Oman’s authorities are weighing the inclusion of a rider in government-linked construction and procurement tenders that requires contractors to factor in the cost of paying compensation to Omani employees made redundant during the tenure of a contract.
The move, as reported by the Oman Daily Observer, is presently being contemplated for incorporation in tenders related to the Sultanate’s oil and gas sector, which is in the midst of a downturn brought on by collapsing international oil prices.
The issue is currently being discussed by the Oman Society for Petroleum Services (OPAL), the main umbrella grouping of oil and gas sector companies, encompassing oil and gas operators, contractors, vendors and service providers.
According to a top official of OPAL, the move is intended to ensure that bidders are able to factor in potential financial liabilities accruing on them if and when they seek to retrench Omani workers in the event of a contingency, such as the one presently gripping Oman’s oil and gas industry.
It follows new guidelines introduced by the Omani government last November that effectively impose a moratorium on layoffs of nationals, particularly in the oil and gas sector.
Under the guidelines, oil and gas contractors saddled with staff made surplus by the downturn must be suitably redeployed in other companies within or outside the industry.
A high-level Technical Committee set up under the auspices of the Under-Secretary of the Ministry of Oil & Gas has ultimate discretion in deciding whether any nationals remaining over from the redeployment exercise are recommended for either re-skilling or compensation.
To ensure that contractors make suitable financial provision for retrenchment related contingencies when bidding for contracts, OPAL is now leading deliberations within the oil and gas industry aimed at eliciting feedback and building consensus on the issue.
Musallam al Mandhry, CEO of OPAL, commented: “The guidelines came into force at a time when the attendant cost of redeploying surplus Omani oil and gas workers was not included in tenders. Going forward, we envision redeployment costs being included in tenders. Consequently, bidders will be costing these issues in their contract value. Of course, contract values are expected to rise as a result, but the contractors will not be impacted because they would have factored in these costs in their bids.”
In making provision for redundancy related contingency costs, contractors are expected to either seek additional insurance cover for their Omani staff or directly bill these costs to the client when bidding for a contract, said Al Mandhry.
