Reviewing Nigerian Content Implementation


Peter Uzoho

Despite the insecurity, high cost of operation, lack of clarity of terms and the overall high-risk environment associated with the Nigeria’s oil and gas industry, the enactment of Nigeria’s Oil and Gas Industry Content Development (NOGICD) Act of 2010 has remained one of the greatest landmark achievement recorded in the industry within the past 10 years.

NOGICD Act was fueled by the need to deepen the participation of Nigerians and their facilities in the industry so as to reduce the industry’s yearly spend being repatriated abroad.

Before the Act came into force, over 90 per cent of the $20 billion spent yearly in the industry was repatriated abroad because a larger chunk of the contracts were executed by foreign manpower and in foreign facilities.

With only few indigenous manpower and facilities participating in the Nigerian oil and gas sector, the Nigerian content was less than 10 per cent.

Though the implementation of the Act was effective from the beginning, the dynamics changed when the present management of the Nigerian Content Development and Monitoring Board (NCDMB) put in place the Nigerian Content 10-Year Road Map.

This strategy document targets to increase Nigerian Content performance from 28 per cent to 70 percent by 2027, create 300, 000 jobs from industry activities and retain $14billion in-country out of the $20billion annual industry spend.

The 10-Year-Road Map has five pillars namely: Technical Capability Development, Compliance and Enforcement, Enabling Business Environment, Organisation Capability and Sectorial and Regional Market Linkage.

It also has four enablers and they are Funding, Regulatory Environment, Collaboration and Stakeholders Engagement and Research and Development.

What has followed since then has been a flurry of strategic developments and achievements.

Giving an account of his stewardship recently, the Executive Secretary of NCDMB, Mr. Simbi Wabote, said when he took over, the Nigerian Oil and Gas Park, the agency’s flagship project was still a mere plan on paper but has been moved to actual construction in two pilot sites at Odukpani in Cross River and Emeyal 1 in Ogbia Local Government of Bayelsa State.
Each of the parks will create employment for 2,000 persons when they are fully operational and will spur manufacturing of critical oil and gas equipment, tools and spare parts close to oil fields.

The NCDMB recently signed contracts with seven companies for various construction works at the Bayelsa and Cross River Oil and Gas Park and the sand filling and fencing of the Oil and Gas Park site at Ikwe, Onna Local Government Area of Akwa Ibom State.
It also inaugurated Community Interface Committees (CIC) for the first two pilot parks. The committee will liaise between the communities, the contractors and the board and promote community participation, cordial relationship and compliance with the Community Content elements of the NOGaPS project.

The success of the Parks led the Imo, Edo and Rivers state governors to invite the agency to replicate the NOGaPS model in their states.
Still on technical capability, the agency is spearheading the Project 100 Initiative. Already 60 oil and gas start-ups have been identified and the agency is sponsoring the deployment of special interventions for their incubation, maturation and growth into world-class service companies.
This intervention would include capacity building, funding and access to market.

Another major achievement of the board is the provision of equity investment to catalyse the establishment of 5,000barrels per day modular refinery by Waltersmith Refining & Petrochemical Company Limited in Ibigwe, Imo State and in the 12,000 barrels per day Hydroskimming Modular refinery by Azikel Petroleum Limited at Obunagha, Gbarain, Bayelsa State.

The Waltersmith refinery would be completed in May 2020 while the Azikel Refinery would be completed in 2021.

The board is also close to concluding p
artnership agreement for the development of another modular refinery in Calabar, Cross River state before the end of 2019.
Progress has also been recorded in the discussions with investors on the establishment of LPG cylinders manufacturing plant, LPG depots, and gas processing facilities to complement federal government’s LPG penetration initiative.

NCDMB had deployed chartered accounting firms to carry out forensic audit of Nigerian Content Development Fund (NCDF) remittances.
Section 104 of the Nigerian Content Act stipulates that one per cent of the value of contracts awarded in the upstream section of the oil and gas industry must be remitted to the NCD Fund.

The audit, which began in November 2018, has revealed huge amounts of non-remittances from operating and service companies.
At the moment, some companies have owned up to their indebtedness and have started addressing their infractions.
On the issue of few companies that have remained recalcitrant, Wabote said recently that the agency would hand over such companies to the Economic and Financial Crimes Commission (EFCC) for prosecution.

The introduction of the Service Level Agreements (SLAs) by Wabote has addressed the perennial cancer of long contracting cycle in the oil and gas industry.

NCDMB initiated the agreement and has signed the SLAs with the Nigeria LNG, International Operating Companies under the aegis of the Oil Producers Trade Section (OPTS) and Independent Petroleum Producers Group (IPPG).

The SLA has shortened the NCDMB interface on the tendering cycle from 36 months to nine months.
On funding, NCDMB has so far disbursed the Nigerian Content Intervention Fund (NCI Fund) to 11 firms, as part of the efforts to provide accessible credit for Nigerian oil and gas service companies and community contractors with single digit interest rate and five year moratorium.
A total of $160 million out of the $200million NCI Fund has so far been given out.

The Bank of Industry (BoI) is the custodian and administrator of the NCI Fund and NCDMB is working closely with BoI to monitor the beneficiaries and ensure utilisation of the loans for the stated purposes and repayment when due.”

NCDMB also supported the rebuilding of the North East region, which had been impacted negatively by Boko Haram insurgency.
In July, NCDMB completed the training of 107 internally displaced persons (IDPs) under the Fair Chance Initiative (FCI).

The beneficiaries were selected from Borno, Yobe and Adamawa States and were trained on plumbing, electrical, carpentry, GSM phone repair, digital soft skills, soap making and bead making.
Wabote had assured that, “very soon we will launch the training of 1,000 youths in Kano on phone hardware repairs, software installation and entrepreneurship development.

“This programme will develop a pool of local talents for assembly of GSM phones and development of software applications that are currently largely import dependent.”

The achievements of the NCDMB have encouraged stakeholders to increase the clamour for the extension of the Nigerian Content Act to other critical sectors of the economy like power, construction and Information Communication Technology.

Hopefully, the ninth National Assembly will conclude the proposed amendment of the NOGICD Act and extend it to the desired sectors.
Already, the federal government has commenced the process with the the Presidential Executive Orders 03 and 05, which focusses on Local Content in procurement by MDA and Science and Technology.

A former Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu, had consistently argued that the NCDMB had been blessed with successive bright chief executives.

According to Kachikwu, while the pioneer Executive Secretary, Mr. Ernest Nwapa, did a fantastic job in raising the discourse and commitment of industry stakeholders towards local content, the current Executive Secretary brought a lot of energy, passion, skill and commitment to the job.

It was in recognition of these achievements that the NCDMB was recognised as the Government Agency of the Year for Enabling Business by BusinessDay Newspaper.

Indeed, when President Muhammadu Buhari appointed Wabote as the Executive Secretary of NCDMB on September 1 2016, stakeholders within and outside the Nigerian oil and gas industry applauded the decision and described him as the best man for the job.

Wabote had managed Local Content Development for Shell Petroleum Development Company (SPDC) in Nigeria and had also creditably supervised Local Content for the Dutch multinational across Brunei, Oman, Kazakhstan, Australia, Iraq, Qatar, Jordan, USA and new frontier countries.