone of contention was the issue of deduction of withholding tax (WHT) at the rate of 10% from payments due to Arco, rather than the stipulated statutory rate of 5% which was supposed to be paid to ARCO Group.

ARCO Group reported the illegal deductions when it demanded WHT credit notes from GEION for the sums deducted from its invoices purportedly as tax. The reluctant explanation GEION offered did not match the volume of monies deducted from invoices, ostensibly as WHT.

Upon further investigations, the issue became messier when it was found out that it wasn’t ARCO Group alone that was short-changed in this manner by GEION. This discovery led to further investigation by the Federal Inland Revenue Service, the result showed that GEION had not been honest in its withholding tax credit notes. 

FIRS in 2017 confirmed the applicable rate of WHT to be 5%, and instructed GEION to furnish ARCO Group with credit notes to match purported WHT deductions from ARCO’s invoices. While in other climes, GEION would have been slammed with stiff penalties for such fraudulent error, GEION instead was given opportunity to attend a reconciliation meeting between FIRS, ARCO Group and itself, where it was confirmed that the total amount over deducted from ARCO Naira invoices was ₦446 million and some USD 3 million had been over-deducted in the USD invoices. 

The reconciliatory meeting also confirmed that between 2006 and 2008, the sums of ₦74 million and USD1.275 million deducted by GEION were not remitted as required by law, and could therefore not be accounted for. Another sum of USD563,861.05 deducted from 12 ARCO invoices in 2014 could not be traced!

The matter eventually reached a dead end when on Tuesday 24th September, 2019, the Hon. Minister of Labour reconvened the meeting to deliberate on the FIRS report, and issued final instructions to the parties through a letter dated 4th October, 2019, that GEION should make the payments as agreed upon. But GEION has continued to turn a deaf ear to all entreaties. 

It was at this point that the labour leaders in PENGASSAN and NUPENG stood up in one accord and said “no, enough is enough,” that no foreign company should hold government agencies in such disregard.  It was against this backdrop that the unions gave a 14 day ultimatum to industry stakeholders to call to order General Electric International Operations Nigeria, GEION, and all other authorities, over the non-payment of terminal benefits to its members who were laid off in August 2019 by ARCO Group.

The ultimatum which commenced last Monday was signed by PENGASSAN General Secretary Lumumba Okungbawa and the General Secretary of NUPENG Afolabi Olawale. The ultimatum was addressed to the Group Managing Director of Nigerian National Petroleum Corporation.

Both labour unions said that the ultimatum became necessary after GEION failed to act according to the decisions reached at the reconciliation meeting with the Minister of Labour and Employment held in September. During that meeting, parties came to an agreement that GEION should within 7 days apply to FIRS for the refund of the over-deducted sums paid to FIRS as agreed during the reconciliation exercise with FIRS.

“That GEION and ARCO should meet afterwards between 2 weeks to reconcile the deductions that had not been done and ensure that the workers who were laid off are paid within one week. Tax deductions made by GEION on behalf of ARCO supposed to be remitted to FIRS but which was not done, should be returned to ARCO within 3 weeks”.

GEION was also supposed to meet with FIRS within 2 weeks because of the sum confirmed by the Lagos State Inland Revenue Service(LIRS) office as having been remitted by GEION but presently under dispute for further reconciliation. The unions noted that the refusal of GEION to adhere to agreements is a slap on constituted authority and an affront for which they will have no option but to go on an indefinite strike after the expiration of the ultimatum. 

A combination of PENGASSAN and NUPENG strike in Nigeria has always been the most feared in the country as it literally means paralysis of the economy of a nation that largely depends on oil for survival.

Experts are of the view that a strike of this magnitude at a time of so much insecurity, coupled with insurgency in the northern part of the country and recent closure of the borders that has restricted trade flow in several sectors of the economy will totally shutdown the economy. The unions are calling on GEION to move at the speed of light to avert this impending economic shutdown