Source: The Punch Newspapers, October 26, 2015
The Nigerian Oil and
Gas Industry have in recent times been unsettled by the Guidelines for the
Release of Workers in the Oil and Gas Industry recently released by the
Department of Petroleum Resources (DPR). The Guidelines subject the release of
a worker by an oil and gas company to the consent of the Minister of Petroleum
Resources.
The Guidelines was
signed by the erstwhile Director of the DPR, George Osahon, and was issued
pursuant to Regulation 15A of the Petroleum (Drilling and Production)(Amendment)
Regulations. Regulation 15A was itself issued pursuant to section 9 of the Petroleum Act, LFN 2004 which empowers the
Minister of Petroleum Resources to issue regulations for the purpose of giving
effect to the Act.
Certain questions have
arisen in relation to these Guidelines. Questions like does the DPR have the
power to issue the Guidelines? Do the Guidelines violate labour laws which
state that an employer can terminate an employee’s contract of employment for
good, bad or no reason at all? Do the Guidelines apply to downstream companies?
I have been asked some of these questions by some of the affected companies. I
wish to use this medium to air my view on the issue.
Provisions of the
Guidelines
While it is not the
purpose of this piece to examine the provisions of the Guidelines (as I have
done that in another medium), suffice it to say that the Guidelines require
that employers must submit to the DPR some stated information about their new
and current workers, including their names, date of birth, date of commencement
of work, designation at commencement of work, current designation (if already
in employment) and one coloured passport photograph. In the case of a new
worker, it must be submitted within 7 days of the employment of the new worker
and in the case of an existing worker, within 60 days of the enactment of the
Guidelines. So far so manageable.
However, the Guidelines stirred the hornet’s
nest when vide paragraph 5.1 it
mandated an employer desirous of releasing a worker from its employment to,
prior to the release, apply for consent, in writing, to the Director of the DPR
stating the manner of staff release, the reasons for the proposed release, the
compensation due to the worker, and the proposed replacement of the worker (if
any). Paragraph 5.3 further provides
that an employer shall not release any worker without the prior consent of the
Minister through the Director of the DPR! The DPR, after receiving the
application for release shall conduct an investigative inquiry into the
proposed staff release and make a decision on whether to grant consent or
otherwise.
More bewildering is the
penalty for non-compliance. Permit to state at this point that paragraph 6.0 which imposes penalties was
not well drafted. It failed to state whether the itemised penalties were
conjunctive or disjunctive, i.e. whether one or all of them is imposable at a
single instance. The use of the “and” or “or” would have made the difference.
The uncertainty created by this paragraph is evident in for instance paragraph 6.2 where both suspension and
cancellation are imposable as penalties. Can a lease be suspended and cancelled
at the same time? We can’t even conclude it is disjunctive as the penalties
listed in paragraph 6.1, i.e. fine of
N100,000.00, letter from the DPR indicting the company, and suspension of
permit and approvals, can be imposed conjunctively at a single instance of
default.
The penalty for failure
to seek the DPR’s consent prior to release of a worker is a fine of ten million
naira, recall of worker, suspension, (and/or) cancellation of lease, licence or
permit. The penalty for failure to implement DPR’s decision on staff release is
a fine of five million naira, (and/or) suspension of lease, licence or permit, amongst
other penalties.
To whom do the
Guidelines Apply?
The Guidelines apply to
upstream companies, downstream companies, oil servicing companies, and even oil
refining companies. Obligations under the Guidelines are imposed on an
“Employer”. An “employer” is defined in paragraph
2.0 to mean “any organisation, company, partnership, or registered business
name which holds an oil mining lease, licence or permit (or an interest
therein) issued under the Petroleum Act or under Regulations made thereunder or
any person registered to provide any services in relation thereto”.
Without doubt, it is
clear that upstream companies are caught by the Guidelines as they hold their
oil mining lease pursuant to section 2 of
the Petroleum Act. Downstream companies also hold their licence or permit
pursuant to section 4 of the
Petroleum Act. Oil serving companies are covered by the part of the Guidelines
which says “…any person registered to
provide any services in relation thereto”. Oil refining companies hold
their licence pursuant to section 3 of
the Petroleum Act.
Does the Department of
Petroleum Resources have the authority to issue the Guidelines?
I have read and heard
arguments that the DPR does not have the authority to issue the Guidelines.
Proponents of this argument rely on section
12(1) of the Petroleum Act which empowers the Minister to delegate to
another person powers conferred on
him under the Act except the power to make orders and regulations. Reference
has also been made in some instances to section
3 of the Ministers’ Statutory Powers and Duties (Miscellaneous Provisions)
Act, CAP. M14, LFN, 2004. With due respect, it is submitted that this is a
wrong interpretation of those sections.
The reason for this is twin. First, the
purpose of the cited sections is to ensure that the power to make any document
with the force of law is reserved with the Minister. To this end, it provides
that the powers of the Minister to make regulations, bye-laws and orders cannot
be delegated. Generally, “Guidelines” do not fall into the category of
documents with the force of law. One single denominator that runs in all
definitions of “Guidelines” is that they are non-binding principles that are
meant to provide direction. Guidelines are mostly issued by Regulatory bodies
to guide on compliance with an existing regulation, bye-laws or orders.
Accordingly, the Department of Petroleum Resources have issued several
Guidelines for the oil and gas industry to guide on compliance with the
Petroleum Act and all the Regulations made thereunder. It would thus, with due
respect, be intellectually mischievous to argue that the DPR has no authority
to issue the Guidelines.
The second reason is section 10 of the Nigerian National
Petroleum Corporation Act, CAP. N123 LFN 2004 (NNPC) which confers on the
Director of the Department the regulatory functions of the Minister. The
section provides that “…notwithstanding
the foregoing, any regulatory function conferred on the Minister pursuant to
the said Acts [i.e. the Oil Pipelines Act, the Petroleum Act, or any other
enactment…] or any other enactment shall, as from the appointed day, be deemed
to have been conferred upon and may be discharged by the chief executive of the
Inspectorate [i.e. the Director of the Department]”. So this is not even a
case of delegation of powers by the Minister to the Director of the Department,
as the powers of the Director are exercised pursuant to section 10 of the NNPC Act.
The case of statutory
ubiquity
The Chambers dictionary
defines ‘ubiquity’ to mean “existence
everywhere at the same time”. The simple truth in this instance is that the
Petroleum (Drilling and Production)(Amendment) Regulations is ubiquitous. The
problem is not the Guidelines, the problem is the Regulations, and it is
unfortunate, and we energy lawyers should chastise ourselves for not
questioning this legislative anomaly long before now. At the expense of
prolixity, Regulation 15A provides that “the
holder of an oil mining lease, licence or permit issued under the Petroleum Act
1969 or under regulations made thereunder or any person registered to provide
any services in relation thereto, shall not remove any worker from his
employment except in accordance with guidelines that may be specified from time
to time by the Minister”. So even if our opposition to the Guidelines
is successful, what happens to that Regulation? This is a clear case of over
regulation. The Petroleum Drilling Regulations have no business with how a
worker is removed from employment.
My take on the
Guidelines and the Regulations
While the DPR has the
powers to issue the Guidelines, I believe the Regulations which is the cistern
from which the Guidelines flowed, is faulty and unconstitutional. Section 40 of the Constitution of the
Federal Republic of Nigeria, 1999 (as amended) guarantees the right of every
person (including a legal person) to freedom of association. This means that
every person or company has the right to associate or disassociate with any
person as employee or employer. This unwavering provision extends its tentacles
to labour law as seen in the doctrine of not
foisting a willing employee on an unwilling employer, which doctrine has
received notorious judicial solidarity, and is even expressed in section 11 of the Labour Act which gives
a party to a contract of employment the freedom to terminate the employment by
giving the requisite statutory notices. If the Regulations is declared
unconstitutional, then everything flowing from it, the Guidelines inclusive, is
null and void and of no effect whatsoever.
In summary, the
Guidelines is a clear case of regulatory profligity. The DPR has more important
issues to regulate on, and shouldn’t regulate issues on labour and employment,
which, even if there is a need to regulate such, should be regulated by the
Nigerian Content Development and Monitoring Board (NCDMB). On its part, the
Regulations is a clear case of legislative ubiquity. Making provisions on how a
company should terminate an employee is just a case of being everywhere. It is
accordingly submitted that the Regulations be revisited and the Guidelines
withdrawn.
Harrison
Declan, MCIArb(UK)
Energy
Lawyer and Researcher, and Editor, Energy Law Review, is a Senior Energy
Associate with Hybrid Solicitors
