Navigating the Bid Process in Nigeria’s Energy Sector

Tosin Clegg
The energy sector in Nigeria, a cornerstone of the country’s economy, relies heavily on effective and transparent bidding processes to secure the contracts that drive its vast operations. From upstream oil exploration to deepwater drilling projects, the bidding process in Nigeria’s energy industry plays a pivotal role in selecting the best suppliers, contractors, and service providers for the sector’s demanding and complex projects.
In recent years, the bidding process has undergone significant transformations, influenced by both internal and external factors, including regulatory changes, technological advancements, and global market trends. The process remains crucial for companies involved in the oil, gas, and energy sector, as it determines the efficiency, cost-effectiveness, and success of multi-million dollar projects.

The bidding process in the energy sector is typically a multi-step journey that begins with the development of a bidding strategy, proceeds through a call for tenders (CFT), and culminates in the selection of a bidder and the awarding of the contract. For large projects, such as drilling rigs or well delivery contracts exceeding $10 million, companies often adopt a rigorous approach to ensure that the right contractors are selected based on both technical and commercial criteria.

Cynthia Onukwulu, a contract engineer with TotalEnergies, with extensive experience in bid management, shared insights into the process. “I’ve had the opportunity to manage the entire bidding lifecycle, from strategy development to recommending the best bidder for contracts. It’s critical to ensure that our bidding documents—Call-for-Tender strategies—are comprehensive, clearly outlining project details, budgets, and bidder lists to align with our project goals,” she explained.
Onukwulu’s role also involves collaborating with technical experts to draft Instructions to Tenderers (ITT) and ensure that all bidders receive complete and accurate information. “By ensuring clarity in the documentation, we make sure bidders have what they need to submit their proposals. This transparency is key to ensuring fairness and achieving the best outcomes,” she added.
Once the bids are submitted, Onukwulu and her team evaluate them alongside technical duets, assessing whether the proposals meet both technical requirements and commercial expectations. She also emphasizes the importance of managing contract modifications through Change Orders (COs), which help adapt project scopes while ensuring cost control and alignment with agreed terms.

Despite the structured approach to bidding, several challenges persist in Nigeria’s energy sector. The country’s volatile market conditions, regulatory uncertainties, and shifting policy frameworks often complicate the bidding process.

One of the main obstacles companies face is managing risks associated with fluctuating oil prices and the rising costs of materials and services. “The Nigerian energy sector, like the global energy market, is susceptible to price volatility,” says Onukwulu. “This can affect bidders’ cost estimates and ultimately impact contract negotiations.”
In addition to financial and market risks, geopolitical factors and regulatory changes in the oil and gas sector—such as Nigeria’s Petroleum Industry Act (PIA)—have added another layer of complexity to the bidding process. These changes require companies to adapt to new compliance requirements and, in some cases, re-evaluate bidding strategies.

Despite the challenges, there are significant opportunities within Nigeria’s energy sector bidding process. One of the biggest opportunities is the increasing use of digital tools to streamline the procurement process. Platforms like SAP, Ariba, and Agora have become essential for managing procurement and bid processes, reducing lead times, and improving accuracy.

Moreover, Onukwulu points to the increasing role of data analytics in improving bidding decisions: “Leveraging data insights from previous contracts and analyzing market trends can help identify areas for cost savings, improve procurement strategies, and ultimately lead to better decision-making.”
Another key opportunity lies in improving supplier relationships and fostering a more competitive bidding environment. As Nigeria’s energy sector continues to attract both local and international players, creating a robust supplier network will be critical to driving competition, ensuring quality, and reducing costs.

The bid management landscape in Nigeria is being shaped by emerging trends and technologies that aim to increase efficiency, transparency, and decision-making accuracy. A notable trend is the increased reliance on e-sourcing platforms, such as Ariba, for managing the entire procurement lifecycle. These tools facilitate better communication with bidders, streamline documentation, and enhance transparency in the bidding process.

Furthermore, contract modification processes, including change orders and amendments, are becoming more digitally driven, allowing for real-time updates and better tracking of contract terms and performance. “We’ve seen significant improvements in how we manage contract modifications with the help of digital platforms,” says Onukwulu. “The ability to track changes and communicate directly with bidders makes the entire process more efficient and less prone to errors.”
Another emerging trend is the growing importance of sustainability and social responsibility in bid management. Bidders are increasingly being evaluated not only on their technical and financial capabilities but also on their commitment to sustainability, environmental protection, and community engagement.

At present, the bidding process in Nigeria’s energy sector remains highly competitive, with local and international companies vying for multi-million-dollar contracts. While the regulatory landscape continues to evolve, the integration of digital tools and a more structured approach to bid management are ensuring greater transparency and efficiency in the sector.

In 2024, the energy sector in Nigeria is poised for continued growth, driven by significant investments in exploration and production (E&P) projects, particularly in deepwater operations. According to the Nigerian National Petroleum Corporation (NNPC), the country’s oil production has been targeted to reach 3 million barrels per day by 2025, underscoring the need for robust bidding processes to ensure successful project delivery.

The bidding process in Nigeria’s energy sector is a critical component of the country’s oil and gas industry. While challenges persist, such as market volatility and regulatory shifts, the sector is increasingly embracing technological advancements that streamline procurement, improve transparency, and foster a more competitive environment.

As Nigeria continues to leverage digital tools and improve procurement practices, industry experts like Cynthia Onukwulu highlight the importance of innovation and strategic planning to ensure the country’s energy projects meet both economic and sustainability goals. The future of the energy sector’s bidding process in Nigeria will depend on continued adaptation, transparency, and the ability to address market and regulatory challenges head-on.