When President Goodluck Jonathan, on April 26, 2010, signed into law, the Nigerian Oil and Gas Industry Content Development despite the challenges he faced then as the acting President, Jonathan, knew Nigerians and the national economy could only derive maximum benefits from the Oil and Gas Industry and industrialise if the Nigerian Oil and Gas Industry Content Development Act was implemented to the letter.
Apart from laying to rest the sea of confusion through which the Nigerian Oil and Gas Industry Content Development Act had gone through, it was expected to fill the lacuna created by its absence in the about 50 years of petroleum exploration in Nigeria that pinned the percentage of local content in the oil and gas industry to between 5 to 15 per cent.
What that portends is that of the average $8 billion spent annually in the petroleum industry, only about 5 per cent is retained in Nigeria.
That was why in April 2010, Senator Lee Maeba, the sponsor of the bill (now Act), argued that the Act aimed at granting Nigerians full and fair opportunities to participate and enhance the wealth and income benefits of the oil and gas industry , while ensuring international competitiveness of the materials, equipment and services provided by Nigerian companies.
The highlights of the Act stipulate that the Nigerian Content Management(NCM), the country’s independent operators shall be given first consideration in the award of oil blocks, oil field licences, oil lifting licences and shipping services and all projects for which contracts were to be awarded in the Nigerian oil and gas industry, subject to the fulfillment of such conditions as may be specified by the minister.
Consideration for Nigerian indigenous services as it were for each of its operations stated that the operator shall submit to the Board a succession plan for any position not held by a Nigerian.
Such succession plan shall, it further suggested, provide for Nigerians to understudy each incumbent expatriate for a maximum period of four years. At the end of the four year period, the position shall become Nigerianised.
It also recommended that where Nigerians were not employed for lack of training, the operator shall ensure to the satisfaction of the Board that effort was made within a reasonable time to supply such training locally or elsewhere.
With all these incentives dangled at Nigerians, industry watchers are surprised that no tangible investment has been made in this regard to justify the agitation that spurred the signing of the bill into law.
To the chagrin of pundits in the oil and gas sector , the trillions of naira fleeced through the subsidy scam were not even deployed to harnessing the gains offered by the law.
Thus, experts have reiterated the need for indigenous companies in the country to take advantage of the oil and gas industry’s local content legislation and invest in the sector.
The Managing Director, Nestoil Plc, Ernest Azudialu, noted that unlike the situation in the past 20 years, the local content law has provided an enabling environment for investors to get into the business without regrets.
Basking in the euphoria of the success recorded by Nestoil, he said the company refused to be discouraged even though there were several odds against it at the inception, stressing that its mastery of the local terrain offered it an edge over competition.
According to him: “People want to know how Nestoil made it; but it’s a long story because it dates back to twenty years ago.
“However, today, people who want to get into the oil and gas business would first of all understand that the local content law has provided an enabling environment for people to get into it unlike when we started 20 years ago.
“So with that in mind already, the next thing that would come to your mind would be the finance required to procure equipment and the finance required to get the human resources needed because this is a specialised industry where you are competing with foreign companies only.
“For the local companies, which want to get in now, I think this is the right time to get in; Nigeria has many laws that have asked local companies to create partners, so if you join now and make that investment now, you are going to enjoy it tomorrow. It is an industry that pays – it is difficult to start but once you start and make your in-road, it would start flowing just like Nestoil did 20 years ago.”
The feat he said informed the company’s decision to build one of Africa’s biggest pressure vessel facilities in Rivers State, adding that the project valued at several millions of dollars was expected to be completed in the next six months, although its first and second phases have already started production.
According to him: “It is a very good facility because the government’s local content directive states clearly that pressure vessels will not be built outside the country anymore.
“So, countries like Korea and Japan, which used to build all these pressure vessels for Nigeria will see that we have developed in-house capacity for this level of equipment. It is a very good achievement for Nestoil and goes further to grow our investment locally. It is a facility we are looking forward to and is a very big leap for Nestoil.”
He added that nationally, the growth of Nestoil had been aided by the oil and gas industry local content legislation. He identified shared leadership, investment in human capital as well as culture of excellence as factors critical to building and growing the company’s brand.
“If we were just a small struggling company dabbling into the sophisticated oil and gas industry preserved for giants just decades ago, today we are an international brand recognised for reliability and world class service. We continue to invest and diversify into other technologically advanced areas including oil exploration and production, power generation and distribution and pressure vessel fabrication,” he added
The president, Dr. Goodluck Jonathan, had at various fora told Nigerians to utilise the opportunities in the sector, pointing out that merely earning money from sale of crude oil to pay salaries and build infrastructure was not helping the economy in the desired way.
Jonathan, in his understanding of the sector remarked that: “Until we make sure that the requirements of the industry, at least a reasonable per cent are produced in the country, Nigeria as a nation cannot benefit from the industry.
“Our gross national earning from the sector is more than 80 per cent, so it is from the oil sector that we can industrialise.”
According to him, it was by developing capacities locally and owing assets used in industry operations that the sector could increase employment opportunities, produce and utilise more locally manufactured goods and components.
The lack luster attitude of Nigerian investors in this regard had also not gone down well with the Minister of Petroleum Resources; Mrs. Diezani Alison-Madueke, who is determined to transform the economy.
Be that as it may, she noted that Nigerian Content interventions have galvanised the entire industry, adding that the implementation model adopted by the Nigerian Content Development and Monitoring Board(NCMB) had resulted in successful collaboration between the Nigerian National Petroleum Corporation (NNPC), International Oil Companies, multinationals, equipment manufacturers and local service companies.
In her upbeat manner of spurring industries and corporate entities to action, she said the Act was stimulating steady growth in the areas of engineering, procurement, construction, fabrication, installation, shipping and logistics, drilling and subsurface, equipment component manufacturing, pipe mills, instrumentation controls, banking and insurance.
For the likes of Senator Lee Maeba, and many other Nigerians to be proud that their efforts were not in vain, the need for local brand that would compete with super brand like Heineken of Holland, Guinness of Ireland, Larfarge WAPCO of France, ExxonMobil and Chevron all of USA, Total of France, leveraging on the content law has become imperative.