Sheriff Balogun in Abeokuta
An expert in the oil and gas sector, Mr. Bala Zaka has disclosed that Nigeria stands to reap greater benefits from improved local procurement in the oil and gas sector than it is currently getting from relying on royalties and corporate taxes.
He said the country had relied on decades of exploitation of the mineral resources of the country by foreign players without much to show for it.
Zaka argued that local companies should be given opportunities to invest more in oil and services than they are presently doing in order to increase the country’s economic output that will in turn see an improvement in the living standards of citizens.
According to him, although the crude oil is a major international commodity and businesses around it are conducted at the international markets, the participation of Nigerians in the services aspect of it should be increased.
“There are local players in the ownership of oil blocks, but there’s still a wide gap in both production and prospects. The procurement expenditure-royalty revenue dichotomy is exemplified by by major international oil companies who have dominated oil and gas production and prospecting fields in the country while paying only a fraction of their earnings to the country’s coffers,” he explained.
He argued that this could be reversed if the government speeds up activities to implement the local content law or expedite passage of the Petroleum Industry Governance Bill.
He stated that prior to enactment of local content law in 2010, only a negligible fraction of oil and gas expenditure was domiciled in the country
According to him, it was in a bid to reverse the ominous trend that the government has been making efforts on the local content and other laws to boost local participation in the petroleum industry.
“One area government could maximise gains from the mining companies and create more jobs is the procurement sector because the companies procure a lot of goods and services in the countries in which they operate,” Zaka added.
He, however, warned that the government should not compromise quality and safety standards, while encouraging local participation.
“The government should ensure that activities in the oil and gas sector conform with international standard because crude is business is conducted at the international markets with international currencies”, he said.
