PIB: Nigerian indigenous firms to lay off 80% workforce as upstream oil projects halts

Akin Odumakinde. Pix: winne.com

ACCRA – Major upstream development projects in Nigeria accruing to billions of naira may have been stalled as a result of the lingering delay in the passage of the Petroleum Industry Bill (PIB), even as the situation has necesitated the reduction of manpower by 80 percent.

The situation has become a growing concern as most service providers who incidentally are responsible for most oil industry workforce have confirmed the lull in contract awards owing to the refusal of International Oil Companies (IOC’s) from investing in key upstream development projects in the country.
The IOC’s on their part have continually stated that they cannot afford to invest without a clear fiscal and regulatory terms to work with. That according to them can only be made available if the PIB is passed.
Some Oil service providers, who spoke at the ongoing Africa Energy Week (AEW) in Accra, Ghana, yesterday, said that the situation is threatening to wipe off the gains recorded so far in the implementation of the Nigerian content policy as most of the service firms have started massive staff lay off due to long period of redundancy.
They also argued that the situation may have put the key targets and objectives of the Nigerian Content law on reverse course.
Managing Director of DeltaAfrik, an indigenous Engineering Company Akin Odumakinde, while speaking on the evolution of local content policies among African governments, noted that the delay in the passage of the PIB has stalled key development projects expected to yield significant patronage for the local firms.
He emphasised that local firms providing services in the Oilindustry have been constrained to lay off over 80 per cent of their staff to cut overhead and keep afloat in a period of acute business lull.
His words  “bids and proposals from the service providers that positioned to participate in the development major deepwater fields in Nigeria have also stalled with the projects as investors halted activities and wait for fiscal terms to be certain.”
Odumakinde said that following long period of inactivity,  Nigerian petroleum industry has remained stagnant in the past five years when the crisis about the contents of the bill raged.
He pointed at stalled development of Shell operated Bonga Southwest field and Total operated Egina field as two key deepwater projects that should have engaged the industry service providers if they were not caught in the crisis surrounding disputes over the PIB.
He said while the final investment decision on the Egina deepwater field was waiting for fiscal terms in the PIB to be resolved, Shell has also put development of its Bonga Southwest on hold following its sharp disagreement with government over the fiscal changes in the PIB.
 However, reports that the PIB which prescribed a comprehensive fiscal overhaul of Nigerian petroleum laws has been the subject of heated debate in the industry since its introduction to the National Assembly last five years.
The disputes have led to innumerable reviews and interventions in the law, resulting in protracted delays that have become difficult resolve given the new composition of the national Assembly.
Also speaking, Barrister Soji Awobade, from AELEX legal services,  said the indices of performance in the implementation of the Nigerian Content Law were not yet visible in the industry, faulting figures on percentage progress in the policy realization.
According to him, Nigerian government should speed up action on the passage of the PIB to enable the industry swing into operations and provide the needed patronage for service providers that form the engine of activity.
He stressed that it is clear that non-passage of the PIB was responsible for the low investment level in the Nigerian petroleum industry, adding that the situation was affecting the level of employment in the real sector.

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