Contractors in the Nigerian petroleum industry have collectively laid off over 10, 000 workers, as multinational and indigenous firms compete keenly for few jobs available in an industry that has been disabled by fiscal disputes and low oil price cycle.
It was gathered that whereas multinational oil firms trade off indigenous workforce for cost discounts on jobs, the indigenous companies lay off workers to cut overhead costs at period of activity lull and resource redundancy.
Indigenous firms also accuse foreign firms in the country of patronizing impostors in the service industry to violate abuse the Nigerian Content Development policy and perpetrate corruption in the system.
The Nigerian Oil and Gas Industry Content Development Act 2010 requires oil exploration and production companies that mine the country’s hydrocarbon resources to domicile their job executions in-country in order to bridge patronage between the huge budget upstream petroleum sector and the real sector of the economy.
The key policy objective is to guarantee patronage for the local oil service firms and empower them to develop world class capacity and competencies retain and deploy industry budget in creating multiplier growth effect in the larger economy.
Deepening the local content of the industry is part of the key national economic aspirations that government mapped out for the petroleum industry by 2010. However, the industry missed the 70 percent objective by 2010 due to low indigenous capacity.
The challenge had spurred a wave of huge investments by indigenous oil service firms to develop capacity and effectively position to deliver on the mandate to deliver 70 percent of all industry jobs by 2020.
With a plethora of indigenous service firms in the market space, foreign service firms struggle to maintain presence and deploy several clandestine measures including phony partnership deals with commission seeking indigenous firms to maintain their position in the industry space.
Despite the ruthless competition for few available jobs, both service groups are not spared in the adversity that hit the industry following oil price fall and fiscal disputes in the country’s petroleum industry.
The job cuts, The UNION gathered, are compelled by very low patronage that leave both service both service groups scramble for few jobs coming from exploration and production companies that operate various production agreements with the government in assigned oil blocks.
Indigenous companies alone are confirmed to have laid off over 7000 workers since the onset of industry downturn while multinational firms have sacked over 3000 mostly indigenous workers in the period.
Industry activity data available at various regulatory agencies confirmed that investment in the in the industry has come to an all time low as government fails to provide clear fiscal climate and policy direction for the industry in the past 10 years when the highly controversial Petroleum Industry Bill (PIB) remained on the platform of policy debate.
Minister designate and Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, confirmed to The UNION that massive job loss was ongoing in the industry and also confirmed that the sad development was prevalent in the service sector.
He explained that staff cut in the industry has swept across the asset operating companies, oil service companies and all levels of contractors in the entire service chain.
New Executive Director of Nigerian Content Development and Monitoring Board (NCDMB), Mr. Denzil Kentebe, appears to have placed the policy on reverse movement as foreign operators and compatriot service firms appear to recapture grounds and push national economic targets to the background.
Intervention from the agency is missing despite a spate of chorused outcry by indigenous companies against the job contracting processes in the system. The board which is the sole agency for protection of jobs for the local service industry appears to have abdicated its regulatory role left the turf for the strongest.
Efforts to speak with Mr, Kentebe on the issue proved unsuccessful as neither him nor his aides took calls put across to them.
Sources in the Department of Petroleum Resources (DPR) which oversees activities of the industry claimed no knowledge of the mass sack in the industry, insisting that its role has been limited to technical regulation since the creations of NCDMB.
Chairman of PETAN, Mr. Emenka Ene, also confirmed to The UNION that he 2015 has remained exceptionally tough for the service sector of the industry, explaining that low activity and consequent falling patronage means that the companies are running huge overhead while assets and personnel remain redundant.
Worse than low patronage, according to him, is a renewed wave of stringent competition by multinational oil service firms which, in desperate strategy to circumvent Nigerian Content requirements, infiltrated the local service industry with commission seeking partners that use political links to secure tem jobs,
Mr. Ene who is an eminent petroleum engineer accused the international oil companies in the country of colluding with compatriot foreign service companies in a clandestine arrangement to creatively defy the Nigerian Content regulations on local job execution.
He said the foreign firms deploy traders that pose as indigenous oil service providers in a decoy to trap jobs guaranteed for indigenous companies under the NOGICD Act. He also alleged that the local fronts are also used circumvent existing laws and shield the foreign accomplices from vulnerability to America’s stringent Foreign Corrupt Practices Act.
He explained that the foreign firms simply sign memoranda of understanding (MOU) with local brief case firms to exploit job opportunities created by the Nigerian Content Development Act. He lamented that political patronage which he said was creeping in on the industry.
He declared that the Nigerian Content Act must not be allowed to become toll gate for foreign companies, warning that such a development would strip incentives and protection to Nigerian service firms and their bankers that staked huge investments in building capacity to domicile industry job execution to realize national economic aspirations in the petroleum sector.
In calling on the policy drivers to rescue the Nigerian Content policy, Mr Ene made it clear that multinational service firms that hijack local jobs offer huge discounts and turn around to sack over 50 percent of their Nigerian workforce in order to break even.
In pointing at other strategies used by the foreign multinational firms to sabotage indigenous firms, he said the foreign firms besiege their key indigenous adversaries and drain locally trained workforce with the allure of posting them overseas.
He alleged that the poached indigenous workers are the first the foreign firms sack at any time they encounter downtime.
In calling on the authorities to strengthen implementation of the Nigerian Content policy, Mr. Ene stressed that indigenous companies must be supported now in order to sustain gains already built in developing Nigerian technology and expertise for delivering petroleum industry jobs.
Oil Companies Load Off 10,000 Workers