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Indigenous companies, labour tango over local content

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Adewale Sanyaolu

A major crisis seems to be brewing between indigenous oil and gas companies and labour, represented by the Petroleum and Natural Gas Senior Staff Association (PENGASSAN) over the former’s claim that the association was working to erode the gains recorded in the Nigerian Oil and Gas Industry Content Development Act (NOGICD) of 2010.

The stakeholders have, however, warned that billions of dollars staked by government and investors to grow local capacity for in-country delivery of oil industry jobs may be at risk in the face of ongoing confrontation between labour leaders and the fledgling indigenous service companies that form the engine of the policy.

But labour recently responded, warning that should there be any slip in the progress made with NOGICD Act, indigenous firms should be held liable because of their penchant for cutting corners and bending the rules in their favour to the detriment of extant labour laws.

The issue at stake

It was learnt that labour crisis in the service segment of the petroleum industry arose from futile struggle by indigenous companies to retain indigenous workers they groomed under various capacity building programmes that took substantial investments.

So far, the raging dispute has led to sack of nearly 1,000 field operations staff as the service companies shrink down to avert further exposure to labour union liabilities.

The workers’ unions’ protests, often border around financial entitlements while the oil service companies point at low oil price cycles, dearth and outright cancellation of contracts by operators whose projects have dropped from investment tables, as well as elongated downtime due to call-off contracts.

Some of the union members who spoke under the condition of anonymity, confirmed that the oil workers’ union is driving a movement against nearly 20 companies that fail to meet their demands for internal unionism, reinstatement of sacked workers and payment of  exit packages to disengaged staff.

It was equally learnt that some of the workers demanding severance packages are leaving for foreign multinational oil service firms after they have been employed as pupil staff and trained by the indigenous firms to meet industry skills and set standards.

Operators raise the alarm

Foremost indigenous well intervention and well site health, safety and environment (HSE) contractor, Weafri Well Services, though not involved in the current crisis, had unsuccessfully driven a campaign against poaching of groomed employees by foreign companies. The company had decried the glee with which workers it spent fortunes to train moved over to foreign competitors on the promise to work abroad.

Mr. Chris Onyekwere, whose company had vehemently fought against massive poaching from Halliburton, had argued that regulators should insist that poaching must carry a condition that the foreign employers must first offset the training cost of the employees they seek to pull out from indigenous companies.

He said the workers who regularly succumb to the allure of working aboard for foreign service companies also seek full exit entitlements from wound-licking indigenous firms, thus triggering a war cycle involving PENGASSAN and the National Union of Petroleum and Natural Gas Workers (NUPENG).

Disagreements by both unions against indigenous oil service firms, it was learnt, led to downsizing and outright shut down that resulted in massive lay off in the past six months while demand for exit entitlements has also become cyclical as more demands from sacked workers surge against weakened capacity of the companies to write cheques.

Currently, over 17 indigenous service companies based in Port Harcourt, Rivers State, are battling to save their businesses over unresolved entitlement issues. Other five companies have received demand notices from the workers’ groups.

One of them, Ciscon Nigeria Limited, has been forced to declare insolvency as hostility from labour unions and sacked employees assume worrisome dimension. The situation has led to massive staff load off after efforts at resolution agreement failed.

The company pointed at low business cycle in the industry as the reasons for delays in payment of entitlements.

Chairman and Chief Executive of Ciscon, Mr. Shawley Coker, explained that the company had to downsize in response to activity downturn in upstream operations after weak oil prices and low oil income forced operators to call off projects and cancel contracts at a time government offered no buffer for companies that staked funds on equipment and facility acquisition.

He faulted the leadership of PENGASSAN for failing in their appraisal of prevailing situation in the industry and advised them to get clear understanding of their roles as partners in building the nation’s economy and not to align with agents that demolish business structures that create jobs.

He explained that PENGASSAN was formed to protect the local economy from the activities of foreign multinational oil firms that were exploiting national resources at the expense of the Nigerian people. He equally alleged that some labour leaders were trying to outsmart the system by projecting personal interests ahead of national interests.

He also blamed government for folding its arms and allowing few interests in the industry to inflict the economic losses associated with prevailing investment flight on the country, saying that most of the companies under attack have started relocating from the country and shedding local staff.

With the massive downsizing going on in the oil services segment of the petroleum industry, Coker said, the country has recorded active job losses, shed substantial industry capacity to create new employment for new graduates, and lost deep pocket investments in local job delivery capacity.

PENGASSAN faults allegation

Reacting to the allegation of the indigenous operators, National Public Relations Officer (PRO) of PENGASSAN, Mr. Fortune Obi, said the allegations leveled against the association are baseless and untrue. He said the claim that PENGASSAN was working to erode the gains recorded by the Nigerian content policy was laughable.

Obi said PENGASSAN was one of the leading promoters in the campaign towards the realisation of the local content policy in the oil and gas industry, adding that the local content gains being enjoyed by the indigenous operators was as a result of the advocacy promoted by the association.

The PENGASSAN spokesperson insisted that indigenous players in the country’s oil and gas sector are promise breakers who never kept signed agreements.

He noted that there are collective bargaining agreements signed between the companies, workers and the in-house unions but such have never been implemented by the companies, hence the clampdown on them by the unions.

‘‘Our indigenous companies operating in the oil and gas industry are their own problems. They flagrantly disobey extant labour laws and all forms of agreements. They always want to cut corners by not doing the right thing. They are not the only ones operating in this sector. Why are we not constantly having issues with the International Oil Companies (IOCs)? This is because they play by the rule and do the right thing.

On their demand that there should be legislation against poaching unless money spent on training is paid will be resisted by labour because it is a way of perpetually wanting to keep a worker in abject poverty.”

Obi said the oil and gas industry, being a global business, thrives on skills set, adding that once a worker has the required skills needed by an interested employer, he or she is free to move without any hindrance.

 FG, PETAN proffer solution

Chairman of Petroleum Technology Association of Nigeria (PETAN), Mr. Bank-Antony Okoroafor, said the group was working with all parties in the disputes to address the worrisome development. He said a meeting has been scheduled to look into series of complaints by workers and employers involved in the disputes. He clarified that there are over 15 other companies outside PETAN that are also affected by the labour dispute.

 Okoroafor admitted that low activity cycle affected the financial capacity of most service companies in the country, adding that labour leaders should situate the prevailing crisis in the industry in the context of the current economic condition of the country and close ranks with investors to move the sector up from the doldrums.

Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who deplored the labour crisis in the service sector, said government was working to attract the right level of investment capital to keep the Nigerian Content vibrant in the short to medium term. He, however, stated that it would require over $100 billion worth of investments to recalibrate activity in the industry.

He acknowledged existence of the conflict and pledged to wade into the crisis with a view to finding a middle point between the employers and labour leaders. 

He admitted that the problem deserves greater attention than it currently receives from government and explained that Ministry of Labour should lead the intervention while Ministry of Petroleum Resources assists with details.

“I have appealed to the unions to bring labour issues in the industry to me for initial dialogues before they become disagreements. My advice is that ultimatums and work stoppage are something that must be used very sparingly. In a typical year, we lose a lot of time because we are back to back with strike.

“It is almost like the organised labour in the industry believes that the only way to get attention from us is to go on strike. But it shouldn’t be. When we are not doing things right, we need to correct ourselves.

 “I will pay attention to this more than we have ever done because I must confess to you that we have not given enough attention to some of the developing labour issues in the industry,” the Minister promised.

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