Wabote: Local Content in Nigeria’s Oil and Gas Sector is a Marathon


The new Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Simbi Wabote spoke to Ejiofor Alike on his implementation strategies to consolidate on the gains of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010. Excerpts:

Before you came on board as the new Executive Secretary of NCDMB, the agency has had two executive secretaries since it was established six years ago. What are you going to bring to the table? I mean what difference are you going to make, going forward?

Thank you very much. I think it is a very important question, you can imagine, especially when you have a new helmsman in any establishment – the first thing the people would want to know is what difference will you make and what is your strategy going forward? I think for me, my background is engineering – I am an engineer. I worked for Shell for 25 years as an engineer and I became a Director of Shell. One thing my engineering knowledge always teaches me is that you have to first of all plan before you enter into execution mode. While we will focus on some quick wins in order to ensure continuity and to maintain the relevance of NCDMB, I think the first thing we need to do is to first of all, take stock of how we have been able to implement the Act for the past six years and then ask ourselves a question to say how well have we fared? Based on that stock taking, we will then set a baseline and then tell ourselves the things we want to pursue in the next four years if I will be in this position. So, first of all, continue the quick wins and secondly, take a strategic look at how the Act has been implemented for the past six years and then begin to strategise on the areas that need to be strengthened and the things that we need to do to change the face of the game. So, that to me, is the strategic approach, which I will adopt during this my tenure. I am sure the review will be a short review. Work is already ongoing. After that review, we will then set a very clear strategic direction but in the short term, we will build on some of the successes that we have seen in the implementation of the Act. Some of it being the development of the pipe mills that we have all these while promised Nigerians that we are going to make sure we develop in-country; the development of our oil and gas park to encourage manufacturing and also to encourage local businesses to set up shops to be able to manufacture for the industry. We will also look at Research and Development agenda that we have within the Act. A lot of work has been done. Stakeholders have been engaged and some kinds of regulations have been agreed in terms of research and development. We will make sure we get it quickly into the implementation phase. But like the Minister of State for Petroleum Resources charged the board is to think big on the things we want to bring about in Nigerian Content to change the face of the game. So, our ambition will be a very big ambition, robust and conscientious execution of that ambition.

How much do we have in the Local content fund? How much has been disbursed and which companies have benefitted?
That is a very important question and that is a question that borders the minds of key stakeholders. When you look at the Nigerian Content Fund that they started contributing since 2010 when the Act was enacted, I must say that the Fund has grown over the years to approximately $600 million. As far as I am aware, this fund has benefitted about six Nigerian companies that have tapped into that Fund for capacity development. But I must say that it is not directly giving money to those six Nigerian contractors; it is about guaranteeing some of the loans that they got from the banks because we are not a funding institution. We guarantee the loans they got from the banks. Not much has been expended from that fund for capacity development. Part of the strategies of this new board is to come out with very transparent process with which genuine Nigerian contractors involved in the oil and gas sector will have access to that fund. That is the strategy that we will develop in the shortest possible time to bring about transparency because most of the fund contributors are asking questions about the fund and we are not oblivious of this fact. We will make that position very transparent as soon as possible. I think one important thing again is the establishment of the Governing Council of the NCDMB, which was inaugurated on October 18, 2016, by President Muhammadu Buhari. That will bring corporate governance principles in the management of the activities of NCDMB and will also support us in terms of the strategies we wish to deploy for the management of the fund.

Many operators have complained that the process of accessing the fund is cumbersome. How do you intend to simplify the process of accessing this fund?

I think it is not that the process is really cumbersome; it is that there is no very transparent process in accessing the fund. I don’t think that people have applied conscientiously for that fund to come out for them to do business because the process is not clear to them. The process is a bit opaque. That is why I said that this board will bring about transparency. By the time we finish with our strategy, it will be published in the newspapers and stakeholders will be engaged on the process to be followed to access that fund. So, I don’t think people have really thrown in their applications because there is no clarity and there is no understanding of the process to access the fund but we intend to bring about that transparency within the shortest possible time.

As part of your strategies to reduce the long contracting cycle, you once said that if an operator or project promoter does not receive NCDMB’s response on a project within 15 days of submitting the application, the operator should consider his request approved. Could you further clarify your position on this issue?

Contracting cycle time is of great concern not just to operators but also for NCDMB and I am sure, some of our sister regulatory agencies because it increases the cost of doing business and it delays investment decisions. I think the Minister of State for Petroleum charged all agencies involved in the oil and gas sector to ensure that they reduce the contracting cycle time as much as possible. In fact he gave a benchmark of six months as his acceptable the turnaround time for contracts. I think all the agencies have been actively working to come out with strategies with which they will reduce the contracting cycle time. One of the strategies that the NCDMB will adopt is to give a timeline with which if what is required of us is not received by the operators or project promoters within 15 days, they should consider the item approved. I think it is a bold step and all my colleagues within the board are aware of this and are working conscientiously to make sure that the turnaround time is drastically reduced on those items that are within our control. But like you know, it is not just NCDMB that gets involved in the contracting cycle in the oil and gas industry. I think we are working collaboratively with other agencies to understand the challenges. On the other hand, we also challenge the project promoters and operators to also keep their house in order because we have also seen that the bulk of the delay is also on their own part. For instance, when I took over office, I received a letter from an operator asking for a review six months after the NCDMB had approved a particular project. I am sure that once the operator gets that approval, the story might not be put there in the public domain that it is their fault. They will push it to NCDMB.

Some operators who invested heavily to build capacity are concerned that despite the availability of local capacity, jobs are still being outsourced in violation of the local content law. People invested millions of dollars to develop capacity only to have an empty yard because of no jobs. What strategies are you going to adopt to check this trend?

One thing we need to understand with regards to local content is that I always say that local content is marathon. It is not something that can happen in a year; it is not something that can happen in two years; it is not something that can happen completely in five years. It is a continuous process that needs focus and tenacity to ensure that it is implemented. A lot of gains have been made in terms of local capacity development to replace expatriates that come into the country to work. I think as journalists, you guys need to portray the gains that have been made in this sector to the world. For instance, today, most of the international oil companies (IOCs) are being managed by Nigerians. This was not there some seven or eight years ago when expatriates were the managers. In addition, almost 85 – 90 per cent of the employees of these IOCs are Nigerians. So, a lot of progress has been made in these areas. Today, most of the owners of oil blocks and oil mining leases (OMLs) in this country are Nigerians. These never existed seven years ago. So, a lot of progress has been made. What I am saying in effect is that Rome was not built in a day. We will continue to push the boundaries; we will continue to do anything we can to improve local content attainment in the oil and gas industry. I think we also need to look at the positive side of it and don’t think that overnight, we are going to eliminate all expatriates in our midst. Don’t forget that I came from an IOC and I know that within those IOCs, a lot of Nigerians are outside in various countries giving their expertise to those countries. So, in Shell where I came from, there are more Nigerians outside the country than expatriates in the country to strike that balance. So, you, journalists also need to look at the other side of the development in terms of local content because you need Nigerians to also go out to acquire the technical knowhow and the knowledge and come back and make their input to further develop the country.

Having worked for an IOC, there is concern that you may have sympathy for the IOCs. How are you going to strike this balance so that you don’t end up having sympathy for the IOCs at the detriment of the country?

That is a very good question. I think it has been a concern not even outside this wall – even my staff were also wondering on whose side will I be, having come from the IOCs. But I think for me, first of all, I am a Nigerian before I worked for the IOC. So, I also managed local content within the company I was coming from for eight years both locally and internationally. I managed it for that period of time and I think within the company, they know my antecedents in terms of where I stand on issues concerning Nigeria and where I stand on issues concerning my employer then, which was Shell. I believe passionately in the benefits of local content, which I think that Shell as an organisation also share the benefits of local content. I believe that in the long run, local content will reduce cost; local content will ensure the security of supply. For example in the Niger Delta where you have all the militant activities that are going on, most of the expatriates companies had to leave. But who are the people providing the services? They are Nigerians. If we did not build local capacity, I think most of the oil companies would have left Nigeria by now. So, secondly, local content provides the opportunity for securing the assets, lives and property of the investors because there is no security you can get better than the community people that work with you. So, the benefits of local content are enormous and to be fair to Shell, the company also sees the benefits of local content; hence they agreed and allowed my voice, who was too passionate about local content to still persist. I am now working for the government to further enhance local content in the oil and gas sector. Like I said, I am first a Nigerian before I worked for an IOC and that is very important and I believe in this country and I believe in the drive by the present administration to create jobs and employment for Nigerians. So, there is no way my position on issues can be compromised because I come from that sector.