AMERICAN oil giant Chevron is making 25% of its Nigerian staff redundant as the crippling effects of the coronavirus lockdown and the subsequent collapse in global petroleum prices and demand are taking their toll on the economy.
With about 90% of government revenue coming from the sale of crude oil, Nigeria is heavily dependent on the sector and with prices dropping below the $57 a barrel which the 2020 budget is predicated upon, the economy is facing a crisis. Already, finance minister Zainab Ahmed, has had to borrow about $10bn from the International Monetary Fund and World Bank this year to fund the budget.
Chevron Nigeria operates a joint venture with the Nigerian National Petroleum Corporation (NNPC) but their operations have been severely hit by the collapse in sales. In the light of the changing business environment, Chevron said it was disengaging one quarter of its total staff in a decision it said was to aid its long term survival, following the recent downturn in the industry.
In addition, the company added that it was continuing to evaluate opportunities to improve capital efficiency and reduce operating costs, stressing that in the process, it will be streamlining its workforce and improving service delivery and overall performance at all levels. Esimaje Brikinn, Chevron Nigeria’s general manager, policy, government and public affairs, explained that the aim is to have a business that is competitive and have an appropriately sized organisation with improved processes.
He noted that thus latest move will increase efficiency and effectiveness, retain value, reduce cost and generate more revenue for the federal government of Nigeria. According to Mr Brikinn, the new organisational structures will, unfortunately, require approximately a 25% reduction in the workforce across the various levels of the organisation.
Mr Brikinn said: “It is important to note that all our employees will retain their employment until the reorganisation process is completed. Chevron Nigeria supports the federal government in its objectives and efforts to build a prosperous Nigeria and in the area of employment generation, the company has several social investments which are helping to provide employment for thousands of Nigerians.
”We have prospects for our company in Nigeria, however, we must make the necessary adjustments in light of the prevailing business climate. We need everyone’s support to get through these tough times and become stronger, more efficient and more profitable, in order to sustain the business.”
He added that Chevron Nigeria was in alignment with both its joint venture partners, the NNPC and the Department of Petroleum Resources in the entire process. According to Mr Brikinn, Chevron is actively engaging its workforce to ensure they understand why this is being done.
“We will continue to consistently engage all relevant stakeholders, including the leadership of the employee unions as we continue this process of business optimisation. At Chevron Nigeria, the welfare and safety of our workforce is one of our highest priorities, so making changes to the organisation is never easy for anyone that will be impacted.
“However, it is necessary to improve our ability to remain competitive in Nigeria. Reducing the cost and improving the efficiency of our operations is critical to generating more revenues for the federal government of Nigeria,” Mr Brikinn added.