Fostering harmonious oil company and ethnic host community co-existence through a local content partnership in the Niger Delta.
Abstract: Social and civic conflict in the Niger Delta around the distribution of oil and gas revenues and the call for more involvement of the local population in development decisions and environmental degradation creates opportunities for local content partnerships. As an independent broker, Sampson Abiala describes his experience of brokering a local content partnership between a construction company upgrading facilities for Total EPNG – Nigeria National Petroleum Company and the Egi ethnic community.
FOSTERING HARMONIOUS OIL COMPANY AND ETHNIC HOST COMMUNITY CO-EXISTENCE THROUGH A LOCAL CONTENT PARTNERSHIP IN THE NIGER DELTA
Author: Sampson Abiala, Independent Partnership Broker
The Niger Delta region accounts for over ninety percent of Nigeria’s oil revenue. And yet it is the most underdeveloped region in Nigeria. Four decades of ecological and economic neglect have left much of the Delta desolate, uninhabitable and poor. Political corruption and corporate mismanagement have been blamed for the scale of environmental and social damage caused by crude oil production. There is deep ingrained disagreement about the way in which oil and gas resources are extracted, the distribution of revenues and the level of involvement of the local population in development decisions.
Not surprisingly, oil has been at the centre of the violent conflict between ethnic minorities, militant groups and local youth organisations, the Government and the multinational oil companies and construction firms. Militants, mostly angry youths, have kidnapped and ransomed oil workers, sabotaged or seized pipelines oil wells, terminals and flow stations and fought with the army. Their anger has been aimed at oil firms and politicians alike. Withdrawal of companies, falling oil outputs, unemployment and the pervasive poverty have only served to further exacerbate social unrest.
The militants demand compensation for the environmental damage wrought by the oil industry, greater control over oil revenues for local Government, development aid to improve living conditions in the Delta and respect for the rights of and greater inclusion of the ethnic communities.
This latter point has been particularly important in the area I have been working in. Oil companies have typically hired workers from outside the host communities for filling their employment roster and have not always tried to decrease the unemployment in the region. At the same time, as ethnic communities in the Delta region were given little compensation for the oil that was pumped in their region, many are now exerting their rights as ‘landlords’ and making ownership claims to the rich resources that were derived from their land.
The Federal Government introduced an amnesty for the militants. The proliferation of fire arms amongst youths and continued spate of kidnappings suggests this has not been an effective solution. What has been missing instead is a substantive effort from the Government in youth employment and in engaging the private sector more meaningfully in economic development in the region.
There is a need for solutions which shift emphasis of the oil sectors’ investment towards economic development, job creation and increasing local content in its operations. From a strictly economic perspective, no party involved can actually lose if the oil money is distributed in a fairer manner. It would create a win-win-win for the oil companies, the ethnic communities and Government.
Local content partnerships as a solution
In my experience, Local Content Partnerships (LCP) would meet such expectations. “Local content” typically refers to local recruitment, training, purchases of local goods and services. By increasing the local content of their oil and gas projects and operations, companies can help develop local infrastructure and skills of communities in which they operate and recruit from. Developing local content projects also meets the expectations of the host countries where locally sourced workforce, goods and services can help stimulate the economy, build industrial capacity and allow skills transfer in areas most in need of investment.
There is recognition by some companies that they can do more to engage local communities and consider different paradigms in the way they build and sustain their local operations. One such company is Total Exploration and Production Nigeria Limited (Total E&PNG), which has been operating in Nigeria for five years. It has been making efforts to integrate local skills at all levels of its workforce and has created a Nigerian Content Department tasked with helping operational departments achieve their local content objectives.
In 2009, Total EPNG formed a partnership with Nigeria National Petroleum Company to upgrade its facilities located in the Niger Delta. This provided me with an opportunity to see how the local community could be involved. As an independent partnership broker, I felt I could take the lead in drawing together the partners to develop a feasible solution and help them to build and consolidate their working relationship. In the PBA Level 1 training course I had taken, I was influenced by my tutor, Michael Warner, who said that partnership brokers sometimes needed to be bold and innovative – to seed the idea of a partnership with communities and organisations who may not have considered it as a genuine possibility. The background of social unrest in the Niger Delta – and the fact that it was also my home – made me feel that this was an opportunity I have to take up.
I wrote and put forward a proposal for a Local Content Partnership to Mercury Engineering and Construction Nigeria Limited, a construction firm engaged by Total EPNG to provide civil engineering for the project for a period of 22 months. The upgrade construction project was estimated to require 4,000 unskilled workers and involve several suppliers of goods and services. I felt the community would provide skilled and unskilled labour workforce but also an enabling atmosphere – if properly coordinated- for the upgrade project.
The initial contact with Mercury revealed they had had a mild conflict with one of the protagonists in the upgrade project and were somewhat cautious. I felt it was important for me to make the case for the partnership and help them explore and understand the wider implications of fostering collaboration between the construction and other firms and the community. In particular, I facilitated a discussion round these pertinent questions: what would happen if the demands of the community for deeper involvement with the upgrade project were to be met or conversely, if they were not met? What kinds of development projects could help meet such expectations? What could the community supply to the project? How can construction firms work peacefully in the Niger Delta Region without their operations being disrupted by angry youths? What would be the impact if such disruption occurred and the project could not be completed in time?
The discussion gained Mercury’s interest and motivated them to consider a partnership with the local community. I then designed a detailed proposal for a partnership between Mercury and the Egi Clan which was the host community and de facto landlords of the land where the project was being developed in the Rivers State. It covered suggestions for how Mercury could approach the Egi and other stakeholders, how the roles and obligations of both parties could be aligned to suit the LCP arrangements, how activities would be managed, how to mobilise the project site for the partnership and what local contracts should be created and shared amongst the landlords to avoid problems.
A clear mandate for the partnership broker
Following evaluation of the proposal, Mercury appointed me as a partnership broker. It was important for them and me to have a clear understanding of my remit and responsibilities as the partnership broker. It became my role to help develop, co-ordinate and manage the partnership in collaboration with a fellow indigene of the region, Mr. Chikwe Ejah. Our task was to moderate host community demands, which were linked to the size and ownership of the land where the project was located, and ensure the relevant equity of share. Our other tasks as intermediaries were to:
- Introduce Mercury to the Egi community, ensuring quick and timely resolution of all community concerns around Total EPNG’s local operations;
- Help align and streamline the interest of the company and the community to ensure proper implementation of the project;
- Ensure the local community benefits from the operation for sustainable development to thrive and to provide them with a sense of genuine inclusion;
- Ensure that those benefits which the community feels they are deprived of are provided, including respect for their rights, distribution of employment and local content contracts – in other words, the ‘soft benefits’ for the community arising from the project;
- Be on site during working hours and to follow up on any community matters or complaints raised with site management.
The purpose and activities of the local content partnership were stated in a written partnership agreement which was negotiated in two days. The roles of the LCP included guiding Mercury on how best to involve the host community and other stakeholders in delivering the project and promoting trouble free operation. Mercury took on the obligation of providing an agreed amount of funding to the LCP and provided me with measures of financial commitments to help me facilitate partnership development.
A positive response from the community
The community was highly receptive to the idea of a LCP. Whereas previously they had felt marginalised by the oil companies and excluded from participating in their activities and the ‘soft contracts’ rising from its local operations, the community now felt they had a seat at the table. However, not unsurprisingly, such a novel experience did create some challenges for me as a partnership broker in the intermediation process: the community tended to put forward some implausible and unrealistic demands. I felt that if these were not addressed properly they would lead to stakeholder expectations for more rights and value which would make future partnership engagement difficult. Consequently, our task was to moderate the community’s demands to fit in with the project’s technical characteristics, the skills requirements and the company’s limitations and capacity as defined in its contract with Total EPNG.
A separate meeting with a couple of influential community persons also helped overcome major challenges. This is of importance in a ‘difficult’ , antagonistic community – as a partnership broker, I consider it essential that I identify highly influential stakeholders and opinion formers in the community and meet them privately to share information and create an understanding around the immediate and future mutual benefits offered by the partnership. This approach helped me run a subsequent larger house meeting of all communities involved in the project more smoothly.
That is not to say, that challenges did not arise from time to time. We had to contend with stoppages – for instance, when misinformation led to a stoppage for about 45 minutes by the community and workers stopped work for a day on the site to support their demand for a pay rise. There were two other project interruptions which lasted between 2-4 hours in the first two months of the project. Other challenges I faced as a partnership broker during the course of the partnership had to manage the demand from all the communities, especially around being given their benefits at once. In these instances, my role as a partnership broker was to be an intermediary between the construction firm and the host communities – helping create a mutually agreed timetable to deal with the communities’ demands and to facilitate discussions and consultations so they felt they had access to the firm.
However, overall the LCP worked efficiently. In keeping with my partnership brokering role, I outlined the key results of the overall exercise in a weekly report which helped the partners in the LCP to (a) review and analyse the performance of the partnership; (b) make adjustments to the partnership’s mandate and activities; (c) make projections for future adjustments (d) provide a platform for brainstorming and cross-fertilization of ideas and (e) give the community participants a sense of belonging in the scheme.
Implications of the LCP and the partnership brokering approach
Partnerships around local content and community inclusion in delivery of local projects are relatively new in the Nigerian context. Companies in the oil and gas sector have been wary of involving ‘landlord’ communities due to corruption or due to constraints placed by their own global policies on procurement of services. Steps taken by companies like Total EPNG to establish local content activities are in the right direction. As the LCP with Mercury demonstrates, there is a huge opportunity. If oil companies and construction firms alike create local content partnerships with local communities, it will go a long way to mitigate the current crisis we experience in the Niger Delta. By brokering the partnership between Mercury and the Egi community, we have demonstrated that it is possible to create mutual benefits for the construction firm supplying a local service and the community. These benefits go beyond economic inclusion of a deprived community but also to the restoration of social cohesion and a peaceful co-existence between business and society.
Local content partnerships such as those brokered for Mercury, which create long-term, mutually beneficial relationships with local market stakeholders, create a win-win-win. They satisfy ethnic communities, giving them access to a fairer distribution of oil revenues and a voice and a place in local economic development. Oil companies benefit too: by increasing local incomes and employment and improving the local business environment, the oil companies improve the acceptability of their operations and reduce their operational risk. By fostering competitive business practices, they can also lower their costs and improve the quality of locally sourced goods and services as well as comply with Nigerian local content laws. In a marketplace where there is increasing competition between oil companies in the Delta, any oil company’s ability to implement a local content policy gives them a competitive edge and helps forge partnerships with national oil companies. Finally, wherever there is inclusive local employment and growth, everyone benefits from the reduction in social risks such as youth unemployment, poverty, and other drivers of instability. It creates for a more harmonious society.
Local content partnerships like any other forms of collaboration need to be effective. Particularly where there are the types of complex and deep-running social and economic issues we have in the Niger Delta. This is where a partnership broker who understands the local social, economic and political context can make a difference. He can bring in a partnership brokering approach which can be realistic and sensitive to the needs of all sides in a partnership. He can help change things by showing possibilities through simple but effective initiatives which bring together the contribution that each partner can make.
Biography
Sampson Abiala is an independent partnership broker operating in Port Harcourt, Niger Delta, Rivers State, Nigeria. He is an alumnus of PBA, graduating from Cohort 15 of the Level 1 training course in 2007. Prior to setting up S. Abiala Services Company, Mr. Abiala was a News Reporter with Rivers State Radio 99.128 FM, a Community Development Practitioner and a Social Analyst. He also served as a Personal Assistant to the Nigerian High Commissioner in Uganda, Burundi, and Rwanda. He is pursuing a degree course in Adult and Community Development at the University of Science and Technology, Port Harcourt, Nigeria.
