SPE 128361

THE IMPLICATION OF POOR FUNDING ON HSE POLICY

IMPLEMENTATION IN THE NIGERIA OIL EXPLORATION INDUSTRY.

FAGBE TUBOSUN, MIIRSM, AMIMarEST. HSE ADVISOR UGNL/IDSL JV.

Introduction
Copyright 2009, Society of Petroleum Engineers Inc.

This paper was prepared for presentation at the 33rd Annual SPE International
Technical Conference and Exhibition in Abuja, Nigeria, August 3-5, 2009.
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ABSTRACT.
Employers crave for profit maximization with
lesser concern for personnel’s health, safety and
working environment is worrisome and has made
implementation and management of HSE Policy
difficult for Professional Safety Personnel in the
service of most Nigeria Oil and Gas Companies. In
the contemporary setting, expert advices on
sustainable Human Safety and well being in an
appropriate workplace via provision of essential
working tools and standard Personal Protective
Equipment for safe operation are strictly adhered
to by the Company’s management. In Nigeria
today, opposite seems to be the practice. This
paper examines the impact of poor funding on
HSE Policy implementation and enforcement
capability in a typical Nigeria Oil Service
Company. It avows a high and unsteady
population influx and a disproportionate in demand
for safety equipment, training and working
materials budget for the phased Safety
development. This paper proffer solution to
stemming the HSE Policy poor implementation
tide, which includes, appropriate planning, healthy
budget, prompt release of fund and unbiased
management commitment to Personnel and
operational safety.
Health Safety and Environment Management is a
critical aspect of Nigeria Oil exploration industry
whose catalytic effect, particularly in the socio-
economic development cannot be over
emphasized. The huge investment by different
private investors and Government in Oil and Gas
business can only be sustained in a safe working
environment. Besides, there is hardly any sector
of the economy – whether industrial, employment,
residential recreational, agriculture, financial and
education sectors – that is not linked to the Oil and
Gas sector. In short proper management of
Health, Safety and Environment in the Oil and Gas
Sector will automatically improve mobility and
accessibility of passengers, goods and services.
Nigeria, incidentally, is endowed with vast reserve
of Oil and Gas deposit that spread across the
Niger-Delta region and with high prospect of
acquiring commercial quantity deposit in the Chad
Basin. The potential of the yet to be tapped
Bitumen deposit in Ondo, Edo and Ogun axis as
well as Liquefied National Gas has steadily
increase exploration activities in Nigeria.
Unfortunately, most employees in Nigeria have
less concern for the working environment and
personnel safety. They only crave for profit
maximization and indulge in capital flight.
However, Health and Safety Practices in the
Sector is experiencing great challenges in terms of
funding and policy implementation.
Notwithstanding, this paper seek to assess the
implication of poor funding on HSE Policy
implementation in the Nigerian Oil exploration
Sector by analyzing effects on overall performance
of the sector.
2 F. Tubosun
The need for effective HSE Policy and funding
For any meaningful assessment of the
performance of management in the
implementation of HSE Policy, it is important to
have a clear comprehension of what HSE Policy,
in all its ramifications, intends to achieve. As
suggested by HSG 65 (1998), Yeo (2007),
Spickett and Brown (2006), Whitehead (2007),
Dorrell (2009) and modified here. There are some
underlying principles about workplace safety and
personnel wellbeing that need to be well
understood for the purpose of formulating effective
HSE Policy as well as adequately managing the
implementation through funding. These include:
- Safety is about protection of environment
against pollution and environmental
hazards.
- Health, Safety and Environment is about
safe-place and safe-people.
- Effective Safety practices should increase
efficiency, encourage healthy competition
and if possible foster ownership structure
that would improve Oil and Gas Sector
performance
- The role of Government is to set up
standard to guide development, by
establishing requisite legal and legislative
framework, in enforcing the standards.
- It is the role of employer to prevent
incidents and accident in their workplace
due to moral justification, legal and
financial implication.
- The formulation of Policy, its
implementation, funding and
encouragement of employee on active
participation are roles dedicated to the
employers.
- Health and Safety policy facilitate good
relationship between communities and
company.
From the foregoing, one is not in doubt about the
need to ensure that “HSE” as a concept is viewed
holistically, and that “right HSE policies are applied
at the right time.” In other words, in order to
achieve higher efficiency and sustainability in the
oil and Gas Sector according to World Bank
(2002), we need careful planning, realistic
implementation, efficient use of fund and better
management. This therefore, implies that HSE
policy need to be funded in other to support a
better quality services on a sustained basis.
Perhaps it should be mentioned that because
Health Safety and Environment management has
SPE 128361
close interaction with the growth and pattern of
businesses across regions. HSE implementation
and the Oil and Gas business management are
typically dependent. Furthermore, HSE effective
implementation produces safe-place and safe
persons which in turn, produces productivity,
higher returns on investment (ROI), workers’
commitment to duty, incident reduction,
competency, improve services and optimum use
of ManHours for meaningful production. It is now
well recognized that HSE effective management
promotes cooperation, interaction, trade and
commerce. It also provides employment.
From the foregoing, employers, in order to
optimize the existing and potential benefits of
investing rightly in all HSE issues, should know
and not ignore their roles as investors; be well
informed about the fundamental impact of Health
and Safety while running an organization as well
as have adequate knowledge on principles of
prevention of incidents.
Requirement of Health and Safety
An attempt is made in this section to outline the
general requirement of Health and Safety as
applicable to Employer:
1. REASONABLE PRATICABLE: This
practicable requirement means that it
must be carried out only if limited by
the current state and knowledge and
intervention, even though
implementation may be difficult or
inconvenient or costly.
2. REASONABLY PRACTICABLE
which means a RISK-Benefit Trade off
that is the reduction of risk and the
benefits is minimal compared to the
cost.
3. ABSOLUTE DUTIES: They are
worded as SHALL, which indicates
that every employer shall ensure that
all persons who use work equipment
have received adequate training.
Responsibilities of employer.
From the three general requirements of Health
and Safety, the following responsibilities were
generated. These responsibilities are:
- Introduction of measures that affects
Health and Safety.
- Appointing/nominating competent persons
and emergency procedures
- Planning and organization of Health and
Safety training.
3 The implication of poor funding on HSE Policy implementation in the Nigera Oil Exploration Industry SPE 128361

- Managing Health and Safety is Singapore based maritime company that

consequences of the introduction of new
technology.
- Funding of Health and Safety programs.
- Information passage to stakeholders
- Consultation
- Provision of suitable personal protective
equipment to workers exposed to risk to
her health or safety while at work.
- Organize for Health and Safety to
maintain control, promote cooperation,
ensure communication and secure
competence
engages in Diving activities, the sixth employer is
from the educational sector. The choice of
companies and location were spread to enable the
research have a result that can be applied in
managing HSE across various fields.
- A, B and C are exploration companies
operating within Nigeria
- D is Angola
- E is Singapore base Driving Company
- F is a Nigerian Private University

How employers can prevent accidents in the Table1 below is the table showing the yearly
worklace budget allocation for the HSE section and the
actual percentage of fund release all expressed in
The two main approaches or target of Health and
percentage for the year 2007 and 2008.
Safety are safe place and safe person. The safe
place refers to environment, protective measures
for access/egress; plants and equipments/ Table1: Yearly Budget and Fund release in 2007
materials, system of work, supervision and training and 2008 expressed in percentage (%)
while safe person mean individual who has
received adequate information, training and Companies Budget Percentage (%)
instruction and who follows the safe system of /Employer Percentage Released for
work. (%) Fund for HSE
2007 2008 2007 2008
From the above two approach, employers are A 1 1 85 60
therefore responsible for ensuring safe place and B 1.6 1.4 60 53
safe person through the below principles. C 2.0 2.1 68 72
- Controlling hazard at source D 0 2.8 - 67
- Avoiding risks E - 8% - 92
- Adapting work to the individual F 0.10 0.18 90 88
- Evaluating unavoidable risks
Report from colleagues serving in the
- Adapting to technical process
aforementioned companies A to F indicates that,
- Replacing dangerous by less/more only Company E situated in South East Asia has
dangerous the budgetary allocation of 8% while others in
- Develop a coherent prevention policy Africa varies between 0.18% and 2.8% of the total
- Giving priority to collective protective sum of the Company’s budget for each respective
year. Moreover, the report also indicated that there
measures
is serious difficulty in the disbursement of the
- Provide appropriate training information approved sum for the year as none of the six
and supervision companies fully disbursed their allocation despite
- Provision of protection equipment pressure from the sectional Head for the fund.
- Funding of HSE Policy for proper
Poor training and development Program
implementation.
In recent years, issues of HSE personnel
Performance evaluation of roles of employers
competence through training and development
in funding HSE activities
program have attracted the interest of most
international clients in the selection of tenders and
In this session, attempt is made in appraising the
award of contracts to contractors. Unfortunately,
current state of performance of some employer in
training and development program for HSE
the Oil and Gas Sector. Six companies were used
employee in most Nigeria companies is fast
for this purpose; three of the companies are
eroding due to inadequate knowledge of most
currently operating in Nigeria, one in Angola, one
4 F. Tubosun
employer on training requirement of safety
professional to enable them perform their statutory
role of implementing Safety Regulations, which is
an International Practice that requires broad
knowledge on various fields.
Five of the Companies which are A, B, C, D, and F
falls within the category of company where poor
funding hindered its execution. Feedback from
this five (5) companies indicated that there is
seemingly poor administration of employee
training program through non involvement of
external professional trainers for such assignment.
The research also reveals that HSE professionals
are not sponsored for competence examination
due to unemployment rate and self development
effort of most practitioners.
Waste management: Poor management of waste
was pronounced as one of the effect of poor
budgetary allocation. This was found to have
resulted in insufficient waste baskets, poor waste
handling, sub-standard training for waste
handlers, inadequate sewage treatment and
analysis. The education sector despite running
biological science courses with modernized
laboratories bothers not to treat sewage nor carry
out its analysis before disposal. Sewage analysis
in A, B, and C are most time delayed or not
properly executed due to non-payment of the
executing contractor for a long period.
Environmental monitoring: The use of analogue
meters for noise, illumination and other
environmental parameter is worrisome despite
technology breakthrough and wide use of digital
meters worldwide. Readings obtained form this
analogue equipment was found not to be reliable
due to aging and parallax errors.
Emergecy management:
The management of fire detection and fire fighting
equipment is also affected by poor funding,
adequate fire fighting protective clothing was
found to be lacking, breathing apparatus for
firemen not reliable due to expiration, smoke
detectors and extinguishers not sufficient and not
adequately serviced as at when due thereby
making the environment unsafe.
Personnel Protective Equipment (PPE):
Personnel Protective Equipment intended to be
worn or held by “person” at work to protect him/her
against one or more risks to his/her health and
safety. Reports reveal that in Nigeria, the purpose
of protective clothing is far from being achieved.
The use of worn out protective clothing, use of torn
shoes, broken or defective helmet, sub-standard
SPE 128361
earmuffs, late or non replacement of hand gloves
and other PPE for employee use is so common
among players and this portend bad image and
unsafe practices in the sector.
There is no doubt about the fact that the
aforementioned issues has affected the
implementation of HSE policy and have not
allowed it made the desired impact. Other effects
of poor funding on HSE policy are:
¾ Insufficient supply of stationary materials
for the printing of risk identification report
form. Therefore has resulted in poor report
of identifiable risks.
¾ Later of laminating materials and
malfunctioned machines that hinders
production of plasticized procedures and
other informative materials that usually
aids HSE information dissemination to the
employee.
¾ Shortfall in the erection or pasting of
safety sign where necessary.
¾ Delay in the implementation of corrective
actions that emanated from risk identified
by stakeholders.
¾ Poor medical emergency management
arising from insufficient medical team,
operation hours, First Aid Kits
administrations and insufficient medical
supply.
Factors responsible for poor funding of HSE
activities
In view of the above issues, several factors were
found to be responsible for poor funding of HSE
activities, some of this factors are reliance on
foreign market for safety materials, sky rocketed
exchange rate, poor management of available
stocks in store, fraud, poor resource allocation,
poor management skill on Health and Safety
issues, Capital flight, less concern for workers well
being and workplace safety, lack of management
commitment as well as poor enforcement by the
Regulatory Agency.
Effects of poor funding on Oil and Gas
business in Nigeria
5 The implication of poor funding on HSE Policy implementation in the Nigera Oil Exploration Industry
The problem of funding of Health, Safety and
Environment activities in the operation of Oil and
Gas business has its tolls on all stakeholders in
the sector. This covers the operative staff,
maintenance employee, cleaners, contractors and
visitors.
The rather overwhelming problems have led to
other numerous challenges for the oil and gas
investment. One of these problems is accident,
which has resulted in direct cost; indirect cost;
insured cost and uninsured cost in most
companies.
Direct cost is cost that covers legal fee,
compensation, insurance, cost of replacing
machine and personnel. The indirect cost
comprise of cost incurred through loss time of
employee work-hours, loss of time of management
and supervisor during investigation. Indirect cost
also includes loss order, corporate image problem,
downtime of machinery and cost of training.
Insured cost on its part is responsible for employer
liability, public/third party liability, contract all risks,
plant and building damage including tools and
equipment. The uninsured cost is cost expended
on products and materials damages, emergency
supplies, product delay, overtime, temporary
labour cost, investigation time and supervisor time
diverted for investigation.
Other effect of poor funding are:
- Work induced stress.
- Violence at work due to abuse, threat or
assault
- Poor workstation design and condition.
- Heat and radiation exposure with resultant
effect
- Noise
- Poor welfare and lack of motivation.
- Poor education, training and development
program for the employee.
- Lack of adequate competence
- Consultation and communication
breakdown.
- Business losses.
- Delay in production
- Loss of capital to occupational injuries
which was estimated to cost global
business about US$171billion yearly.
How management of HSE activities can be
improved through funding
So far all investors, private and Government are
now clearly appreciating the need to develop their
SPE 128361
investment through best HSE Policy formulation
and implementation as it is being demanded by
most Clients. Investing in Safety the joint session
of America Society of Safety Engineers (ASSE)
and Singapore Institute of Safety Officers (SISO)
declare makes good business sense and strong
safety culture lends itself to an improve business
performance with capacity to save as much as 5%
of a company’s total profit that could have been
spent on occupational injuries. ASSE-SISO
(2008). In his own contribution to safety
management, Fearing (2008) noted that a return-
on-investment (ROI) of $3USD or more is receive
on every $1 spend on improving workplace safety
and health program. The declaration that safety is
a value by companies and still struggling to make
this declaration true Knisley(2008) observed has
led them to developing world class procedure,
taking on series of behavior based program but
still experience injuries.
To ensure an all round success in the
implementation of HSE policy taking into
consideration the aforementioned, it is necessary
for investors to note that the following and act on
them. These are:
- Consideration of Health, Safety and
Environment (HSE) management
generated expenses as a worthy
investment.
- Investor should believe that for any
amount spent on HSE implantation, A
minimum of thrice such amount will be
gained back directly or indirectly.
- Funding of HSE activities improves the
company’s reputation.
- Adequate funding of HSE programs
reduces operational incident, loss time to
absenteeism and improves productivity.
- Financial provision for the implementation
of HSE policies sell company to her
prospective clients and enable her to
secure the confidence of competent
employee.
- Funding of HSE policy will facilitate
effective communication and improves
performance of employers on duties to
consult as mandated by ILO-C155, Article
20 and ILO-R164, Article 12.
Finally, it is of the research opinion that the
following recommendation will be of great
importance for overcoming the challenges posed
by insufficient funding of HSE programs. These
recommendations are:
6 F. Tubosun SPE 128361

- Compulsory Occupational Health and mica(P)092/07/2006. Singapore Institution of

Safety Management training program for Safety Officers, Singapore.
employers and management team
participation as being practiced in HSG65(1998) Successful Health and Safety
Singapore and United Kingdom. This the Management, Her Majesty’s Stationary Office,
research hope would enable the employer Norwich UK.
in acquiring the HSE management skills
as well as enable them to appreciate the Jack Fearing(2008) Selling Safety to
need for funding of safety program Management, ASSE-SISO Conference,
Singapore.
- Funding of Safety professional career
development schemes, this is achievable Jeffrey Spickett and Helen Brown (2006) The
by increasing the budgetary allocation of importance of Risk Management, Q3, mica(P)
Health, Safety and Environment section 092/07/2006, Singapore Institution of Safety
Officers, Singapore.
- Optimum enforcement of Safety
regulation by the regulatory agency with Jocelyn Dorell (Jan 2009) Hacrow’s Glasgow
appropriate sanctions the research rangers, Health and Safety at Work Headley
observed will be a magic wand for the Brothers Ltd, Kent UK.
improvement of occupational health and
safety activities funding. Roy Yeo(2007) Managing Safety starts with top
Management, Singapore Institute of Safety
Officers, Singapore.
Reference

Bruce Whitehead(2007) Why managers are the

weakest link-The Australian experience, Q1