Nigeria Oil & Gas Forum

General Forum => News & Happenings => Oil & Gas Industry => Topic started by: Admin on May 28, 2013, 11:38:49 AM

Title: Nigeria: Oil Companies And Criminal Abuse Of Expatriate Quota
Post by: Admin on May 28, 2013, 11:38:49 AM
When the Nigerian Oil and Gas Industry Content Development Act 2010 (the “Local Content Act” (NCA) was signed into law by President Goodluck Jonathan on Thursday, 22nd April, 2010, it was set out to guide a paradigm shift in the way even menial jobs were dished out by oil and gas operating and service companies to all sorts of funny expatriates on flimsy excuses of offshore sourcing of technical expertise.

The Act which derives from the Nigerian Content Policy seeks to increase indigenous participation in the nation’s oil and gas industry by prescribing, among other things, minimum thresholds in relation to the utilization of local manpower, services and goods as a means of adding value to the Nigerian economy by stimulating growth of indigenous capacity. And by virtue of Section 33 of the Act, operators are required to apply for approval of the Nigerian Content Development and Monitoring Board (NCDMB) before submitting applications for expatriate quotas (including variations) to the Federal Ministry of Interior (Immigration Department) or any other agency of the Federal Government of Nigeria.

The NCDMB Guidelines sets out the procedure and requirements for an application for new expatriate quota position(s) and the extension of existing ones. Additionally, prior to making an application to the Ministry of Interior for the extension of an expatriate’s stay the approval of the Content Board must be sought. These stipulations no doubt suggest that the enactment of the Nigerian Oil and Gas Local Content Act was one of the rare steps in the right direction. However as at today three years after it came into existence as a law, the stipulations on allocation of the number of new expatriates or extension of stay of those already in the country to work in a company or particular project is only on the paper used in writing the Content Act.

The foreign operators have abused their allowed expatriate quota with impunity simply because they have found ways of circumventing the system that was supposed to monitor compliance. Some companies even bring in all kinds of funny “expatriates” under the guise of expertise without recourse to approval from any government monitoring agency. All the government agencies involved are as guilty as the other in corrupting what would have been a good government policy of building local capacity and adding value to the economy.

The Immigrations Department of the Ministry of Interior, Department of Petroleum Resources, the Navy and Marine Police and obviously the NCDMB have all been working at variance with stipulations of the Local Content Act by granting all sorts of waivers to please their interests which most times is tied to corruption in government. The Nigerian Immigration Act (NIA) 1972, which gives the Ministry of Interior the powers to approve or revoke expatriate quotas, lists the objectives of the Expatriate Quota Policy to include filling up inadequate supply of manpower, training of local manpower, attracting foreign investment, and achieving transfer of technology, whereby two Nigerians will be attached to understudy an expatriate.

From what is happening in the nation’s oil and gas sector, it is obvious these objectives have not been achieved, probably because of proper coordination among concerned government agencies including Immigrations of the ministry of interior and Department of Petroleum Resources (DPR) of the Petroleum Ministry. These agencies either for outright lack of will power to be honest and do the right thing approve applications for expatriate quotas allocations and variations without recourse to existing Regulations and so you see even cooks and washer-men, security men, mechanics amongst many others work in Nigeria as expatriates with unthinkable pay.

And this situation is worsened by the non-existence of a coordinated strategy for determining the skills gap in the oil industry today which would have addressed gaps in the strategies set out in expatriate quota management. Though multi-national operators in the country’s oil and gas industry handling jobs that require the involvement of expatriates are mandated to first give Nigerians the opportunity to vie for the job before advertising such positions to foreigners, these foreign companies have devised ways of manipulating this aspect of the Content Act. The companies from day one recruit these so called expatriates from countries where labour is so cheap, pay them what they were supposed to be paid in their countries but on paper claim they are paid what oil workers earn in Austrialia or America. Is this not fraud and money laundering?

Section 32 of the Act, which stipulates that an operator or project promoter may retain a maximum of five percent of management positions, as may be approved by the Content Board as expatriate positions, to take care of investor interests is also being grossly abused by the foreign operators that bring even fresh graduates from their home countries and places where labour is cheap and give them positions and condition of service that would make even our senate president envious.
Experience from the industry (don’t forget I trained and worked as a geologist) show that the salary of one the expatriates in any of the big eight operating companies can conveniently pay over one hundred Nigerian engineers and the salary would still be good.

It is very annoying and one wonders if our monitoring agencies are not aware of this negatively skewed arrangement. These foreign operators use these avenues to repatriate huge profits made in Nigeria back their home countries- Shell, Nigerian Agip, Total, Mobil, Chevron, the Schlumbergers, the Halliburtons amongst other scores of operators are all guilty of this fraud and money laundering.
The situation is worse in the marine service providers working for the industry.

You see Philipinos, Sri-lankans, Burmese, Indians, and all sorts of people working as expatriates in the marine service sector of the industry. And interestingly, these Asians are as oppressed as their Nigerian counterparts but on paper, they earn what their peers from the west get.

Unknown to most Nigerians majority of these stupidly paid expatriates don’t even receive their real salaries in Nigeria so government cannot tax these huge earnings in foreign currency of course in dollars which is used in the accounting standards of the oil industry. They live and are taxed in Nigeria merely based on very few of their lucratively –packaged allowances. Another style of money laundering- is it not?

The expatriate that work in the Nigerian oil and gas sector are among the highest paid in the world, with an average monthly salary of $140, 800 (N22.246 million) as was recently revealed by a salary survey “Oil and Gas Global Salary Guide 2013,” published by Hays, a global recruitment firm.
The annoying aspect is that most of these people that come here as technical experts don’t even have experience on jobs they are imported to do. They secretly learn on the job from our highly skilled proudly Nigerian engineers and technicians and yet their allowances alone would cause envy from our senators.

It is pathetic that this sort of financial crime is glaringly being perpetrated in this country with full collaboration of government agencies that were supposed to protect our national interest. The Content Board and the minister of Petroleum, Diezani Allison Madueke should wake up their ideas and address this abnormality so that the gains of the federal government’s oil and gas local content policy can be realized in the interest of armies of our unemployed and well trained young professionals.