Nigeria risks loss of US$25bn, 20,000 jobs if amendment of NLNG Act is allowed- Johnson

FRANCIS JOHNSON, president of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), in this interview with BusinessDay’s JOSHUA BASSEY, warns on the implications of moves by some members of the National Assembly, to amend the Nigeria Liquefied Natural Gas (NLNG) Act.

Why is PENGASSAN opposed to amendment of the NLNG Act? 

We are not opposed to any law that would add value to Nigeria and her citizens. But as workers in the oil and gas sector, there is no way we are not going to look at what is to be amended, the motive and how it will impact the people and the economy.

When the National Executive Council (NEC) of our union met in Abuja on December 8, 2016, one of the issues discussed was the amendment of the NLNG Act. The various branch chairmen usually brief the NEC in session on developments in their units. After an exhaustive deliberation, the NEC mandated that a communiqué be issued to express our stand on the matter. We have sent letters to the President of the Federal Republic of Nigeria, the Senate President and the Speaker of House of Representatives. We have also copied the Minister of State for Petroleum Resources and the GMD of NNPC.

We are conversant with the role that the NLNG is playing in our nation’s economy, and so we are curious about the moves to amend the Act. Who is pushing this amendment and whose political or economic interest is it to serve?

We are concerned because about two or three months ago some people came up with the idea of sale of national assets and the same NLNG among other assets was mentioned. We came out to say this is not proper and they beat a retreat. Today the talk again is about amendment of NLNG Act.

Why would any group be pushing for amendment of the Act bearing in mind the role of NLNG and the negative consequence such amendment will throw up. NLNG is owned by Nigerians together with foreign partners from the Netherlands, France and the United Kingdom covered by Bilateral Investment Treaties (BITs). The mode of operation of NLNG over the years has boosted the confidence of these foreign partners in our economy. We cannot therefore fold our hands and allow this confidence to be eroded.

If the NLNG as we know today is laying the golden egg, why should we not sustain it? When this current government came on board, it was the dividends they got from NLNG that they used to give bailouts to states to pay salaries.

You talk about NLNG laying the golden egg. Can you give an insight?

The NLNG Act was passed during the military regime. It is unfortunate that most of the legacies we have in this country today were initiated during the military era. I think that our civilian administrators should build on these legacies rather than wipe them. Take for example the Odua Investment: The Odua group of companies was set up by late Chief Obafemi Awolowo. Today they are still in existence.

The NLNG was established after 35 years of unsuccessful bids to make sure that we move forward as a country in the area of liquefied natural gas. The initial investment of NLNG upon its incorporation in 1989 was about US$6.0 billion. Today it has an asset base of US$11 billion and has generated over US$90 billion in revenues. It has contributed over US$15 billion to the government by way of dividends. At present, the company has expanded from investment in one train to six trains and it is getting ready for the 7 and 8 trains. It has grown to become the fourth largest supplier of liquefied natural gas in the world. These achievements have been made possible by the NLNG enabling Act.

If we have what is creating jobs for Nigerians with the potential to create more jobs, why would we not protect it?  That is why we are saying we don’t know the motives behind the legislators’ moves; we also don’t know the sincerity of the proponents of the amendment of the Act.

 What if the legislators succeed in this?

There are negative implications for the economy. Among the issues being contemplated by the proponents of the amendment are the deletion of assurance by the government to retain agreed physical and security regime of the investment and the extension to the NLNG of 3 percent contribution of the total annual budget of the company payable only by upstream companies to the NDDC.  We are concerned: Amendment without discussing the implications for the economy and the way it will affect the foreign partners?

What impression are you giving them? The confidence of investors in Nigeria will be affected negatively. This will damage the reputation of Nigeria, her credit rating and ability to retain the current investments and attract future ones.

It will harm the much needed foreign investment because after 35 years of unsuccessful efforts, NLNG could only be incorporated with the enactment of the NLNG Act. If this amendment is allowed, people will say there is no need investing in this uncertainty!

Another serious implication is that Nigeria will lose about US$25 billion at this time of recession which should accrue from investments in NLNG trains 7 and 8. Those are the areas we’re looking at to say it is not the best for us.

There would also be job losses because if trains 7 and 8 are stalled, some 18 to 20, 000 jobs are going to be negatively affected. If you go to the NLNG in Bonny Island, you will see the positive impact of the investment in this economy.

 Do you see the Federal Government backing the amendment?

When the issue about of the sale of national assets was muted, we said that the President and Commander-in-Chief should tell us the true state of the situation because he was elected. But up till now, the President has not said anything on that and even on this latest issue of amendment of NLNG Act. But I think that if the present government is the one proposing the amendment, they should also be the one to drive it, and not some businessmen and investors. Businessmen are trying to look for a way to corner what they could not when the dangled the idea of selling national assets. For us, the executive has not come out on this. But we warn strongly that the NLNG Act should not be made a subject of politics, we must protect jobs and leave a legacy for generations unborn.

 Are you worried about gas flaring in the oil producing region?

 Successive regimes have tried to draw up a master plan that is workable towards ending gas flaring, but unfortunately, when you go to all these refineries, you still see gas being flared. In other countries, for example Italy, it is not like that. We are supposed to harness this gas and utilise it for useful purposes including home cooking. Being wasted away is not too good for the economy. This is also why we are concerned about this subtle move to amend the NLNG Act. Rather than discuss amendment, NLNG should be encouraged.

When you look at the Petroleum Industry Bill (PIB) and most of the policies of the government, what you see is inconsistency and lack of proper implementation or follow-up on issues. The PIB has been lying fallow. These are issues that need to be put on the front burner.

 Does it raise suspicion that the passage of PIB has not been fast-tracked?  

 It is very suspicious to us. It means that some people are afraid of allowing the NNPC and others to operate freely.

I have been to Malaysia and PETRONAS which is owned by the Malaysian government and it has almost 55,000 staff in 150 companies. Every January, these companies give the government dividends, and then look at some sectors like road, works and other infrastructure and do them. Hence, if the PIB that will ensure the smooth operation of the oil and gas sector has not been passed, it is only curious that some people are jumping to something else.  We believe that the PIB is supposed to be the bedrock of any development in the oil and gas sector. If PIB is passed today the issue about the poor state of the refineries would no longer be there. The NNPC and other agencies will be taken care of. It looks suspicious to us that after the sale of assets was resisted, they are now talking about amending the NLNG Act. We believe there are under current motives behind it and that is why labour is worried and will not accept it.

So we are liaising with the National Assembly and reaching out to the representatives to ask what the issues are. We believe that what should be uppermost is our collective interest as Nigerians. Like Donald Trump, it should be Nigeria first and not personal interest or interest of the few.

 What should be done to end fuel importation in Nigeria?

 We have said it before that importation of products was not the best for Nigeria. Whatever can be done to make the refineries perform optimally should be done.

The staffers of the refineries are ready to work. The issue of crude oil supply is being addressed but the major problem is pipeline vandalism. I will say don’t sell the refineries like that. Rehabilitate them and apply the NLNG model in running them. I wish to commend the Ministry of Petroleum Resources and immediate the GMD of NNPC and his team on their effort to see how the refineries can work. Fuel is not supposed to sell at N145 per litre, but because we depend on import. If we continue to import, the negative effect on the economy will continue because of foreign exchange. If the refineries are working optimally, we can only augment with minimal import.

We have told our members in NUPENG and PENGASSAN that the era of business as usual is gone. Everyone must be alive to his responsibilities.  If the refineries are working as they should, Nigeria stands to benefit. We call on our compatriots in the oil producing region to join efforts towards blocking the loopholes and eradicating vandalism in the area. If crude oil supply improves, that means more revenue. Then government will employ more people. So let’s maintain these facilities and, of course, the government should address the issue of development in the Niger Delta.

 

How are you tackling labour casualisation in the sector?

For us in PENGASAN and NUPENG, we have tried pushing the issue of local content in the sector to the forefront.  The main focus of local content is to make sure that most of these jobs are handled by Nigerians instead of foreigners. Unfortunately the issue of expatriate quota has been abused. For example, there is a company where if you see 400 Indians, you will see 80 Nigerians. This is not proper

When you go to ExxonMobil also, you will see jobs meant for Nigerians being given to foreigners. There was a case in ExxonMobil that they removed the Head of security- a black man and gave it to a foreigner. And we ask are there no laws in this country?  Are there no Nigerians competent to do the work? Look at what Donald Trump is saying, America first!

It is only when there are no qualified Nigerians that you can look for expatriates. And when you bring in expatriates, they are supposed to develop and nurture indigenes.

On the issue of casualisation, most of the servicing companies sublet contracts.  For example, when you sublet, instead of employing, they source for casuals in those localities and enslave them. You can be a casual for 7 to 8 years and when the person dies, no benefit is paid. This is not too good, it must be stopped. People should be treated as humans that they are.