Nigeria: 2,500 Shell Workers Face Sack As 1,000 Retire

Nigeria: 2,500 Shell Workers Face Sack As 1,000 Retire

This Day (Lagos)

3 June 2008
Posted to the web 3 June 2008

Stanley Nkwazema
Abuja

As the deadline for the voluntary disengagement of staff of Shell Petroleum Development Company (SPDC) expired last Friday, the management of the oil company is set to lay off about 2,500 of its workforce, who refused to cash in on the window of voluntary retirement at the end of last month.

THISDAY, however, confirmed yesterday that more than 1000 members of staff were either laid off or had voluntarily retired as at the close of work May 30.

It was gathered that the outstanding workforce of 5,000 prefer trying their luck on either being laid off or retained.

The Nigeria National Petroleum Corporation (NNPC) confirmed yesterday that a moratorium was placed on the exercise, but could not confirm if it had been lifted.

The retrenchment exercise is however not going down well with the NNPC, the joint venture partners of the Anglo Dutch company, as management had earlier claimed that it was not formally notified by Shell before the commencement of the exercise.

NNPC had admitted that the Federal Government was taken aback at the planned restructuring by Shell, expressing worry that transparency might be lost in the process if the exercise was actualised by the Anglo Dutch company.

The Managing Director of Shell, Mr. Mutiu Summonu, had earlier explained that the downsizing would save the company over $200 million annually.

Acting Group Managing Director of NNPC, Alhaji Abubakar Yar’Adua, had told the House of Representatives Committee on Petroleum (Upstream) that Shell never consulted NNPC before commencing the exercise.

“We were taken aback, because we were not duly consulted when we heard that Shell was downsizing. We are aware of the company’s difficulties and also aware of the financial cost on the $1.2 billion over performance. It is a very strange financial position. We are aware of the Ogoniland issue and also aware of the vandalisation, which not only Shell is facing. We hope to be able to overcome that soon,” he had said.

Yar’Adua had told the House that the Federal Government, which holds 51 per cent in the JV operations, was “doing a lot to assist the company pull through and we have almost concluded on several financial models”.

Yar’Adua, however, told the Committee that when he was alerted on the planned retrenchment, he wrote to Shell on January 8, this year to suspend the exercise.

“It would have affected 3000 Nigerians. It is a lot and they have heeded to that. Another letter of 28th January was for us to discuss with them. Our concern is not only on the downsizing, but the JV and the PSC. We believe that transparency must be limited.

“A lot of Nigerians that should have been in positions are in blanket and we need to know and address that. If the proposed synergy will affect the exercise, transparency would be lost. Federal Government is interested. You can do it over time so it does not affect the physical issues of the organisation,” Yar’Adua had told the committee.

The Shell MD while explaining the finer details of the downsizing said: “The issue we are facing is not retrenchment, but the survival of our business; making sure we pull from the brink of collapse”.

He said that while Shell produced 1million bpd in 2004, that figure dropped drastically in 2006 because of the problems in the Niger Delta, adding that “in the last two years, we have been struggling to get access to our production. We shut down production till last year in some areas and kept on paying salaries and maintaining company community relations.”

Sunmonu also disclosed that the company’s business plan from 2008 – 2012 “is now half what we used to do. Production cost is getting very high and unit cost is also high. We are taking action in the interest of the business and all the JV partners. It is in the interest of the Federal Government and business that we will continue to deliver value.”

On the actual number of persons that would be affected, he said that both the Nigerian and expatriate staff would be affected. “We have expatriates of less than 300 in a population of more than 6000. Nigerians abroad as expatriates are close to 270. It rose from 72 in 1993 to the present figure last year,” he said.

He had confirmed then that following the intervention by the NNPC and the House, the retrenchment would be put on hold.

“But some volunteers may not be allowed to go. We’ll go into negotiation with them because we know that they have a bright future in the company. Some will go because they are not performing and they are unproductive. They will have to leave. It is both voluntary and involuntary,” he said.

When contacted yesterday, the Group General Manager, Public Affairs of the NNPC, Dr. Livi Ajuonuma, told THISDAY that he was aware of the moratorium placed on the exercise and could not confirm if it had been lifted.

“I can confirm that there was a moratorium placed on the exercise following the presentation of my GMD that we were not initially carried along when it was started. But I can’t confirm it has been lifted. I will cross check and get back to you,” he said.

Meanwhile, Shell will tomorrow appear before the House Committee on Gas to present the company’s position on the planned repeal of the NLNG Fiscal Incentives and Guarantees Act by the National Assembly.

The House had earlier taken a landmark decision by accepting a Bill to repeal the Nigeria Liquefied Natural Gas (Fiscal Incentives, Guarantees and Assurances) Decree of 1989, which if passed into law would compel the Bonny-based company to pay 3 per cent of its annual turnover to the Niger Delta Development Commission (NDDC).

Sponsor of the House Bill Hon. Gbenga Oduwaiye, who represents Ijebu Ode/Odogbolu federal constituency of Ogun State had explained during his presentation of the Bill on the floor that it would correct the injustice of an extractive company refusing to contribute to the development of its host community.

He said the NDDC had in a bid to enforce section 14 (b) of the NDDC Act, which lists as part of monies due to it (three per cent of the total annual budget of any oil producing company operating onshore and offshore in the Niger Delta area including gas processing companies) gone to the Federal High Court in Port Harcourt to challenge the decision of the NLNG.

The NLNG contested the claim and refused to contribute to NDDC while relying on the provision of the Decree which exempts the NLNG from complying with Nigerian tax laws of 1989 and any “new” ones in the future.

“Without prejudice to any other provision contained herein, neither the company nor its shareholders in their capacity as shareholders in the company, shall in any way be subject to new laws, regulations, taxes, duties, imports or charges of whatever nature which are not applicable generally to companies incorporated in Nigeria respectively,” the Federal High Court in Port Harcourt had ruled.

Justice R.O Nwodo of the Federal High Court in Port Harcourt had paved the way for the repeal of the Act when she stated: “The NLNG Decree in as far as it purports to fetter the legislative powers of a sovereign parliament otherwise than by reference to the Constitution is to that extent unconstitutional and null. I agree with him that Paragraph 3 of Schedule 11 of the NLNG Act is unconstitutional by that provision any new laws passed cannot apply to the defendant. This fetters the legislative powers of the National Assembly. This cannot stand, the constitutional law is clear and we must move with the globe. The Federal Government assurance on that law needs to be reviewed.”

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