Local Content: Nigeria Saves $2bn on LNG Train 7 EPC

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Emmanuel Addeh in Abuja

The implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act has saved Nigeria the sum of $2bn in the Engineering Procurement and Construction (EPC) contract for Nigeria LNG Train 7 Project.

Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Simbi Wabote, dropped the hint at the 2020 annual capacity building workshop organised by the agency for the judiciary.

The online workshop drew participants, including Justices of the Supreme Court, Appeal Court, National Industrial Court, Federal High Court and external solicitors.

Wabote, stated that contrary to wrong insinuations held in some quarters, ample evidence had proven that sustainable local content practice reduces the cost of oil and gas projects in addition to creating job opportunities and economic prosperity.

He gave example with the LNG Train 7 EPC bid, where Saipem Contracting Nigeria and its consortium won the contract with a much lower bid than its competitor, leveraging its commitment to local content and investments in Nigeria in the last 50 years.

He said: ”In the LNG Train 7 project contract which was recently concluded and awarded, the difference in price between Saipem that had established itself in Nigeria and the second lowest bidder that was coming from outside the country was US$2bn.

“That’s a huge sum of money that this country would have lost if not for the drive for the development of local content.

“The other consortium had no footprint in-country and it proposed to put extra $2bn on the back of the project to develop local capacity to execute the project. This is evidence of cost savings associated with the development of local content.”

Admitting that developing local content and building capacity would always entail some costs at the beginning, the Wabote insisted that such costs ultimately gets reduced overtime and creates much needed jobs and stability in the polity.

He also clarified that the focus of Nigerian Content implementation is not ‘Nigerianisation’, rather it encourages domiciliation of capacities and promotion of foreign direct investments and home grown investments.

On the possibility of recording 100 percent Nigerian content in the sector, the NCDMB boss clarified that the aspiration is neither possible nor desirable, especially for a developing country like Nigeria.

“You still need foreign direct investments. The industry is a very vast business, with high intensive technology. You still need to leave some space for foreign participation and investment to grow the industry.

“But you are going to see 70 percent. That is our aspiration, growing from five percent which was the level when Nigerian content started,” he said.

The Chief Justice of Nigeria, Hon Justice Ibrahim Tanko Muhammed who was represented by Hon. Justice Olukayode Ariwoola described the implementation of local content policies across the globe as an apparatus through which citizens of oil rich countries derive value from crude oil resources.

The Director of Legal Services, NCDMB, Mr Mohammed Umar, stated that no matter how good laws are, without the support of the judiciary, it becomes difficult to succeed.

He said that the essence of the programme was to enable the judges have a good understanding of the local content law, so that when matters around the act come before them, they will be in a good position to dispense justice.