Nigerians Now Manage 90% of Drilling, Oil Servicing Activities in Oil Industry

Simbi Wabote

Mr. Simbi Wabote was appointed as the executive secretary, Nigerian Content Development and Monitoring Board (NCDMB) by President Muhammadu Buhari in 2016. What the NCDMB has  achieved  in the oil and gas industry within just two years of his leadership is phenomenal and incomparable to prior years. With such indelible mark imprinted, stakeholders said the chief executive has written his name in gold in the sector’s history.  That notwithstanding, Wabote believes there is still a lot more to be done in the  Nigeria content space  and he is not resting on his oars in ensuring all set targets are attained or even surpassed. He shared his views with Chika Amanze-Nwachuku and Ugo Aliogo

One of the challenges you inherited was the cumbersome process of accessing the Nigeria Content Fund by operators.  You had promised to ease access to the fund. How far have you gone in this task?

Indeed, it was the first commitment that I made that the fund will be accessed by the fund contributors. Exactly one year ago since I made that commitment, we have launched the fund- $200 million Nigerian Content Intervention Fund (NCIF) in conjunction with the Bank of Industry (BoI), we lend to the contributors to the fund. We made it very clear that it will be on Right of First Refusal to the contributors to the fund. When the fund was launched, we had five product lines for the fund. They include contract financing; equipment financing, loan re-financing, community contract financing, and manufacturing financing. These were the product lines we launched with the $200 million. It has interest rate of 8 per cent fixed for five years and a one-year moratorium to start paying back the loan. At present, there has been successful access to that fund. From the last report from the BoI between now and the first quarter of next year, they will be asking and looking for more funds to sustain the number of requests that they have currently.

Is it possible to know the operators that have benefitted from the fund since it was set up?

Maybe I will just shy off that a bit, but the information is there. About a month ago, I was in Port-Harcourt for launch of a newly procured vessel by one of the beneficiaries. It is the first company that benefited from the loan and it is a marine company. There is a whole battery of them, who are lined up to gain access to the fund. It is a promise that I made and it is a promise kept.

Some companies have refused to remit the compulsory one per cent upstream contract fund as stipulated by Section 104 of the Nigerian Oil and Gas Industry Content Development Act. What measures have you put in place to ensure strict compliance to the law?

Again that was another commitment I made when I took over office. We made a decision that we were going to launch a forensic audit on all those companies since the inception of the Act in 2010, to see how we recover remitted funds. Three months ago, going through all the recommended processes, we were able to recruit forensic auditors who are busy on the field, trying to verify documents for most of the companies. I can tell you that since that exercise started, we saw an upsurge in the remittance of funds to the Nigeria Content Development Fund. Again, another promise made and another promise kept.

Before this upsurge, were you able to sanction any of those errant companies?

We noticed that some companies were not remitting before the forensic auditing started, we were able to fish them out and notified them; because they know the consequences of the action, they immediately complied. So far, nobody has remained recalcitrant for us to punish as such. But those who discovered that we found them, looked for a way to quickly make the remittances.

 For the first time in the history of the industry, the board concluded the evaluation process for Zabazaba project in record time. How were you able to achieve this feat? Why is it that several months after you concluded the evaluation process and recommended three contractors to Agip, the contract has not been awarded?

That is a very good question. The challenge that the Minister of State for Petroleum put before us when I took over office is to see how we reduce the contracting cycle time from an upward of about 36 months in some instance, to 24 months, if it is fine to considerable length of time because like you very well know, long cycle time increases the cost of contract. It also makes potential investors and operators lose confidence in the process. So Zabazaba is a typical example where we worked assiduously with the operator which is ENI to put the contract in place in record time. It has never been done in the history of this country, a contract of about $7-8 billion and we put it together within a year period. To your question as to why the contract has not been awarded, I think there are agencies of government that are responsible for different aspects of the oil and gas sector. Ours was to get the contract in place, and the rest is for other agencies of government involved to do their own bid and I guess that it is that bid that has not been done in terms of the contracting process. We were able to set record in the country. I guess that they are still working the details in those other agencies of government. Anything concerning us ensuring that local content requirements are taken into consideration in a contracting process was achieved.

One would have expected the board to speak to SNEPCO and Agip to speed up the process.

SNEPCO and Agip are keen. I think it is not just them alone; it has to do with the government and all manner of negotiation. Therefore, I guess they are still talking and we are very hopeful that one day project will be actualised.

Despite the general belief that the coming of Nigeria content development initiative has helped grow the capacities of Nigerian companies and by extension, has contributed to economic growth, yet we still receive pockets of complaints that some companies still give out jobs meant for local companies to foreign companies. Have you received such complaints and if so, has any company been sanctioned for flouting the Nigeria Content law?

Obviously so, we have received those kinds of complaints. In implementing the act itself, no doubt that there are people who try to circumvent the process; flout the law and do what is not right. We have a very robust monitoring outfit, when we discover such, we sanction them and we ask them to restitute for what they have done. A lot of companies, the contractors and the operators both local and international, have on several occasion been sanctioned for flouting the requirement of the Act. There is no exception for those who have knowingly or unknowingly gone against the law, and if they are fished out, they will be sanctioned. It is an ongoing process. If we are not vigilant, we would not have discovered them. They are very many. There are no exceptions among the international and indigenous operators. They have run afoul of the law in one form or the other.

In some quarters, people say owing to regulatory weakness, some of these oil companies deliberately flout the Nigerian Contact law. It appears the board has not put stringent measures in place to curb this?

I will contest that. If you go and seek public opinion among organised stakeholders in the oil and gas industry such as PETAN, IPPG, and OPTS, these organised stakeholders in the oil and gas sector, seek their opinion they will tell you and the stiff change that they have seen in the past two years in terms of implementation. So I strongly contest that view and I challenge you to seek the opinion of some of the stakeholders that I have mentioned.

Do you think indigenous companies are getting enough support from the IOCs?

I think the indigenous companies are getting enough support to a large extent. I am the first to own up that the international oil companies (IOCs) have been very supportive of the local companies that do business with them. The areas that I keep on saying that I will continue to repeat is where the local companies have challenges, dealing with indigenous producers. They are the biggest culprits in terms of circumventing the Act itself. But with the IOCs, they work in strict compliance with the provisions of the Act and they support local businesses.

Today, in drilling and oil servicing in the country, 90 percent of these activities is managed by Nigerians. These people were not there in the past 10 years; these were businesses hitherto managed by Halliburton, Schlumberger and Baker Hughes. But today all those businesses are managed by Nigerians service providers. It is a tremendous achievement.

The event of today focused on vessel ownership; prior to the Act, eight years ago, all the offshore vessels were owned by foreign companies. But today, we have been able to claw back about 38 per cent of those vessels. Another example I can give you is fabrication. Ten years ago, the bulk of things that we do in this country were fabricated outside, but today, we have been able to establish capacity to manage 60,000 metric tonnes per annum of fabrication.

We have established five world class fabrication yards that can compete with any fabrication yard outside Nigeria. These are all businesses we have supported and we are where we are today. Before the enactment of the Act, only about three per cent of the yearly spend, $20 billion annual spend was retained in the country. Today, we have clawed back about $6billion and it is increasing and the board has developed a strategy that in the next 10years, we will bring in about $14 billion to the in country spend. So the progress in the oil and gas sector has been tremendous in the past seven years. Every other sector is now looking at these achievements we have made in the oil and gas sector and is striving that the local content initiative be replicated in their sectors.

Recently, I read in one of the national dailies that the board targets to achieve 70 per cent indigenous capacity by 2027. So where are we now?

You know when those targets were set during the Obasanjo administration, they were set based on policy, they were not driven by any law and there was not an agency such NCDMB.  But the process effectively commenced when the local content Act was enacted in 2010. Prior to that time, there were no clear strategic targets that were put out for stakeholders to say this is where we want to be by 2027, which is a 10-year plan. So it was when I came on board in 2016, we then decided to gather all stakeholders and then we set for ourselves as where we want to be in the next 10 years and what are the key pillars? What are the drivers? How are we going to get there? What are the critical success factors? These have been clearly set out sometime last year. I have been conscientiously implementing the strategic targets and I can tell you that in the next two years, there will be paradigm shift in terms of our achievements which would be a litmus test to know if we want to get to the 70 per cent target in 2027.

Let’s narrow these achievements to the time you came onboard. Could you tell us some of the milestones you have achieved these past two years?

I came onboard on November 1, 2016. I have achieved huge milestones. First, I talked about the strategy; we were able to set 10years road map. Secondly, we were able to progress the development of our headquarters in Yenagoa, Bayelsa state. It is a 17-storey building. We have a 1,000 seater auditorium and four level car parks. By the grace of God, in the first quarter of next year that project will be completed. This is a huge milestone. In terms of capacity building, we have been able to train more than 300 Nigerians on highly skilled sector of the oil and gas industry and that we have done. 

In terms of creating opportunity for Nigeria businesses, we ran the opportunity fair where we were able to share five year projection in terms of opportunity in the oil and gas industry. Recently, we inaugurated a research and development council. We are trying to set up a 10-year roadmap for research and development in the oil and gas sector and that we have done. In terms of project, we are able to successfully integrate the Egina FPSO, 200,000 barrels per day production FPSO. It has never been done in Africa before. We are able to successful integrate that facility in Nigeria and it has sailed off to start production before the end of the year. In terms of engineering designs, we have been able to enhance the existing engineering design where they deliver more than 1 million man hour of engineering time in the oil and gas industry. 

 Would you now say the Nigeria Content Initiative has achieved its objectives?

I will not conclude; there is still a lot more to be done.  If you look at our target; 70 per cent is our target in seven years. We have achieved about 38 per cent presently. There is still a lot more to be achieved because our objective is to be able to domicile a lot of our activities in country; to be able to retain a lot of our spending in country; to be able to create 300,000 jobs in the oil and gas sector in the next 10 years but because you know the oil and gas sector is not a great creator of jobs, we want to make ensure that Nigeria claws back those jobs that are there. There is a lot more to be done that is why we are working to ensure that target given to us is achieved within a specified period of time.

What do you want to be remembered for when you leave the board?

I want to be remembered as the executive secretary who brought in strict professionalism in the management of the board. I want also be remembered as the executive secretary, who also brought in the industry know-how in understanding how the business works; the executive secretary who was also able to move the local content achievement from its paltry position to an enviable position. Also, I want to be remembered as the executive secretary that helped to complete the head office in the South-south, 40 years ago the tallest building was built in River State. 40 years later we are building another 17 storey building.  Most importantly, one of our flagship projects is the establishment of manufacturing capability. We are building oil and gas parks to incubate manufacturing concerns in most of the states of the federation. We have started the ones in Bayelsa and Calabar; we have plans to start one in Imo State. We also have plans to start one in Delta State. In first quarter of 2020, we believe that one of those parks will be highly operational and incubating manufacturing activities in the country.