- NLNG model should be adopted for reviving refineries
- Labour drops opposition to privatization but..
- No going back to subsidy, remove price modulation, enact a law
- Urgent need to pass PIB especially the Host Community component
(Published first in BusinessDay)
Experts in the oil and gas industry rose from a virtual seminar at the week to table a way forward for the sector, pointing to the NLNG model as answer to privatization efforts of the refineries.
The webinar was at the instance of the African Initiative for Transparency, Accountability, and Responsible Leadership (AfriTAL) led by a seasoned oil gas technocrat and labour expert, Brown Louis Ogbeifun, backed by FOSTER. Key outcomes include recommendation of the NLNG model in privatizing the refineries and any other oil related enterprise.
Other highlights include; that Labour is willing to drop opposition to privatization; there should be no going back to subsidy; and that price modulation should not be retained; a law must be enacted to strengthen government pronouncement on subsidy removal; and there is urgent need to pass PIB especially the Host Community component.
On the NLNG model as the way for others, the participants said: “Stakeholders are expected to support and collaborate with the management of the Nigeria National Petroleum Corporation (NNPC) on fixing the refineries using the NLNG model. This seems the only plausible way of urgently turning around the refineries for profitability and sustainability, which at the end, would make Nigeria exit importation of petroleum products.”
The experts who include top industry unions said the unions were not averse to the deregulation of the downstream sector. However, the deregulation should not be based on dollar and import driven process.
It was agreed that subsidy regimes in the petroleum sector have been abused and has become a major source of corruption, economic sabotage and the hemorrhaging effect is disastrous to the country. “Therefore, there would be no need to move from the regime of subsidy into another modulation mode. Price modulation and control would still breed corruption. To give the pronouncement on subsidy the teeth of law, Government needs to move from mere pronouncement to the realm of law, by amending section 6(1) of the Petroleum Act, which vests the power of intervening in petroleum product pricing on the Minister of Petroleum Resources.”
Instead, government should incentivize companies by providing tax holidays and over-laden incentives to investors, which would enable them invest in the refineries.
After the tow-hour robust deliberation and presentations, more resolutions were reached. It was strongly recommended that the Petroleum and Natural Gas Association of Nigeria (PENGASSAN) and National Union of Petroleum and Natural Gas Workers Union (NUPENG) as well as the other critical stakeholders in the oil and gas industry should be engaged by the government and the National Assembly in birthing a new Petroleum Industry Bill (PIB). “The new Bill, should promote good governance, allow for indigenous participation, revitalize the midstream and downstream operations, protect the environment, emplace fiscal regimes that will at the end attract investors and address community concerns etc. A situation where nobody knows where the PIB document is presently, is worrisome.
“Government should urgently create more opportunities for the country through a viable and efficient mid-stream processing, which would help to birth new local industries and also improve local refining capacity.
“There is the need to create a very strong regulatory agency outside the control of the Ministry of Petroleum Resources, which shall be well funded, well-staffed and autonomous. Government should commit to a framework to deal strongly with environmental and community issues. The need to urgently pass the Host Community Bill cannot be over emphasized.
Government should diversify the economy, as a way of mitigating the price fluctuation of hydrocarbons in the global market.
“Civil Society Organizations should advocate for a constitutional review, which should encourage the culture of savings as done in other nations. This is principle behind the Sovereign Wealth Fund management system, which if well managed, would shield Nigeria from the challenges of world oil politics and fluctuations in the prices of crude oil.”
The experts said with climate change, the world is gradually reducing the use of fossil fuels. “This has implications for the industry. COVID-19 has now come with its own deep dive complications and complexities. It has brought new challenges to the world of work, family lives and the ways industrial relations are managed. Therefore, workers must move with the changing times by thinking outside the box if they must move out of the deep.”
It was made clear that companies and employees who would survive the post COVID-19 would require great deal of new social skills in negotiation and technology. “The degree to which companies would survive, shall be dependent on employees’ competence and managers’ empowering people to take decisions either from home or at work. No matter how much companies’ say they care, there are COVID 19 imposed financial and social dilemmas, which would bring about conflicts between unions and management. To successfully manage the conflicts, it will require that unions and management should collaborate, cooperate and hang together.
“Stakeholders should emplace a think-tank, which must include unions, management and employers. Owners of enterprises, must be ready to have slim dividends while unions and company executives would also need to make sacrifices.
“Management should not arbitrarily exercise its power of hire and fire at this time because oil and gas workers are also in the front line of COVID 19, working to sustain the nation’s economy. Anything done otherwise, would be counterproductive. PENGASSAN and NUPENG members have displayed empathy and maturity, in providing continuous support in the frontline of COVID 19, for the industry and by extension Nigeria. During the Pandemic, employers should ensure that PENGASSAN and NUPENG leaders are consulted, in all matters relating to employment contract relationships as contained in subsisting collective bargaining agreements (CBAs). This is key to the synergy needed for a strong oil and gas industry in the immediate post COVID 19 era.
“Both union and management need collaboration and cooperation to survive challenging COVID-19 times. Emplace efficient, open, accountable and transparent licensing, leasing and acreage management systems, such that it will be impossible for companies to hold on to assets without developing them for a long period. This is important because, if Nigeria was not replacing reserves and growing oil and gas assets, there is no way the country would generate employment for her teeming unemployed youths.
“Fiscal regime should be properly crafted in line with best practices as a way instilling confidence in investors.
PENGASSAN President, Nduka Ohaeri, in accepting to cooperate and collaborate with critical stakeholders, called on them to stand up to their responsibilities as he said; “Though the unions have the responsibilities of wearing both the national caps and looking at the business, we shall however, not be cowed or cajoled into taking actions or speaking for government or speaking for our employers, because they all have their responsibilities. But be rest assured that our responsibilities is not lost on us as a union. When necessary, we will wear the national cap. At other times, we shall wear the cap of labour unions in matters relating to the welfare of our members.”
On his part, the NUPENG President said “Though everybody is saying that the unions should cooperate with the companies to survive, that survival should not be translated into redundancies all the time on the part of the Unions. Our members have been asked to stay at home. Companies are using the COVID 19 situation to close out contracts without recourse to the subsisting collective bargaining agreements. Worse still, the unions are not being consulted under the guise that they cannot be reached.”
The underlying concern was that before January 2020, oil and gas workplaces generally had closely knitted traditional social and physical environments, in which workers worked in close proximities. With the advent of the COVID 19, most of these traditional interactive interdependencies, and the traditional world of work as we presently know it, have drastically changed.
It was the view of the experts that; “The pandemic has also imposed excruciating new socio-economic outcomes on oil and gas companies and the country. Some of the harsh realities are oil glut, crash in crude oil price, lockdown of cities and cross-border closures. In order to meet up with its obligations, government had to urgently change some of its policies to reflect the current economic realities. Some of these policies include the management of forex, removal of subsidy on petroleum products, physical and social distancing protocols, change in the model of running the refineries etc.
“On the other hand, with diminishing sales and plummeting crude oil prices, oil and gas companies are incurring extra budgetary expenditures, designing and reordering work programmes. All these pose huge challenges to workers, suppliers, family life, resetting of body clock for global companies, who must attend online conferences with their colleagues in the US and other parts of Europe with different time zones.
“To survive the extra budgetary traps, some companies may need to cut costs, restructure and impose a work-from-home approach, which in turn impose new work attitude. These initiatives have led to the deployment of only few employees into production areas with majority staying at home. These government policies and company initiatives, have far reaching consequences for the practice of industrial relations in the oil and gas sector.”
“It was consequent upon the above that AfriTAL, a non-governmental organization, will be organizing Webinar series to discuss “Post COVID-19: Oil and Gas Industry Challenges and Prospects” under our Save Nigeria Oil and Gas Industry initiative programme. The first virtual session was held on May 14, 2020. During the session, two topics were discussed: (i) Managing industrial relations in challenging times by Steve Ojeh PhD, an oil and gas industrial relations’ expert; and (ii) Repositioning the oil and gas industry for post COVID-19 recovery by Israel Aye, a lawyer, energy advisor and an entrepreneur of repute.
The objectives were listed thus; ensure that oil and gas social dialogue partners, were apprised of the current oil and gas challenges; forge a collaborative and cooperative synergy, which would ensure smooth return to post COVID 19 work; and proffer solutions to identified challenges, which would reposition the industry for strong post COVID 19 oil and gas industry recovery.
“Fifty four participants took part in the Webinar. They included participants from PENGASSAN, NUPENG, Ministry of Labor and Employment, NECA, industrial relations managers, Human Resources managers, Academia, Media, civil society organizations, petroleum industry, past and present leaders of oil and gas unions, Institute of Chartered Mediators and Conciliators of Nigeria, Multi Door Courthouses etc.”