COVID-19: Stakeholders seek FG bailout to avert imminent job losses in oil sector

Nigeria’s oil and gas industry is adversely affected by low crude price regime and the COVID-19 pandemic, ravaging the world at the moment. OLATUNDE DODONDAWA examines calls for bailout by industry stakeholders and its effect on saving imminent job losses in the industry.


There are strong indications that between 300,000 and 500,000 jobs in Nigerian oil and gas industry may be on the line due to the effects of COVID-19 pandemic and high volatility of the crude oil prices ravaging the world at present.

To this end, stakeholders in the oil and gas industry are seeking some level of interventions, in from of bail-out to avert the imminent job losses.

COVID-19 pandemic has resulted in shutting down of global economies and crude oil producers and exporters are facing difficulties in selling their cargoes. These have also resulted in many cargoes remaining unsold and Nigeria unable to sell about 40 cargoes from April loadings.

Speaking with the Nigerian Tribune, the Chief Executive Officer of Radial Circle, a leading indigenous oil and gas industry service provider, Mr. Ranti Omole, stated that oil companies have started laying off workers since the first quarter of 2020 due to crude price crash and lull in the industry.

According to him, “Companies started laying-off staff since the first quarter of 2020 because things have been bad from the early days of the year. We were just hoping that projects come on stream that will stimulate our sector. Internal Oil Companies (IOCs) have not been doing much of exploration works, so the activities have been slow.

“And if you now understand that 80-90 per cent of the entire job done for the oil exploration and productions in Nigeria are done by service companies, both local and international, so the oil companies’ involvement in actual exploration work is less than 20 per cent. Marine vessels, the rigs, facility maintenances are mostly done by service providers.

“So, now that some contracts are being terminated, some costs are being reviewed downward, hence, if these service companies lay off and close down, between 300,000 – 500,000 jobs will be gone.”

He argued that while the federal government is providing bailouts for other industries, attention should be shifted to the oil and gas industry, too.

“You’re looking at other sectors that get foreign exchange from the earnings of the oil sector, and you’re not really looking at special package in terms of maybe $100 million bailout fund, or low interest rate for the thousands of service companies.

“Apart from members of Petroleum Technology Association of Nigeria (PETAN), that you see, there is lots of small size, mid-size local service providers littering Warri, Eket, Port Harcourt, Bonny etc including community contractors all over the place in Escravos, Forcados, Bonny, etc. It is a big labour chain comprising between 300,000-500,000 workers that are supporting the main oil and gas sector,” he said.

When asked of his take on the position of labour unions that frowned against any attempt to sack oil and gas industry workers during the pandemic, the Radial Circle boss posited that labour unions have the responsibility to protect the interest of their members, hence, the need for government’s intervention, else, more jobs will be lost.

“Labour unions have to protect the interest of all the workers who are their members, and irrespective of the situation, they try to ensure that their members don’t suffer. That’s their primary responsibility.

“Secondly, they also are in alignment with the government to ensure that workers do not suffer. So, they need to engage the government and ask what palliative government would pass over to the employers of labour. How can government support employers of labour for the next three to six months to ensure that they don’t lay off workers? You know cash is not printed by employers of labour.

“There are companies that had zero income in the month of April because they are locked down, the workers didn’t go to work and didn’t raise any invoice. They stayed at home without endless pool of cash. Somebody needs to subsidize or augment to provide funds to keep the employees from being laid off or from being furloughed.

“It is a very tough time for employers because the funds are limited. We don’t want job loss by workers due to lack of income, the government needs to address those issues critically. We need to take a very holistic but not radical approach. The approach should be that every business must be supported to survive so that they don’t collapse and don’t close down their operations,” he said.

In his reaction, the Group Managing Director of Oilflow Services Nigeria Limited, Dr Lucky Akhiwu, stated that the atmosphere is very tough for businesses now and also called for government bailout to avert job losses, bankruptcy and worsening economic condition for Nigerians.

According to him, “It is very tough for businesses right now. The global COVID-19 pandemic and the low crude oil prices will have a long-term impact on the industry. So, there has to be some level of palliatives from the federal government. The banks need to restructure the loans, the Central Bank of Nigeria (CBN) needs to give some incentives in areas of foreign exchange and the government needs to look at how it can cushion the effects on the oil and gas sector.

“There is going to be a lot of job losses in the economy. You can see the banks already threatening to sack workers. This will also happen in other sectors including the oil and gas industry.”

However, reacting to imminent job loss in the oil and gas sector, the National Public Relations Officer (PRO), Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Comrade Fortune Obi, told Nigerian Tribune that “The oil and gas industry is under immense pressure and there is no other alternative. We must be frank with ourselves, the oil and gas sector is going to suffer heavy even if there is hope of oil price rising, because it will take the sector between 2021 to 2022 to pick up.

“What it means is that for the companies to survive they must look at their expenditure, therefore, job losses and redundancy are imminent. But as an organisation or association, our own approach to things is that before you lay off anybody, let’s have an opportunity to discuss it.”

A joint statement by PENGASSAN and NUPENG had cautioned oil companies against laying off of workers but urged them to use the spirit, used in donating billions of naira to fight the COVID-19 pandemic, to ensure workers retain their source of livelihood.



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