By Bimbola Oyesola, [email protected]
As Nigeria looks out for ways to get out of the present economic quagmire, oil theft has continued to be an obstacle to the progress of the nation.
In this interview, Lumumba Okugbawa, the general secretary of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), bared his mind on the operations of oil theft and the fact that it is being perpetrated by high-level individuals in the society, including security agents.
He equally spoke on the importance of a stable government to attract foreign direct investments (FDIs) into the country and how the Petroleum Industry Bill (PIB) has put some discipline in the industry.
The labour leader, among other issues of national interest, highlighted how the union has been fighting for its members, the divestment in the industry and its impact on the union.
Excerpts:
Past one year
We are a union in Nigeria, so, like the average Nigerian, we are also feeling the pinch of, should I say, the dramatic change in policies of the current administration. The current administration is almost a year old now, I’d say that these challenges are not unexpected.
Challenges
There are two major issues that came up: The removal of oil subsidy and then the floating of the naira. Although we were all convinced that it would improve local production, because we cannot go on importing PMS and other accessories. We export crude and then we import finished products, which is not good for the economy.
The previous administration had to go borrowing to subsidize all these. The decision of this administration is good but the issue is that if you are enjoying something and it’s taken away from you immediately, whether for the short term or for the long term, you are going to feel the pinch.
But I believe all these would have long-term benefits for the average Nigerian. It has happened, it has happened. I think Nigerians are adjusting to the reality of the facts.
But the major thing that’s really affecting us as a union and sector is the issue of oil theft. The scale and level at which it is done shows it is an organized crime from individuals in the high levels of the society. It is not just the, should I say, rank and file that just go with jerrycan and all to steal.
These guys are well-organized. It is evident that they are high-profile persons, including some in the security agencies.
Because of this, we are struggling to even meet our OPEC quota of 1.8 million barrels per day. Nigeria has the capacity to produce up to 2.53 million barrels per day, if we want to, but we cannot even meet that OPEC quota of 1.8 million bpd.
It got so bad one time, we are even producing less than 900,000 barrels per day. And oil is one of our major earnings.
And if the Nigerian government doesn’t get money, how can they fund projects and all that? So, it’s a challenge and it’s affecting us.
Furthermore, companies are now demobilizing from onshore and are moving deeper offshore. That way, workers are disengaged. And we have seen this rapid divestment of major international oil companies (IOCs), giving their businesses to local people who might not have the capacity of the same IOCs. Jobs are lost.
They are relocating. If you go to Warri, for example, you see Shell has packed away from there. So, the associated benefits of people living in the houses is gone.
Insecurity is another issue. Before, people move by air and by water, but that is no longer the case. The local people and neighbouring communities that benefited from water transportation because they provide it no longer enjoy these benefits.
This has angered a whole lot of people in the communities and the first person they see is you, before they see government, so they vent their anger on you, thinking that you are the one causing their issues. Banditry, armed robbery, all those ones, they come into it.
Oil theft
We have to start by creating awareness to government. Last year, we organized a protest to draw the attention of government to this mundane issue of oil theft across the zone. And then in Abuja, we did protest, you know, and carried placards and everything to government houses. That drew the attention of government to even take more action. Because, before now, everything was just lip service, lip service, lip service.
What can we do? We are a pressure group. We are not policymakers. We are honest. We shout and shout until, even if you are deaf, you hear.
And we were telling them, the scale of oil theft being perpetrated in Nigeria today will require a lot of technical capacity to carry out.
Imagine a company producing let’s say 200,000 barrels in one particular oil well and only 5 percent or less gets to the terminal.
This indicates a massive theft in the chain of supply. And to ship these things, you need barges that would take it to the mothership and all. Of course, our security agencies cannot say that they do not detect these operations.
Members lost due to divestment
We cannot give a specific number because every day we deal with issues of redundancies. These companies come up with a lot of excuses as to why they need to carry out redundancies. Mergers and acquisitions is another thing. Many of these companies, like Seplat, Shell, Oando and others that have real assets, have divested over time.
This has affected our members in many ways. For example, the contract that I have with you would change if there were a new owner and, by implication, the new owner has the right to do whatever he wants with his company. When we discuss redundancy, they could tell us that 20 of our members would go but we try to negotiate downward.
Floating of naira
In our sector, many companies base their budgets on the dollar; crude is sold in dollar. So, if I budgeted $1,000 for a staff at N465/$ and now it is at N1,100/$, it disrupts your company’s finances.
Also, there is massive corruption in the system. Because some people are connected to the ‘powers that be’, they buy large volume of dollars with the excuse of using it to ship crude oil into the country, but when they are given the money, they sell to bureau de change operators at a higher exchange rate. That is making a whole lot of money in a few hours but only for the privileged and corrupt individuals in the higher echelon of society. But this is done to the detriment of the masses.
Incessant petrol price increases
The only way that prices can reduce is through local production. Pricing is affected by two major indices: International oil prices and the exchange rate. This is because commodities are priced in dollars. That is why we welcome Dangote refinery and other modular refineries.
If Port Harcourt refinery and the other government-owned refineries come on stream now, it would further help push down the prices of fuel and other petroleum products.
The issue of smuggling should also be addressed because, when some unscrupulous elements know that they can buy fuel cheap in Nigeria and sell at higher rates to neighbouring countries, they intend to smuggle it out of the country.
Dangote refinery
I will not speak specifically for Dangote because it is a private business. However, these refineries are big projects that require series of test runs before they can be fully functional. There are technical and mechanical issues that need to be addressed and it would be unwise because of public opinion and pressure to rush things before concluding all the required testing phases. But by the time they all come, up, it would help address some, if not all, of our problems.
PIB and the oil sector
One thing about the industry is its uncertainty. The current Petroleum Act of 1969 has been very long. And when investors want to come, they want to be sure of the viability of their investments, what government policies and how they can impact and all sort of things. You would agree with me that a stable government is needed to attract FDIs.
In summary, the PIB has put some discipline in the industry. Taxes that were charged in 1969 have all been adjusted in line with modern-day reality. Also, multiple regulatory bodies with duplicate responsibilities have been merged to reduce the bureaucracy in the sector.
Members’ welfare
First of all is training. We have to train and retrain our members to be aware of the changing economic times so as to create more impact in society. We organize workshops and trainings both locally and abroad so as to expose our people to international best practices and to know their rights and how to demand for it.
At national and subnational levels, too, we hold meetings to keep our people abreast as regards best practices and trade unionism.
As for financial aid, this is according to the employer and it varies by companies, because not all of them have the same capacity. But these companies know that a happy worker would be more productive, so they do what is deemed fit.
Casualisation
It is a big challenge. They tell you that the casuals would work for only six months or thereabouts but, eventually, you see them work for 15 to 20 years. Within this period, different changes must have been made in the leadership of these companies and several changes in terms of agreement with the workers, which at the end of the day does not yield anything positive for the workers themselves.
We have been working to ensure that contract staff are unionized so that the unions can speak for them in such cases.
Workers’ expectations
Our labour centre, the NLC and the TUC, are the helm of discussions. One of the major things is the agreement on a new minimum wage. There have been different proposals made. However, it is important to reach a number that all state governments can pay.
Insecurity
We also push for improved security in the country because we are not happy that our children are being kidnapped. The government should deal severely with the culprits and their sponsors, not all the ‘foot soldiers’ being paraded each time we hear that there have been arrests. They have big sponsors, informants, people that harbour them and provide legal services to them. All of them should be addressed and dealt with.
There are laws in every country and there are people to enforce these laws. Let government go ahead and enforce these laws. Our society too has a role to play. If, for example, I left my village to hustle in a different part of the country and in two years’ time I come back with a convoy of six cars and different aides, I will be given a red-carpet welcome. If I go to church that Sunday, I and my family would be ushered to the front row; if I dropped a particular huge amount, before you know, I would become an elder in the church and later be given a chieftaincy title.
Now the real problem is that nobody would ask the source of my wealth. Yes, it is possible to make money in a short period of time, but is it legitimate? Those are the questions we as a society have failed to ask. It is as if we glorify wealth without asking its source and this has made a lot of people in the society to get involved in illicit activities.
The banks also are complicit because with the BVN and all other data at their disposal, they cannot claim not to be able to detect and track huge sums of moneys that is being laundered and use for kidnapping ransoms by the high and mighty in the society.
Tinubu’s administration scorecard
It has been really tough, but I must commend them in a way. They have taken some very bold steps that previous governments did not take including the removal of subsidy and floating of the Naira reducing the level of ‘scam’ in those areas.