Local Content Act and ‘Powering Jobs’ Yeside Dipo-Salami and Ifeoma Malo
In January 2019, the Nigerian Electricity Regulatory Commission (NERC) launched the implementation process for the 2014 Regulation on National Content Development for the Power Sector.
The regulation aims to ensure that local operators in the power sector support the development of more local jobs in the sector.
The Regulations on National Content Development for the Power Sector is a framework which fosters the “Deliberate utilization of Nigerian human and material resources, goods, works and services in the industry; opening of the Nigerian Electricity Sector Industry (NESI) at all levels of its complexity to involve Nigerian people and expertise; building of capabilities in Nigeria to support increased investment in the industry; and leveraging existing and future investment in the NESI to stimulate the growth of Nigerian and Nigeria-located enterprise.”
Background to the Regulation
The regulation on content development for the power sector was created to ensure that the indigenous people of Nigeria are able to secure jobs and work opportunities at all levels in the power supply value chain of the Nigerian Electricity Supply Industry – including generation, transmission and distribution. These opportunities range from construction roles to procurement positions as well as management and administrative roles and positions. The regulation aims to achieve a minimum of 25-75% of locally sourced equipment used in power generation, 30-100% for transmission and distribution materials and local labor in these sectors ranging between 75 and 100%, although local content in funding projects/businesses is put at 20% from 2024 and beyond.
The regulation is designed/written to ensure that licensees in the industry also contribute to the Joint Qualification System, a system that consists of a databank of qualified local content contractors and companies, as well as the creation of a Nigerian content plan for projects with a budget above NERC’s regulations. It mandates licensees to have local content succession plans for positions that are occupied by expatriates.
Furthermore, the policy encourages technology acquisition through the facilitation of joint ventures. While it does not ignore the fact that in certain projects or situations it may be difficult to find local capacity to execute some projects’ activities the regulation notes that a waiver is available for such projects. The launch in January also heralded the establishment of the NESI Nigerian Content Consultative Forum, comprising of representatives from the Standards Organization of Nigeria, Nigerian Labour Congress, Institute of Chartered Accountants of Nigeria, Nigerian Society of Engineers, Manufacturers Association of Nigeria, Nigerian Bar Association and other professional service bodies, to monitor local content participation in the sector and provide advisory services to the NERC.
Need for the Content Regulation
In the last one decade, the Nigerian power sector has seen reforms at each level of the power supply value chain, from the generation aspect: seeing investments in both fossil and non-fossil fuel/energy power supply companies; to the transmission network of Nigeria receiving investment/financial support from the World Bank and African Development Bank for its reforms and the distribution companies engaging in initiatives such as the Meter Asset Provider program with the NERC to meet the needs of the end users in Nigeria. In the last one year, the DRE sector has seen developments such as the launch of two world class solar training academies owned by Blue Camel Ltd and Asteven Ltd. These training academies have provided capacity building and training programmes for engineers and technicians that would serve growing renewable energy projects.
Mini-grid providers such as Green Village Electricity and SOSAI Renewable Energy have also received financial investments in their relative projects/businesses. Furthermore, federal agencies such as the Rural Electrification Agency (REA) have set-out clear goals to electrify markets, universities and hospitals with the use of decentralized renewable energy technology, such that the pilot phases of some of its projects have created 5,042 jobs so far.
While there has been growing investments in capital and development projects in the power sector, and even more recently in the Off-Grid renewable energy sector, there has been lesser focus on building the human-capital workforce that would ensure that the projects or initiatives of these investors and companies would be successful and sustainable. This is why the launch of the Powering Jobs Campaign by the global advocacy group – Power For All in July 2019 simultaneously in India, Kenya and Nigeria could not have come at a better time.
Similar scenarios have played out in the past in the oil and gas sector in the country, where there was a huge focus in the oil & gas sector – capital or development projects were executed with the capabilities of foreign experts and talents, who executed projects in the sector but left underdeveloped local content thereby putting Nigeria and Nigerians at the mercy/dependence of expatriates for the maintenance and execution of similar projects.
It was not until the government introduced the Nigerian Oil and Gas Industry Content Development Act in 2010, that companies in the oil and gas sector started to promote local content in the country, with a target of 70% indigenous labor, materials and resources in all oil and gas projects. This has grown local human capital in the Oil and Gas sector which over the years started to see the benefits in the delivery of professional services and also the attraction of investments to the sector.
Therefore, in order to contribute to meeting SDG 7 on Clean Energy access for all and SDG 8 on job creation in Nigeria, the Powering Jobs initiative by Power For All released a job census that provides data on skills gap that can inform policy making and catalyze action within private sector and civil society around building local skills and knowledge, across the decentralized renewable energy sector value chain.
Challenge in the Power Sector
Nigeria’s population experienced a change in its human resources and capacity in 2018. According to a report by the National Bureau of Statistics (NBS), the country has seen an increase in its unemployment rate, going from 18.8% to 23.1% in a year. There is the concern that there may be a low number of qualified and effective staff within the NESI Nigerian Content Consultative Forum to properly monitor and enforce the local content for companies in the sector. In addiditon, minimal training opportunities pose a barrier to meeting the regulation’s goals by 2024, as well as the lack of awareness of this regulation. For the training institutions that are capable of building the needed capacity, there is the challenge of funding to prioritize the goals of the regulation in these institutions.
Implication for Decentralised Renewable Energy Sector
The positive side of this regulatory policy is that it prioritizes the capabilities of Nigerians, where it has not done in the past, for employment and encourages more technical and vocational education and training (TVET) to meet the demand for skills in the sector. These developments similar to the job census report by #Powering Jobs census and campaign shows that there is a demand for human resources to carry out the projects and the local content policy is a very much-needed driver and support for projects in the sector.
The results of the #PoweringJobs jobs census result shows that focusing on building local skills and capacity will for one, reduce the costs of employing foreign experts, who request to be paid for their services in foreign currency, even in the face of foreign exchange instability in Nigeria. Paying for locally-developed capacity would then mean some savings of the country’s relatively scarce foreign exchange and thereby ensuring cheaper use of human resources.
Another challenge that can be resolved by focusing on local content is the reduction on dependence on foreign experts and the growth of the economy by focusing on the direct and indirect jobs that can be obtained when Decentralized Renewable Energy is deployed. This is not to dismiss the needed role that foreign content can play in a country’s development, such as providing, for example, technical insights or the technology transfer necessary for handling or tackling perceiving challenges.
“Powering Jobs” campaign and local content policy
In 2018, when the #PoweringJobs campaign was launched t conduct a comprehensive jobs survey that collated data linking SDG7 to SDG8, in order to close the skills gap through the deployment of distributed renewables and make decision making easier for policymakers using evidence. With the rapid investments and development of projects in Nigeria’s Decentralized Renewable Energy sector, it is clear that the country is being confronted with the challenge the skills gap that exists which is not meeting up with the demands of the growing off grid sector.
The Power for All-Powering Jobs campaign aims, therefore, to galvanize a global effort to focus on building a workforce within the DRE sector, as there is a need to create more awareness, promote behavior change and market activation by mobilizing support for new inclusive energy employment opportunities through partnerships as well as the media. The Powering Jobs campaign also aims not only to fully focus on showcasing the gaps and skills that are in demand in the DRE sector but also seeks to promote policies that push for the inclusion of women in employment processes and shed more light on TVET opportunities existing in Nigeria as well as those on productive use of energy systems.
The goals of the #PoweringJobs campaign includes building awareness around the vast opportunities for job creation and positive economic impact by meeting the energy access employment needs of private and public stakeholders. The campaign also will focus on Behaviourial Change among funders and governments, as well as academic, training and private sector institutions that recognizes workforce training as a benefit, not a cost. The campaign also seeks to drive market activation through increased financial, policy and programmatic support to develop new, equitable, diverse, and inclusive training and employment opportunities. The campaign and the job census data that it produced shows that to achieve all of these goals will require all hands on deck.
Malo is the Nigerian Country Director, Power For All and Dipo-Salami is the Nigerian Lead, Human Capital Development, Power For All