We don’t need NUPENG to save oil & gas industry - PENGASSAN Deputy President FeaturedWritten by Uchechukwu Ugboaja
Comrade Eze Jude Chidinma, Deputy President of Petroleum and Natural Gas Workers Association of Nigeria, PENGASSAN, in this exclusive interview with our correspondent, speaks on issues concerning the ongoing strike action by his union; how government’s continuous inaction towards cash call agreements to IOC’s may soon render the sector moribund; and why PENGASSAN seems to be alone in this struggle to rescue the entire oil and gas industry.
Why is your union in this strike, do you think that it is in the interest of Nigerians to plunge the nation into another economic crisis?
This time I really want to tell you that the strike is actually in the interest of all Nigerians, it is possible that in the past selfish interests might have been pursued but clearly what PENGASSAN is saying is that on the issue of J.V.O funding and cash call agreement, and if you agree with me this is one issue that has been on for so many years, but what is the issue all about? There is a current arrangement where government through NNPC have an understanding with the International Oil Companies (IOC’s) in a kind of Joint Venture Arrangement, the percentage differs most of them is an average of 60% for government through the NNPC and 40% for the IOC’s. So it is such that government takes 60% of what comes from the oil and also contribute 60% of the expenditure but the problem is that governments takes their own benefits but are never forthcoming when it comes to the expenditure to finance the projects. So this has been an issue for so many years, in fact as I talk to you now government owes over 6billion dollars of arrears of cash calls to these IOC’s. If I should break it down EXXON MOBIL is owed about 1.2billion dollars, SHEVRON, TOTAL, SPDC, each of them is owed an average of about 1 billion dollars of cash calls arrears.
Why is all these an issue now since the problem never began today or with this administration?
This issue has been there for so many years but I must tell you that have become more critical today because of the drop in oil prices. I must tell you that in the past these IOC’s have tried to look for alternative arrangements to cover up the obligations of government since the government totally neglected its own part of the bargain, where NNPC allows them to engage alternative funding arrangements, in an instance where the IOC’s even go borrowing and then recoup later, but with the sharp drop in oil prices now a typical American company like EXXON MOBIL and the rest of them it is no longer sustainable for them to borrow the margin is dropping heavily, the investments if you talk about the return on investments it is shrinking for them, so it is not looking so juicy for them to even go borrowing and when the even borrow the government is not even forth coming with their own part of the bargain, so this is what has been stifling the industry right now. But most importantly the way it is going and if it continues like that the oil and gas industry may soon go moribund.
Can you say your union has done enough in interfacing with the relevant ministries of government to avert this perceived public grandstanding?
Of course whenever there is any issue, it is important that we have engagement and then trash it, even as a union we have gone beyond the era of table banging and saying that this must happen.
In the first instance for a while now we have been on that matter, we have taken it up with the Ministry of Labour and the Ministry of Petroleum and in fairness the Hon. Minister himself Dr. Kachikwu has been on the matter. I remember sometimes in May we had a discussion in Abuja here with the Minister to see how to address the issue, although the meeting was somehow skeletal but at the end of the meeting we rescheduled for the 23rd of June which was shortly before the International Labour Organization (ILO) convention but unfortunately that meeting did not happen, and then it was rescheduled again to the 30th of June where all of us (union executives) that where to attend that meeting where already in Abuja here expecting the meeting only learned from the Ministry of Labour officials that the meeting has been cancelled.
It got to that point we were already here, even most of the branch Chairmen and NEC members of these IOC’s from even other sectors all came around for this meeting but no reasonable direction, honestly at a point we even got across to the Ministry of Labour that we are aware that part of the reason for these cancellations might be due to the absence of Dr. Kachikwu the minister to far away China but we can still meet and look at other issues while the critical areas could be left out till the Hon. Minister arrives, but that meeting did not hold and at the end of the day some union members felt that the government is playing lip service to this issue as critical as it is and as a union and as body we decided that we need to apply some force into the system because we know that this issue if not addressed at this point the oil and gas industry will collapse and everyone knows that the oil and gas industry remains the mainstay of our economy currently. Are you aware that in this particular oil and gas sector on daily basis there are rising issues of redundancy as most of the oil servicing companies are basically going under, our employees are being sacked on a daily basis may be a lot of Nigerians do not know the gravity of where we are now and that is why PENGASSAN at this point have decided to be courageous to take these steps to save the oil and gas industry.
Yes there are plans by the government of the day to diversify the economy which is fine, but ultimately we need to get to that point where the oil and gas industry should be self-sustaining until such a time the diversification can come.
Comrade in this quest to rescue the oil and gas industry by way of this strike, doesn’t it seem to you that PENGASSAN may have been abandoned by its sister union NUPENG in the pursuit of this goal that ought to benefit all stakeholders in the industry when it decided not to join in the strike action?
Well it is not about whether we are alone on this strike or not, but sincerely it is actually PENGASSAN that is worse hit by these cash call issues but if a critical analysis is done on the long run it will affect everyone directly or indirectly involved in the oil and gas industry because anything that affects the IOC’s or upstream companies will ultimately affect the entire industry because if you look at the service sector companies who work for the IOC’s. In the past many of them who operate up to 5 to 6 rigs now many of them operate just about 1 or 2 rigs, so ultimately those service sector companies that are operating on these rigs many of them have gone under and the rest of the services that they render.
Of course naturally the marketing sector of the industry will definitely be affected and NNPC and government agencies will also naturally be affected, yes critically it affects the upstream sector but ultimately the oil and gas industry will be affected and I want to add that the first time we articulated this it came from PENGASSAN so it isn’t really about trying to cripple the economy, which on our own part we are even trying to be sensitive about how we drive it, which ordinarily would have commenced since last week Monday, but we looked at the holiday which would affect our Muslim brothers participation, so we looked at it again and considered some of the things which probably we could have done to create additional impact on the strike so we decided to play down on some of them so that the hardship on Nigerians would not be much, but what is most important is for government to address the issue.
Finally we learned that your leadership will soon be attending meetings with government representatives and security agencies soon, what are the recommendations that PENGASSAN is looking to put forward in the course of these meetings?
What we are looking at is this, again some of the discussions we’ve had so far of course you know that the Minister Dr. Kachikwu have also assured us that ultimately the current funding arrangements is going to be replaced. According to the Minister, it might even be in place by the end of this year, but what we are saying right now is this going forward, let the government work out a strategy to meet up the current cash call obligations to these companies, then we can now articulate on the way and manner of how government will pay the arrears owed so that these companies can remain in business.
I want to emphasize the fact that PENGASSAN is not defending the upstream companies, our interests is to protect the nations economy. I am aware that in some of the discussions even NAPPIMS have claimed that some of the IOC’s have blotted the figures and so on, but to us we are also saying that NAPPIMS should do the due diligence it requires to make sure that the arrive at the right figures and we really sustain the oil and gas industry.
Thank you Sir!