Exploring New Ways to Support Employees Can Reduce Frauds at Nigerian Filling Stations

The market for filling stations will continue to expand as long as Nigerians keep driving vehicles that need to be filled with petroleum and diesel. As long as people continue to utilize generators as a backup source of electricity for their homes and companies, the expansion won’t stop anytime soon either. The filling station market aspect of the downstream sector of Nigeria’s oil and gas industry is predicted to increase significantly between 2022 and 2027, at a rate of roughly 1.5% annual compound growth. Despite this, there are numerous obstacles to overcome.

Looking at the obstacles, our analyst observes that there would be no significant variation from what businesses and other stakeholders have experienced over the last two decades. Thousands of filling stations in Nigeria would see revenue and profit decline as a result of inconsistent national government policies and global economic uncertainties caused by geopolitical crises. Employees have always been one of the conduit pipes via which major sales revenue is faded away, regardless of the level to which they would drain owners’ investment fund. As stated in our earlier investigation, several forms of sharp practices ranging from non-remitting sales income to theft from the company’s accounts as well as meter manipulation occur every day, from attendants to managers.

Our fraud data at several filling stations shows that between 2012 and 2022, station owners reported that their managers and attendants had stolen a total of N281, 250, 240. Further analysis reveals that managers stole N5,985, 325 on average, while attendants stole an average of N8,388,643. Our data shows that when attendants and managers collaborated on stealing and theft activities, the average amount stolen increased. It was worth N43,000,000. An assessment of the fraud categories as well as the age range reveals that employees aged 31 to 40 years were the principal perpetrators in 55.17% of the 29 reported and prosecuted cases. Employees between the ages of 21 and 30 were followed by those between the ages of 41 and 50 in 24.13% of the cases.

Sensitivity of the Age Range to the Fraud Types

Another important finding from our analysis is the age range’s susceptibility to the forms of fraud. Our analysis reveals that employees of all ages deceived their companies at the same rate. According to our analyst, this necessitates serious thought on the part of the station owners and numerous employees’ associations in the downstream sector. This conclusion is bolstered further by the fact that petrol workers have been on low remuneration since 2016. From a psychological and economic standpoint, paying employees a low wage is one way to promote financial irregularity in all facets of any business. Given the current state of the economy in the nation, paying attendants between N10,000 and N15,000 and managers an average of N60,000 and expecting them to refrain from financial fraud is untenable.

Exhibit 1: Fraud Types by Average Salary

Examining this insight in the context of employee average salaries and fraud types will be helpful. According to the data in Exhibit 1, three of the four most common fraud types in the industry involved employees making less than N50,000 while 66.66% of employees (n=3) who committed non-remittance of sales revenue earned the same amount as the four employees who were reported for tampering with the Point-of-Sale system, earning N20,000. More than half of the 21 employees who were reported by the stations and charged with the crime under the state’s criminal code also made the same salary. The average wage of the four employees who were accused of stealing and prosecuted in several courts was N60,000.

Exhibit 2: Average amount (N) stolen by age

The large amount of average sales revenue that was lost in 2019 suggests that the COVID-19 pandemic’s effects must have encouraged employees to participate in fraudulent behaviour. This reinforces the earlier position that station employees would find it impossible to refrain from participating in different fraud operations in the face of economic uncertainty. For a lot of employees in the private and public sectors, 2019 was extremely difficult. For instance, the Nigerian government provided food and financial aid during the pandemic’s initial wave. According to our observations, the government provided some filling station employees in the states where the fraud instances our analyst examined with palliative care worth between N50,000 and N70,000.

Exhibit 3: Average amount (N) stolen by year

Strategic Options

According to all indicators, filling station employees require better working conditions, particularly in terms of adequate remuneration. This is entirely dependent on the Petrol Dealers Association of Nigeria, the Independent Marketers Association of Nigeria, and the National Union of Petroleum and Natural Gas Workers. Based on current observations and facts about working conditions at various filling stations, it is high time for these associations or unions to recognize station personnel as key players in the country’s mission to clean up the oil and gas industry.

The industry has gone through a series of reforms and programmes to enhance operational efficiency and income for stakeholders in the upstream sector at the expense of those in the downstream sector, particularly attendants and managers. The Nigerian Labour Congress and Trade Union Congress should investigate the actions of some station owners who restrict their employees’ involvement in the activities of the Petrol Stations Workers’ Union. To put an end to different frauds, the job of station attendants and managers must also be subjected to minimum wage requirements and other labour laws. Seeing them as underdogs in the downstream sector will continue to exacerbate financial and non-financial irregularities in all parts of the Nigerian filling station businesses.