Shell Petroleum Development Company of Nigeria, ExxonMobil, Chevron Nigeria Limited, Nigeria Agip Oil Company (NAOC) and the Total Exploration and Production Company Limited, have begun sensitisation of their workers on the Petroleum Industry Bill (PIB) and the likely fall-outs of the proposed law if passed by the National Assembly and signed by President Umaru Musa Yar’Adua.
Essentially, they are now sensitising their workers on some of their concerns over the provisions of the bill which they argued would be inimical to their operations in the country. Among the likely effects is laying off of workers.
A source told The Guardian that the oil firms feel that issues bothering on conversion of Oil Prospecting Licence (OPL) to Oil Mining Lease (OML), renewal of OML, conversion and the proposed conversion of Joint ventures partnership into Integrated Joint Venture companies as well as taxation will erode their autonomy as oil exploration and production companies operating in the country.
The source explained that renewal of joint ventures as integrated joint venture companies with Nigeria’s government controlling the major shares would be reduced to usual government establishment where internal politics in appointment of board members and adhering to international code of operation would be compromised.
He said: “The foreign joint venture operators are not happy. I can tell you that right now, the management have started what I will call sensitisation of workers against the PIB bill because of what they consider would be the adverse effects if allowed to emerge.”
According to the source, some of the companies believe that the government wants to nationalise the joint venture partnership agreement through the backdoor, adding that if the government had contacted the JV partners and included their input from the beginning, all the issues that are now of concern to the operators would not have arisen.
The Guardian learnt that by the time the new bill becomes law, it will change completely the modus operandi in the oil sector with regard to the operating agreement with the Nigerian National Petroleum Corporation (NNPC).
“What the oil companies expect the government to do is to float its own company and go into partnership with the foreign companies instead of saying we are going to integrate the JVs operations, which gives a resemblance of nationalisation of companies or foreign interests in Nigerian operations,” the source said.
It was gathered further that in order to address the issues and forecast the effects of the bill, the management are now preparing the minds of workers for restructuring which may lead to laying off of workers.
The Guardian gathered that the PIB issues have become major concerns at the headquarters of the major oil firms and that if the issues are not properly addressed, they may affect investment in the industry as NNPC could not, in most cases, provide its counterpart fund in the existing JVs.
The Minister of Petroleum Resources, Dr. Rilwanu Lukman, last week, gave indication that the government may modify some areas in the PIB currently before the National Assembly in view of the serious concerns expressed by stakeholders in the industry, including oil-bearing host communities.
Lukman, who dropped this hint in Vienna, Austria, after the meeting of the Organisation of Petroleum Exporting Countries (OPEC), however, maintained that the fundamental objective of the PIB would not change.
“There may be some modifications here and there to take into account what we have heard at the public hearing especially, but the fundamental objectives of the bill remain the same. We are hoping that the new law that is coming will enhance the confidence of our potential investors, both those who are with us and the new ones we are hoping will come into Nigeria,” he said.
Lukman, who also talked on the issue of tax as contained in the PIB against the concern by the stakeholders, explained that the original intention was to correct the “aberrations contained in the previous fiscal regime and to put in place a fiscal regime that will be sustainable over a period of time because what we’ve had has outlived its usefulness.”
Although there are quite a number of other concerns which have been raised by investors, including the workability of proposed incorporated joint ventures, Lukman did not give specifics regarding the planned modifications.
While representatives of the communities in the Niger Delta had complained of not being taken into cognisance, companies engaged in engineering and fabrication complained of being starved of jobs, querying government’s commitment to the Nigerian or local content initiative aimed at boosting participation of Nigerian companies in the oil and gas sector operations.
Similarly, organised Labour had during the public hearing at the National Assembly in Abuja complained about a lack of provision for local refining, job security for members in view of likely break-up of existing entities as well as fears of anti-Labour practices.
The PIB seeks to establish three regulatory bodies for the oil and gas industry as well as spelling specific operations to be undertaken in each sector.