DPR guidelines and procedures for release of staff: A welcome illegality?
The Department of Petroleum Resources (DPR) recently released a document titled “Guidelines and Procedures for the Release of Staff in the Nigerian Oil and Gas Industry.” These guidelines, called “Guidelines No 1 of 2015 for the Release of Staff in the Nigerian Oil and Gas Industry,” (“the Guidelines”) was signed by the former Director of the DPR, George Osahon, on 5th March 2015, in the twilight of the Goodluck Jonathan Administration wherein Mrs. Diezani Allison-Madueke was the Minister of Petroleum Resources.
This paper examines the legal implication of these Guidelines for oil and gas sector players, particularly from the point of view of whether the DPR has the powers to issue such Guidelines on behalf of the Minister of Petroleum Resources.
HISTORICAL PERSPECTIVE OF THE DPR
Nigeria’s interest in Petroleum resources was the responsibility of the Minister of Lagos Affairs from 1859 and thereafter, that of the Minister of Mines and Power effective from 1963. The agency which morphed into the present day Department of Petroleum Resources started as a Hydrocarbon Unit of the Ministry of Lagos Affairs in the early 1950s. It was the first statutory agency set up to supervise and regulate the petroleum industry in the country. At the time, it reported directly to the Governor-General.
The Unit kept records on matters relating to exploration and importation of petroleum products. It also enforced safety and other regulations on matters which were then mostly products’ importation and distribution. As the activities of the petroleum industry expanded, the Unit was upgraded to a Petroleum Division in the then Ministry of Mines and Power.
In 1970, the Division became known as the Department of Petroleum Resources (DPR). In 1971, a new body called Nigerian National Oil Corporation (NNOC) was created to engage in commercial activities in the petroleum industry while the DPR, which was still domiciled in the Ministry of Mines and Power, continuing to perform its statutory supervisory and control duties in the oil industry.
In 1975, the Department was upgraded to a Ministry and named the Ministry of Petroleum and Energy after energy matters were excised and transferred to another arm of the Nigerian Federal Government. The Ministry was later renamed the Ministry of Petroleum Resources (MPR).
By Decree 33 of 1977, MPR and NNOC were merged to form the Nigerian National Petroleum Corporation (NNPC). This was in a bid to optimize the utilization of the then scarce local manpower resources in the public sector of the industry. Section 10 of the Decree created the Petroleum Inspectorate (PI) as an integral part of the Corporation, but with semi-autonomous status in regulating the petroleum industry.
The Head of the Petroleum Inspectorate reported to the Minister of Petroleum Resources, who also doubled as Chairman of NNPC. The Petroleum Inspectorate continued to regulate the industry but was barred by the Decree from engaging in any commercial transactions or being involved in the commercial decisions of the NNPC.
In 1985, the Ministry of Petroleum Resources was re-established, but the Petroleum Inspectorate remained within the NNPC until 23rd March 1988, when the NNPC was re-organised. By this re-organisation, the Petroleum Inspectorate was excised from the NNPC (due to the non-commercial nature of its functions) and transferred to the Ministry of Petroleum Resources as the MPR’s technical arm and renamed the DPR.
The DPR continued to oversee the activities of all companies licensed to engage in any petroleum activity in Nigeria, with the objective of ensuring that national goals and aspirations are not thwarted, and that oil companies carry out their operations according to international standards and best practices. The DPR keeps record and other data of the oil industry’s operations and informs Government about all activities and occurrences in the petroleum industry.
In December 2006, the DPR was realigned with Ministry of Energy, following the merger of the Ministry of Petroleum Resources with the Ministry of Power and Mines to form a single entity.
BACKGROUND TO GUIDELINES NO. 1 OF 2015
The preamble to the Guidelines states that these guidelines are issued pursuant to the provision of Regulation 15A of the Petroleum (Drilling and Production) Regulations (as amended) made pursuant to Section 9 of the Petroleum Act. Section 9(1) (a-d) is the applicable section dealing with the power of the Minister to make regulations. The section provides that the Minister may make regulations regarding the following:
Prescribing anything requiring to be prescribed for the purposes of the Act;
Providing generally for matters relating to licences and leases granted under the Act and operations carried on thereunder including:
safe working; the conservation of petroleum resources; the prevention of pollution of water courses and the atmosphere; the making of reports and returns (including the reporting of accidents) inquiries into accidents; the keeping and inspection of records, books, statistics, accounts and plans; the measurement of production; and the measurement of crude oil delivered to refineries
Regulating the construction, maintenance and operation on installations used in pursuance of this Act;
Regulating refineries and refining operations, and, where two or more refineries are in operation, specifying – the proportion or quantity of crude oil to be supplied to each refinery
the share of each refinery in the total market; and the prices of refinery products
Section 9(1) (e) of the Petroleum Act provides for the Minister’s power to make regulations regulating the importation, handling, storage and distribution of petroleum, petroleum products and other flammable oils and liquids.
In 1988, the Petroleum (Drilling and Production) Regulations was amended by the Petroleum (Drilling and Production) (Amendment) Regulations as follows:
“In exercise of the powers conferred upon me by Section 8 of the Petroleum Act 1969, and of all other powers enabling me in that behalf, I, Minister of Petroleum Resources, hereby make the following Regulations:-
The Petroleum (Drilling and Production) Regulations 1969 is hereby amended-
by inserting immediately after regulation 15 thereof, the following new regulation, that is-
15A. The holder of an oil mining lease, licence or permit issued under the Petroleum Act 1969 or under regulations made thereunder or any other person registered to provide any services in relation thereto, shall not remove any worker from his employment except in accordance with guidelines that may be specified from time to time by the Minister.”
The DPR purportedly issued the guidelines in consonance with the amendment in Regulation 15A.
Section 1.3 states that the purpose of the guidelines is to establish the procedure for obtaining the consent of the Minister for the release of any worker employed by the holder of an oil mining lease, licence or permit under the Act or under any regulation made thereunder or any person registered to provide any services relating thereto. Section 3.1 of the guidelines defines Staff Release to mean the removal of a worker from the employment of the holder of an oil mining lease, licence or permit under the Act or under any regulation made thereunder or any person registered to provide any services relating thereto in a manner resulting in permanent separation or severance of the worker from the company.
The instances of such permanent separation and/or severance include but is by no means limited to dismissal; retirement (whether voluntary or forced); termination; redundancy; release on medical grounds; resignation; death and abandonment of duty post. Section 5.1 of the guidelines stipulates that any employer wishing to release any worker from its employment shall, before such release, apply for the consent of the Director of DPR, stating the manner of such staff release, reasons for the release, compensation due to the worker, and details of his proposed replacement.
Section 5.2 provides that if any employer fails to provide the information required by the DPR under Section 4.2 of the guidelines, such an employer’s application for staff release shall not be eligible for consent.; Section 5.3 further stipulates that no employer shall release any worker from its employment without the consent of the Minister, acting through the Director of DPR. Section 5.4 prohibits the advertisement, publication or making of a press release in respect of the proposed worker to be released until the DPR has conducted an inquiry into the proposed release and made a decision on whether to grant consent or not. The reason for prohibiting such advertisement, publication or press release is to avoid the outcome of any such inquiry being prejudiced.
Section 5.5 stipulates that an employer shall implement the decision of the DPR within ten days of such decision. By Section 6.3, failure to seek the consent of the DPR prior to the release of any worker attracts a fine of N10 million; the recall of the worker back into employment and the suspension and/or outright cancellation of the lease, licence or permit. Any publication of information on the staff to be released before the consent of the DPR is obtained would result in a fine of N5 million and a suspension of the lease, licence or permit (Section 6.4); while by Section 6.5, the failure to implement DPR’s decision on staff release would also attract a fine of N5 million and a suspension of the lease, licence or permit.
LEGAL STATUS OF THE GUIDELINES
A guideline is defined by the Free Dictionary as “a statement or other indication of policy by which to determine a cause of action.” In Clementina M. Ogunnihyi v. Hon. Minister of the FCT & Ors. (2014) LPELR-23164(CA), the Court of Appeal defined guidelines to mean “rules or instructions that are given by an official organization telling you how to do something, especially something difficult.”
David Brickfield, in his article, “The Role of Guidelines in EU Competition Law,” states that guidelines are rules of practice and not rules of law. Even though there is no direct judicial pronouncement by Nigerian appellate courts on the status of guidelines, it can however be inferred, from opinions expressed in some decisions, that guidelines do not have the force of law unless and until they are gazetted or made to form part of a law. In Katto v. CBN (1999) 6 NWLR (Pt. 390), it was held that the mere description of a document as a regulation, even by a public corporation, does not make it a subordinate legislation having the force of law.
In Chief Olabode George v. Federal Republic of Nigeria (2013) LPELR-21895(SC), the Supreme Court held that the guidelines contained in Exhibit P3 (forbidding contracts splitting by an officer) for which the Appellant was convicted under Section 203 of the Criminal Code was never made an offence by any written law, to wit, an Act of the National Assembly. As such, the charges against the Appellant under the said Section 203 of the Criminal Code could not stand for being in conflict with the provisions of Section 36(12) of the 1999 Constitution.
In Engineer Olusunmade Agbe-Davies v. LSDPC & Anor. (2011) LPELR-3653(CA), the Court of Appeal held that the Respondents were bound by the terms of the Administrative Guidelines for Parastatal Organizations and Government-Owned Companies in Lagos State (which was first issued as Legal Notice N0. 16 of 1981 and subsequently gazetted as No. 37 in Volume 14 of the Lagos State of Nigeria Official Gazette) enacted in Volume 1 of the Laws of Lagos State 1994 and therefore acted ultra vires in terminating the Appellant’s appointment by retirement without compliance with the provisions of the guidelines.
MINISTER’S POWER OF DELEGATION
Aside from the legal status of the guidelines, another issue worth considering is whether the Minister of Petroleum Resources can actually delegate the powers to make these guidelines to an agency such as the DPR. Even though it can be argued, on the authority of Bamgboye v. University of Ilorin (1991) 8 NWLR (Pt. 207) 1 at 32, that the Minister does not, merely by the act of delegating power to the DPR to make guidelines pursuant to Regulation 15A of the Petroleum (Drilling and Production) (Amendment) Regulations divested himself of such power or parted with it, Section 3(2) of the Ministers’ Statutory Powers and Duties (Miscellaneous Provisions) Act, Cap. M14, Laws of the Federation of Nigeria 2004, specifically prohibits a Minister from delegating the power to “make regulations, rules, bye-laws or orders.”
Similarly, by Section 12(1) of the Petroleum Act, the Minster of Petroleum Resources may delegate any power conferred on him pursuant to the Act “except the power to make orders and regulations.” The guidelines clearly fall into the category of rule-making powers which cannot be validly sub delegated to the DPR by the Minister, particularly in view of the penal sanctions stipulated in Section 6 of the guidelines.
WHETHER DPR HAS THE POWER TO ISSUE THE GUIDELINES
The DPR has the following responsibilities:
Supervising all petroleum industry operations being carried out under licences and leases in the country in order to ensure compliance with the applicable laws and regulations in line with good oil producing practices.
Enforcing safety and environmental regulations and ensuring that those operations conform to national and international industry practices and standards.
Keeping and updating records on petroleum industry operations, particularly on matters relating to petroleum reserves, production and exports of crude oil, gas and condensate, licenses and leases as well as rendering regular reports on them to Government.
Advising Government and relevant Agencies on technical matters and policies which may have impact on the administration and control of petroleum.
Processing all applications for licenses so as to ensure compliance with laid-down guidelines before making recommendations to the Honourable Minister of Petroleum Resources.
Ensuring timely and adequate payments of all rents and royalties as at when due.
Monitors Government Indigenization policy to ensure that local content philosophy is achievable.
These functions cover all activities in upstream and downstream petroleum operations, including petrochemicals, and are couched in unambiguous terms. As such, if the Minister decides to grant the DPR the power to make and issue these guidelines, it must not only be within the purview of these functions, must also be published in the Federal Gazette as stipulated in Section 3(1) of the Ministers’ Statutory Powers and Duties (Miscellaneous Provisions) Act.
Furthermore, the guidelines deal with contractual matters between the employee and the employer, and is clearly a negation of the freedom to contract. The guidelines are an unwarranted intrusion into a contract of employment between an employer and an employee in the oil and gas sector and seek to erode an employer’s right to determine the contract of employment. By implication, the guidelines have taken away the power of the National Industrial Court to determine issues of termination and/or dismissal of an employee in that sector and given it to the DPR, an administrative agency ill-equipped to exercise such judicial functions.
CONCLUSION
In conclusion, whilst it can be said that the guidelines seek to provide a safeguard for employees in the oil and gas sector, it nevertheless is a document steeped in illegality, as there is no legal backing for the its issuance.
Godwin Etim, a Managing Associate at AELEX
Godwin Etim