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Economic development

Even in the current low oil price environment, the project has continued to make significant contributions to the economies of Chad and Cameroon. These contributions include government revenues; employment training and jobs, almost all of which are held by nationals of the two countries; the purchase of local goods and services; and the transfer of business and technical knowledge to a growing number of entrepreneurs.

TOTCO Operational workforce now 100% nationalized

2016 saw TOTCO achieve 100% nationalization of its operational workforce when Larry Ligring, was named Supervisor of Maintenance Area 1. In this position Larry and his team are responsible for maintaining pipeline operations from Pump Station 1 at Komé 5 to the border with Cameroon near the town of Mbere. Larry’s personal history illustrates some of the ways the project has attracted Chadian and Cameroonian employees and supported their continued growth.

After earning a Masters Degree in Electromechanics from the University of N’Djamena, Larry was hired by EEPCI in 2002 and joined TOTCO in October 2015. He recounted his experiences:

“This project has really shaped my life and given me opportunities. The training I received was really helpful. Once I was on the job, I learned more. As soon as I became expert in one competency, I was given the opportunity to learn something different. Many positions then were held by expats, and they were open to sharing knowledge and experience. Now I have the necessary skills, and I understand how the entire system works, both from a technical perspective, and also how the company operates.”

Larry said the project’s commitment to safety made a deep impression on him.

“When I started here, they said safety is our number one priority. This company really walks the walk, and clearly understands that its employees at all levels are assets that are important and must be protected. I remember my managers telling us that no equipment or activity is worth the risk of injury. It really changed my perspective; everywhere I go, safety is in my mind.”

More local villagers hired to protect the pipeline

For many years TOTCO and COTCO have trained and employed local villagers on a rotating basis to conduct foot patrols along the right of way (ROW) to identify any issues with the pipeline, its 1,070 kilometer ROW or the fiber optic communications cable that is buried next to the pipeline. In 2016, the patrols were increased to two a month because of the discontinuation of aerial patrols in Chad with the authorization of the Ministry of Petroleum and as a cost saving measure. The foot patrols have proven to be just as effective as aerial surveillance, if not more. The increase in patrols has resulted in 48 jobs for local communities along the 178 kilometer Chadian section of the ROW.

Foot patrollers work for six months at a time before new patrollers are chosen using a lottery system, which ensures fair distribution of jobs. Although temporary, the jobs provide a much needed source of cash in otherwise remote areas that are often far from markets, and they connect the villages to the pipeline in a positive way. TOTCO believes the program is likely to continue for the lifetime of the pipeline.

Photo — “Being a foot patroller has helped me gain experience and knowledge, and the salary helps me take care of my family. We have gained a lot of knowledge and when we come home we teach our families what we have learned. In this way people can learn about things, like safety.” – Ndodedjingar Desire, Foot Patrol Coordinator (2nd from the left)

Project workforce by year-end 2016

  • Chadian and Cameroonian nationals employed by EEPCI, COTCO, TOTCO and their contractors: 3,355
  • Percentage of total workforce that is Cameroonian and Chadian: 94.5%
  • Wage payments to Chadian workers in 2016: 30 billion FCFA ($51 million)
  • Wage payments to Cameroonian workers in 2016: 10.5 billion FCFA ($18 million)

Tracking local employment

The Project Update Report provides statistics on local employment on the basis of Full Time Equivalents or FTEs. Reporting by FTEs makes it possible to account for the wide diversity of work shifts and rotations of the workforce, as well as the seasonal variations in the types of jobs available with the project.

  • Many of the project’s workers are on rotator schedules, which often include working in tandem with another “back to back” worker. Rotators typically work 28 days on and 28 days off, or a similar pattern, but when on duty they work seven days a week, 12 hours per day.
  • Other workers have day-to-day jobs where they work Monday through Friday shifts for shorter days but are on duty for most of the year with no rotation breaks.
  • Another category of workers, often hired from villages near project facilities, have temporary contracts and work only a few weeks at a time in order to complete special projects such as maintenance of the pipeline right of way.

Converting all these employee work patterns into standard Full Time Equivalents based on actual hours worked yields a consistent and more accurate picture of the project’s local employment.

National workers employment skills levels

Skilled jobs include positions such as control room operators, oilfield technicians, construction workers, machinery, electrical and instrumentation operators, EMP monitors and welders. Examples of semi-skilled jobs include food service assistants, security guards and welder helpers.

Deepening relationships with local communities to maintain the pipeline

While historically COTCO retained contractors to maintain the pipeline right-of-way (ROW), in 2016 the company began engaging Locally Formed Organizations (LFOs) set up by communities located near the pipeline to do this work. LFOs are officially recognized groups of villagers who have organized themselves into a collective that combines their skills and knowledge in pursuit of greater efficiency and productivity.

Previously the workers were local, but the work was managed by Cameroonian companies from outside the area. This new arrangement has saved the company money and increases the amount of COTCO’s ROW maintenance budget that is injected directly into the communities, while also increasing villager self-reliance.

COTCO made this change after determining that over the years the local communities had become very familiar with the requirements of this work and with the project’s safety standards and procedures, since so many had worked for the project. The company also concluded that these villages and towns had the capability to manage these projects without the need for contractors.

The main activities involved are grass cutting, foot patrols and, in some areas, boundary marker fabrications and installation. LFOs must follow COTCO’s safety practices, and their work is overseen by a project representative to ensure that it is conducted safely and completed satisfactorily.

In addition to grass cutting and other ROW maintenance and monitoring activities, Yebi (near Pump Station 3), like many other villages along the ROW has been contracted to manufacture and place ROW boundary indicators. The photographs in this story show workers from the village of Yebi fabricating boundary markers on behalf of the local LFO.

  • Biyeli Pierre

    Chief, Yebi
    “The relationship between COTCO and Yebi has been smooth since construction began. All the initial compensation went well. We are happy with the jobs that the pipeline offers and with being entrusted with the responsibility for the pipeline by providing foot patrollers. Now that our LFO is working directly with the company, we are making more money.”

New contracting process benefits local villages

By creating a Locally Formed Organization (LFO), the villages of Biombe and Ndoumba Kanga, both located near Pump Station 3, were two of the communities that contracted with COTCO to perform work in the pipeline ROW. COTCO contracted with them to cut grass and fabricate and place boundary indicators along the ROW. Leaders from both villages have reported multiple benefits from the experience.

  • Yandanga

    LFO President, Ndoumba Kanga
    Working with COTCO now has helped our association by generating more revenue. We hire local workers to support our work for COTCO and rotate the hiring to provide opportunities to many within the community. It takes a lot of manpower to support the pipeline so there is a lot of work to go around. Before we were just farmers who were hired to do a job by the company, but now we have had to learn the technical and political skills related to fairly providing jobs and managing a project for COTCO.”

  • Fame Leonard

    Assistant Chief, Biombe
    “Our LFO is focused on agriculture. We are now in our second grass cutting campaign for COTCO. Before, the contractors would simply hire 10 workers at a daily rate. Now we get more revenue because our workers get paid more per square meter, and we also are compensated for managing the project. Even though these are temporary jobs, the additional income really helps us.”

Cameroonian entrepreneur helps local communities work with COTCO

After COTCO decided in 2015 to work directly with local communities in maintaining the pipeline’s ROW rather than using subcontractors, it needed someone to fill the role of program facilitator, providing the villagers with training, monitoring the project and handling the financial transactions. To identify suitable candidates for the position, COTCO issued an invitation for tenders from potential applicants.

When a former COTCO employee with extensive community out- reach experience, Charles Mbiandoum, learned about the tender, he thought his socioeconomic consulting company, CAMUSERS, met all the requirements and submitted a proposal. At the conclusion of the tender review process, COTCO awarded the  job to Mbiandoum after concluding he was the most qualified candidate since he had 30 thirty years of experience in relevant fields. In addition, Mr. Mbiandoum knew the village chiefs from his tenure with COTCO, and they expressed trust in him.

Being program facilitator requires Mbiandoum and his team to be in the field supporting communities and training villagers for two major ROW activities: grass cutting and boundary marker installation. CAMUSERS assesses and selects the appropriate LFOs, provides guidance on COTCO policies, such as safety, and ensures the policies are followed. Mbiandoum is also responsible for facilitating payments to the LFOs and making sure COTCO knows immediately whether the workers have been paid on time. In places where there are no LFOs near the pipeline route, CAMUSERS performs the grass cutting activity, hiring local workers in accordance with company policy.

COTCO views contracting directly with the communities rather than retaining contractors as a triple win. This approach saves the company money and administrative resources; results in more money flowing into the villages; and enables a small Cameroonian business, CAMUSERS, to grow.

Chadian company grows by helping EEPCI cut costs and increase efficiency

SENEV Tchad-SSI is a N’Djamena-based company that has grown significantly in size and capabilities since it began providing services to EEPCI in 2003, the year oil production began. These services have included providing vehicle drivers and maintenance of production camps.

As part of its 2016 efforts to become a leaner and more cost efficient company and to increase local hires whenever possible, in February 2016, EEPCI awarded SENEV the contract for camp maintenance and waste management services at Komé 5, the project’s operations headquarters in the OFDA, replacing a foreign contractor. Senev’s team at Komé 5 is responsible for water treatment, waste management, plumbing, electrical work and air conditioning for the cafeteria, residences and airport. In December, SENEV’s mostly Chadian maintenance team consisted of 42 skilled and semi-skilled workers.

Senev’s total employment has grown to over 160 with 140 working on EEPCI assignments. Wangba Ahorombel Yaro, SENEV’s Human Resources Director, attributes his company’s success in large part to what it has learned from EEPCI and adopting many of Esso’s values. He said, “We made the vision of ExxonMobil our vision” and pointed out that SENEV’s corporate goals are:

  • Safety – “Nobody Gets Hurt”
  • Protecting the environment – “No Spills”
  • To operate on a basis of honesty and integrity in all day-to-day business dealings
  • To create a safe working environment promoting and increasing local staff participation, furthering their acquired skills
  • Continuously improving the maintenance procedures and applying best practices

At the end of the year SENEV was working on a special project: fabricating 400 desks and 57 blackboards that EEPCI plans to donate to schools throughout the OFDA. Over 50 classrooms will receive the furniture. This work will result in a significant benefit to the schools and students, while also giving 26 Chadians temporary jobs for two months. Every year the SENEV maintenance workshop performs a similar project for EEPCI. In addition to the furniture, EEPCI will also donate school supplies such as notebooks, pens and pencils to students directly. SENEV also fabricated 60 waterproof covers for mattresses slated to be donated in Q1 of 2017 to hospitals throughout the OFDA.

  • Ngaradeje Cephas

    Water Treatment Technician, SENEV Tchad
    “I’m lucky to be doing the work that I love. This project has been very beneficial to me. I didn’t go to university and was working as a mechanic, but working for this project has allowed me to learn a lot of things and earn a good living.”

Local business spending
  Chad Cameroon
 2016  48 billion CFA ($80 million)  28 billion CFA ($47 million)
 Project to date  1189 billion CFA ($2.4 billion)  687 billion CFA ($1.4 billion)

  •  

    Number of Chadian companies contracted with EEPCI in 2016

  •  

    Number of Cameroonian companies contracted with COTCO in 2016

  •  

    Number of Chadian companies contracted with TOTCO in 2016

Host country revenue

Chad’s oil revenues come from royalties on oil sales, corporate taxes, income related to pipeline ownership and other permits, duties and taxes. By the end of 2016, the project had generated nearly $12 billion in revenues for Chad, including 2.7 million barrels of oil generated as royalties-in-kind in 2016 alone. Revenues are affected by many factors, including the price of crude oil, operational costs and capital investment.

Chad oil revenue (millions of dollars)
   2016  Project to date
 Royalties on crude oil sales   N/A  2,747
 Income related to pipeline ownership   0  85
 Corporate income tax  13  8,261
 Fees, permits, duties, etc.   43  670
 Project total  56  11,762
 Chad Royalty-in-Kind (millions of barrels) 
 Royalties-in-Kind  2.7  16.4 

Brent Crude is a major benchmark price for sweet light crude oil worldwide. This chart shows the volatility of oil prices since 2003 when production began in Chad. While Doba oil is priced somewhat lower than Brent Crude, Doba generally tracks the movement of Brent. For many years since 2003 the price of Doba has exceeded expectations, significantly increasing revenue to Chad.

Cameroon oil revenue (millions of dollars)
   2016  Project to date
 Transit charges  54  362
 Income taxes   1.9  59
 Customs duties and other taxes   11  82
 Income related to pipeline ownership  1.8  168
 Project total  69  670

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