Nigerian govt., oil workers agree on new funding model for joint venture projects

The Federal Government and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) on Wednesday agreed a new funding model to help end the perennial Joint Venture cash-call problem in the country’s oil and gas industry.

The workers and representatives of the Federal Government also approved the repayment structure proposed by the Nigerian National Petroleum Corporation (NNPC) to off-set the arrears of the old cash calls inherited by previous governments over the years.

These were part of the resolutions reached by PENGASSAN with the government, before the union suspended its recent strike.

Details of the new funding model proposed by the Ministry of Petroleum Resources in conjunction with the NNPC were not stated, however.

But, PREMIUM TIMES understood it will not be different from the proposal by the Minister of State for Petroleum Resources, Ibe Kachikwu, early last year on the issue.

Nigeria has hardly met its oil and gas industry development plans over the years as a result of the inability of government, through the NNPC, its representative in the six joint ventures, to meet its statutory funding obligations to its partners.

But, Mr. Kachikwu said that rather than continue to wait for government to provide all the funding for cash call obligations, an external private financing mechanism could be adopted to relieve government of the burden.

Under the arrangement, he said commercial banks could provide funding for the execution of approved JV work programmes at cost-effective and market-driven borrowing rates, while the repayment would be structured in a way that the lenders have no recourse to the JV assets.

Besides, government could adopt an arrangement that would allow a certain percentage of oil revenues to be set aside regularly to take care of cash call payments to the JVs.

During the meeting, the oil workers were said to have argued that adequate funding of oil industry programmes would help the international oil companies (IOCs) check the high rate of redundancies and job losses by oil workers.

The meeting expressed satisfaction with the report by the minister that almost all the IOCs had agreed to the new funding proposal.

On unresolved industrial relation issues, the meeting agreed that where redundancy has to be declared by IOCs without going through Section 20 of the Labour Act, Cap L1 LFN 2004, such companies must revert to the situation before the crisis.

On IOCs that have laid off workers without passing through due process of law and the workers had either gone on strike, or were locked out by their employers, the meeting directed that both parties have to create the atmosphere for free and fettered negotiation.

While the workers should unlock the affected premises, the employers should ensure that their actions to lock the workers out be put on hold till further notice.

The joint communiqué was signed by PENGASSAN President, Francis Johnson, and his National Union of Petroleum and Natural Gas Workers (NUPENG), Igwe Achese, along with the General Manager, Human Resources, NNPC, BM Isah, and the Permanent Secretary, Federal Ministry of Labour and Employment, OC Illoh.

On restructuring and resourcing in government agencies under the Ministry of Petroleum Resources, the Minister of Petroleum Resources affirmed that the exercise had been done without any job loss, while the October 2016 deadline was agreed for the conclusion of modalities for the implementation of integrated personal payroll information system (IPPIS) in the relevant agencies.