Patronage of Local Contractors to Reduce $8bn Capital Flight


Ejiofor Alike

The House of Representatives Committee on Local Content has said that the patronage of indigenous companies in Nigeria’s oil and gas sector will help reduce an estimated $8 billion yearly capital flight and further promote local content in the sector.

The committee has also vowed to cancel oil and gas contracts awarded by the International Oil Companies (IOCs) to foreign companies where there is in-country capacity and capability to execute such contracts by indigenous companies.

The Chairman of the Committee, Hon. Emmanuel Okon said at the weekend during an inspection of shipyard and fabrication complex operated by West African Ventures (WAV) at Onne in Rivers State that poor patronage of WAV shipyard, fabrication complex and marine facilities of other indigenous companies had worsened capital flight in the oil and gas industry.

According to him, the committee decided to have a physical examination and assessment of facilities put in place by WAV and other indigenous companies so as to avoid supporting indigenous contractors he described as ‘flight by night contractors’ acting as commission agent for foreign companies in Nigeria.

“We believed that companies such as WAV with huge investment within the country as employer of over 5,000 Nigerians should be encouraged so that the investors can do more. That way, we will reduce capital flight (money that is going out of this country significantly),” he said.
Okon noted that the patronage of indigenous companies with capacity would boost revenue earnings of the economy, save more money and create more employment opportunities by encouraging investors that have shown credibility and super quality in its business.

“What we have seen here is 100 per cent Nigerian company and by that law, this company (WAV) is supposed to be patronized first by the IOCs, where they need marine services. That’s what the law says and the law is not ambiguous but explicit. It says wherever there is a Nigerian competence, there is an in-country capacity and there’s a job, within the oil and gas industry. The law states that the IOCs or whoever is giving out that contract, should first of all give a Nigerian company the right of refusal. Today, IOCs will say they are doing local content but I think the best they can do for Nigeria is to patronize indigenous companies like WAV so that they can in turn engage Nigerians teeming unemployed youths,” Okon explained.

He admitted that issues relating to inadequate patronage were a fall out of the global crisis in the oil and gas industry and a deliberate intention by the IOCs not to patronise the companies.
Okon, however urged that this intention is repositioned to promote local content.

“I think the primary thing is to make sure that governance come into see how peace can be maintained, particularly in this Niger-Delta area where the oil and gas business is going on. For now, we still have one major source of revenue in this country, which is the oil and gas business. Hence, The House of Representatives will oppose and cancel contracts awarded to foreign companies where there is in-country capacity by indigenous companies with huge investment creating jobs locally,” he added.

“Basically, I think if the environment is okay, if there is peace, militancy activities are brought down to the barest minimum, opportunities will now come in for WAV that has the capacity, we have seen it. If a Nigerian company is like this, there is no need calling in foreign companies. However, primarily, let us first see how government can come in to see that there is peace in this Niger-Delta in order to encourage business in the industry,” Okon said.

Also speaking, a member of the Committee, Hon. Kehinde Agboola noted that the Niger Delta crisis contributed to the challenges of the indigenous companies.

He however reminded the federal government of the need to restore peace in the region as the oil and gas business remains the mainstay of the economy.