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Monday 20 August 2018
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8 Years of Local Content Act in the Nigerian Oil and Gas Industry — By Simbi Wabote

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8 Years of Local Content Act in the Nigerian Oil and Gas Industry — By Simbi Wabote

It’s been eight years since the enactment of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, arguably the most successful economic policy of the federal government in the last two decades. It’s heartening that the implementation has remained on the front burner of four successive federal administrations, giving the lie to the narrative that governments in Africa are too eager to jettison policies initiated by their predecessors. In fact, the remit of the Nigerian Content implementation is being broadened beyond oil and gas as part of diversification of the economy.

Two out of the five Presidential Executive Orders issued by the administration of President Muhammadu Buhari are specifically in support of Local Content – Presidential Executive Order 003 which mandates Support for Local Content in Public Procurement by Ministries, Departments and Agencies of the Federal Government and Executive Order 005, for the “Planning and Execution of Projects, Promotion of Nigerian Content in Contracts and Sciences, Engineering and Technology.” These instruments have reaffirmed President Buhari administration’s unequivocal support for Local Content and deep conviction of its importance to the attainment of the Economic Growth Recovery Plan (EGRP) and wider socio-economic goals of the nation.

The Senate and the Federal House of Representatives are also working to amend the Nigerian Content Act, so it would extend to the Power, Information Communication Technology and Construction sectors.

Weeks ago, the Chief Justice of Nigeria, Justice Walter Onnoghen and other Justices of the Supreme Court gave huge endorsement to the Nigerian Content Act. The occasion was the first national seminar organised for Justices and Judges on the Role of the Judiciary in the development of the Nigerian Local Content Law and Policy.

Today, Nigeria is widely regarded as a model in Local Content implementation in Africa and the Nigerian Content Development and Monitoring Board (NCDMB) has been mentoring several countries on the development of their own policies.

The famous American Management guru and author, John Maxwell wrote in the book, ‘Everyone Communicates Few Connects’ that “everything rises and falls on leadership.” This maxim resonates well with NCDMB where the Board’s successes have been built on the focused management it had enjoyed from inception and support from government, even much more from the current Minister of State for Petroleum Resources, (HMSPR) Dr. Emmanuel Ibe Kachikwu. The Minister stated recently that NCDMB is one of the agencies under the Petroleum Resources ministry that has been blessed in terms of personnel selection and leadership since inception in 2010.

The Local Content journey started formally from the report of a Presidential Committee inaugurated in 2001 to suggest reforms in the Oil and Gas industry. Prior to the NOGICD Act, the Department of Petroleum Resources (DPR) used oil block bid rounds to enforce some level of Local Content Policies enshrined in extant Petroleum statues. The Nigerian National Petroleum Corporation (NNPC) would later set up the Nigerian Content Division within its system and issue Nigerian Content directives to the industry. The absence of a regulatory framework limited the best efforts of the DPR and NNPC, especially as operators and service companies complied only on best endeavour basis.

The enactment of the NOGICD Act 2010 and subsequent establishment of the NCDMB ushered a paradigm shift. Before then, nearly all fabrication, engineering, and procurement for the Oil and Gas Industry were executed abroad. It is estimated that the national economy suffered capital flight of about $380billion dollars in the first 50 years of oil production in Nigeria and lost opportunities to create over two millions jobs. The level of Nigerian Content was less than five percent, partly because preceding administrations and most citizenry focused on revenue derivation from the Oil and Gas sector.

In the past eight years, we have focused the thrust of Local Content implementation on Promoting indigenous ownership of equipment used in industry operations; Promoting Oil and Gas Components Manufacturing; Giving first consideration to Nigerian indigenous companies; Ensuring that Nigerian Content targets are met for projects and operations; Creating and Utilizing training and employment opportunities for indigenes; Deploying the Nigerian Content Development Fund for targeted capacity building; Ensuring that local capacity investors have work to amortize investments and Involving oil producing communities in the activities of the sector.

The Board’s strategic implementation of the NOGICD Act has been very impactful in the Oil and Gas Industry and the wider economy – several Nigerians service companies have invested in sophisticated vessels and rigs – assets that used to be the exclusive preserve of foreign companies. Local firms now enjoy patronage and even exclusivity in certain areas, retaining huge industry spend in the economy, employing Nigerians and building skills. Many hi-tech fabrications, manufacturing and engineering facilities have also been developed and upgraded, domiciling most industry work that used to be exported.

Nigerian Content has also grown remarkably on the production side. Indigenous and marginal field producers now account for about 15 percent of Nigeria’s crude oil production. They also contribute about 53 percent of Domestic Gas Supply requirements, with NPDC, SEPLAT, ND Western, Frontier, 7Energy, Aiteo, etc being major producers.

Even though the Oil and Gas industry is not a high employer of labour like Agriculture and Construction, our bullish implementation of Nigerian Content has helped create over 30,000 jobs and funneled about 5,800 young persons in various projects based trainings.

The total value of contracts awarded to Nigerian companies in the industry has risen to 83 percent while average Nigerian Content retention incountry has shot up to 28 percent.

Although many stakeholders are pushing for increased NC performance, it is imperative to note that the implementation is a marathon and not a sprint.

On January 24, 2018, the biggest Nigerian Content milestone to date was attained when the Total E&P’s Egina Floating Production Storage and Offloading (FPSO) vessel arrived the SHI-MCI Yard, LADOL Free Zone, Lagos for the integration of six modules that were fabricated in Nigeria. The arrival of the FPSO is a huge testament to the giant strides Nigerian Content development has made, particularly in the development of infrastructural and human capacities.

Going forward, NCDMB has set new targets for itself and the industry. We have developed a 10-year strategic road map with which we are pushing to retain at least $14bn out of the $20 billion annual industry spend and create 300,000 direct and indirect jobs.

We also hope to grow aggregate in-country value addition from 28 percent to 70 percent by 2027. These targets are backed with specific initiatives such as completion of five planned oil and gas parks to grow local manufacturing, establishment of two additional pipe mills, local fabrication of modular refineries; attaining at least 50 percent FPSO Integration in-country during the implementation of the world-class Zabazaba and Bonga SouthWest Aparo projects.

In the last year and six months since I assumed duty as the Executive Secretary of the NCDMB, we have sustained the momentum of implementation and injected some fresh impetus.

Our first major activity was to convene the Nigerian Oil and Gas Opportunity Fair (NOGOF), to aggregate industry business plan. This culminated in the compilation of a compendium of investment opportunities in the industry.

We launched the $200 Million (USD) Nigerian Content Intervention Fund (NCI Fund) in partnership with the Bank of Industry (BoI). The Fund offers a single digit interest rate with five year tenure and we hope to unveil the first set of successful applications in a few weeks. Our goal with the NCI Fund is to optimize the capacity and efficiency of our local supply chain and the overall competitiveness our Oil and Gas Industry.

We also issued Guidelines to drive Research and Development implementation in the Oil and Gas Industry.

This was followed by the Nigerian Oil and Gas R & D Fair held in September 2017 to sensitize and galvanize the industry and relevant stakeholders to embrace the culture of research and innovation, a key parameter for sustainable local content practice.

We concluded the bid evaluations for NAOC’s Zabazaba Deepwater project within an unprecedented period of 14 months, in line with the directive of the Honorable Minister of State for Petroleum Resources to reduce the protracted contracting cycle in the industry.

Just recently we held the ground breaking of the pilot Nigerian Oil and Gas Park Schemes NOGAPS) at Odukpani, Cross River State. Dr Kachikwu has confirmed he would personally perform the ground breaking of the second park being sited at Emeyal-1 in Ogbia Local Government Area of Bayelsa State.

The parks will spur manufacturing of equipment components and spare parts that would be utilized in the industry. Each will create about 2000 jobs when it begins full operations.

As we lead the rest of the industry to mark the 8th anniversary of the Nigerian Content Act, we congratulate all industry stakeholders for their various contributions to the achievements recorded so far. We must all be proud of the jobs we have created, the value we have retained in-country and the sense of pride we have brought to our country.

Let me also hasten to add that Nigerian Content is not about Nigerianisation but has the main objective of domiciliation and domestication of value-adding activities in-country. We welcome investors far and wide to set up in our dear country Nigeria for unrivalled returns.

Our 10-year journey has just begun. Please come on board so that together we could catalyze Nigeria’s industrialization and bequeath to our youth a virile economy.

Engr. Simbi Kesiye Wabote is the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB)



SAYELBA TIMES is an independent news group that focuses on original investigative reporting about critical issues facing all Niger Delta States including other parts of the world. Our contents are positive, creative, truthful and relevant.


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