The Nigeria National Petroleum Corporation (NNPC) has called for constructive engagement and dialogue between players in the oil and gas industry and workers representatives, to formulate solutions to the challenges brought by covid-19 on the businesses without sacking workers.
The Group Managing Director of the Corporation, Mele Kyari who made this known at the 6th Triennial Delegates Conference of the National Union of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja said the global covid-19 pandemic has affected business around the world.
He said the minimal downsizing of workers currently going on in some institutions was a result of some deep decisions and interventions by the government Nigeria.
According to the GMD, going by the economic outlook, Nigerian is doing better than most countries as they had undertaken some reforms that affected the working class adversely.
“From lockdown to meltdown to recession, the world economy has forecasted to decline by at least 3.5% this fiscal year. Which means from a growth level forecast of 2.9% when you go down 3.4% that means you are going down close to 6%?
“That is not very deep for us as a country because we did better than most countries; we are more stable in economic outlook than most countries. But the reality is that we are far better than most jurisdictions across the globe and we should thank our government for this. Government is still paying salaries, downsizing is going on yes, but institutions are not doing extreme downsizing.”
Kyari spoke further: “Many oil and gas-related industries have laid-off employees as the first line of measure to survive. During the pandemic most companies operated probably with 50 percent of their staff and some operations were actually brought to a standstill, nobody is investing, all interventions are done to ensure that regular production environment is maintained.”
While speaking on the reduction in crude oil production from 2.49 million to 1.7 million bpd, the NNPC GMD said one of the challenges arising from such logical decisions was a reduction in human resources operating cost.
“You can’t add production because you cannot be able to sell it which means we have to cut down activities and that includes having fewer people to get the work done.
“That is reality, it’s unavoidable so it’s either you pay less and keep them and not work, or you cut down the number so you can maintain the optimum number of paying situation. As long as this economic imbalance subsists, there must be a conversation around what do we do to keep these businesses running.
“When your operating cost takes 46 percent of your net income then you are in trouble and that is what we are having today. Particularly, the HR element of our operating cost constitutes about 46 percent of your gross income.
“In any company where the HR costs exceed 13 percent, you are doing something wrong. Its either the structure is wrong or you are overmanned or doing things that you shouldn’t be doing. That is why the conversation must take place; is it that we are overcompensated, do we have more people than we need to get the job done or are their structural issues in terms of the services, the support or logistics that you need to do. Something is wrong obviously.”