Implementation of Local Content in Nigeria’s oil and gas industry is gaining tenacity with robust instruments being constructed by the Nigerian Content Development and Monitoring Board (NCDMB), to hoist indigenous companies participation in oil and gas business. CHIKA IZUORA looks at the latest instrument recently unveiled by the agency
When Ibe Kachikwu, the minister of state for petroleum resources handed down a target to the Nigerian Content Development and Monitoring Board (NCDMB), sometime in 2018, that it must ensure that the Nigerian oil and gas industry is able to produce all its needs by year 2027, it was a tall order that requires resilient planning and continuous innovations to that target.
The Minister set the target in Owerri, Imo State during the Nigerian Content Workshop organised by New Planets Projects in conjunction with the Senate Committee on Petroleum Resources Upstream.
He said the Federal Government expects that over the next 10 years, the Nigeria oil and gas industry, in collaboration with foreign investors would have developed in-country capacities and capabilities to produce all its offshore platforms locally.
He said, “I would like to see the Japanese coming; I would like to see the Koreans come here; I would like to see collaborative efforts that will make our oil industry produce everything that we need.”
He acknowledged the giant strides made by the Board in seven years, commending particularly the excellent achievements of the Board’s executive secretary, Engr. Simbi Wabote, whom he credited for working with energy and passion and meeting several targets set for the Board in the past one year.
Though the minister noted that the Nigerian Content achievement in engineering services had hit 80 per cent, he however observed that performance in offshore aspects of the industry was still substantially low and charged international and local operating oil companies to collaborate with the NCDMB to achieve the new target.
Kachikwu, described Nigerian Content as the future of the industry adding, “It doesn’t matter how much money we make, how much gas we produce or alternative fossils we produce; if we do not ensure that a lot of that is captured locally in terms of benefits, we have no stake.”
The minister also underscored the role of the Petroleum Technology Development Fund (PTDF) and the Petroleum Training Institute (PTI) in tackling dearth of local skills in the sector and urged a strong collaboration of the two agencies with the NCDMB, in developing a plan for training youths who are involved in pipeline vandalism, illegal refining and other illicit activities in the oil and gas industry. The training programme will focus on improving their skillsets and getting them to embrace productive activities.
He said, “We need to find a middle-level specialized system of training people in the oil industry, a system that is not necessarily tied to degrees. We need to capture a lot of those in the hinterlands who have finished WAEC or their first diploma and don’t know where to go to but have some unique skillsets. We need to bring them to finishing schools.”
Kachikwu also directed the NCDMB, PTDF and PTI to use existing industry facilities in Port Harcourt and Kaduna to carry out the planned trainings and other bespoke capacity building programmes for industry stakeholders. “We have to provide local competency trainings, relying on support from oil companies in terms of investment and overseas faculty.”
Thus, the launch by the Ministry of Petroleum Resources in conjunction with the Nigerian Content Development and Monitoring Board (NCDMB) of Project 100, is seen as a stimulant to evoke specific industry buy-in and encouragement for indigenous oil servicing companies who have been constrained in the past.
The Project 100 seeks to provide institutional and financial support to 100 indigenous oil and gas service companies, specifically for those offering seismic, marine, engineering and drilling services and will provide financial and non-financial as well as technical support and access to market for the beneficiary companies.
Engr. Wabote, at the unveiling of the initiative said a lot of evaluation criteria were used to trim the number of companies who applied. Only 60 companies were so far chosen among thousands of service companies who applied. Some of the beneficiary companies include Anzor Nigeria Ltd, B2 Oil and Gas Project Ltd, Energeria Ltd, Gemstone Energy Services Ltd, Jite Projekts Ltd and Mafuta Energy Services Ltd.
Wabote said, however, the Board was finalising another financing model. “Within the next couple of months we will launch another financing scheme perhaps without all the bottlenecks that we see today with the BOI and these selected companies will be our focus areas and beneficiaries,” he said.
To ensure the project achieves its objectives, Kachikwu, said his ministry would consider ways of securing import waivers for the implementation of the Project 100, where it is necessary.
The government, according to him, has already approved import duty waiver for importation of modular refineries equipment but however noted that the ministry may intervene with the application of the executive order when it becomes expedient.
Although he said it is the responsibility of the NCDMB to raise the fund, there is really nothing like the government paying for the project because the companies already have their financing structure in place.
The minister, said the nature of government’s intervention makes it impossible to guess how much the project will cost, when he said,”I won’t put a number because I have not done an analysis but it is multi-billion terms of amount of work required in the project. We are basically saying we have reached a point when we can take the leadership in the industry.
“NCDMB is going to house this now. It is not like we are going to be paying money to the companies. They already have their capital structure down their financing.
“We will support them when they need input from us to help and work with various governments. We will look at accessing all the executive order advantages that have been issued. We will look at accessing quickly in terms of import duty waivers. It will depend on the project, it depends on the company.”
He explained that the project is founded on the basis that Nigeria has the capacity to go to the moon.
On his part, Wabote, said the board will generate a source of funding for the project, stressing that there is no end to funding possibility.
According to Wabote, “We will generate another funding possibility for this particular project such that those who are part of Project 100 will also benefit from it. There is no end to funding possibilities. We will also look at the sustainability of this project itself and we will make sure it does not fail.”
He said that over 80 per cent of the intervention that is required for the project implementation is non-financial but the Board is already finalising its financial model with the Bank of Industry (BoI), which will be launched in the next couple of months.
Project 100, is one of many instruments that have been unveiled by NCDMB, is spirited effort to boost local capacity in the industry.
The Board with the Bank of Industry (BOI), have also launched a 200 million dollars Nigerian Content Intervention Fund (NCI Fund).
The NCI Fund was designed to provide loans to Nigerian companies involved in manufacturing in the oil and gas industry as well as firms seeking to acquire assets, especially rigs and marine vessels.
Beneficiaries under the scheme have access to a maximum of $10 million repayable after five years at eight per cent interest rate.
The Fund covers contract financing for Nigerian oil service providers, contract financing for oil and gas community contractors and contract and loan refinancing for service companies that already have facilities with Nigerian banks.
The Fund will be disbursed directly by the BOI, with community contractors able to access N20 million which they will repay with five per cent interest.
For sustainability of the initiative government expects financial institutions, oil companies and other stakeholders to grow the Nigerian Content Intervention Fund to $1 billion.
Kachikwu said of the Fund, “ The Fund needs to be sizeable to finance big ticket items. We will work internally, first to get BOI to contribute its counterpart funding. I also expect the oil industry to contribute. I will like to see investments drives that will bring in Foreign Direct Investments into this Fund. “
The Fund is expected to be applied in acquiring assets and business driven by cutting edge technology and not facilities that already exist in-country.
The Fund is the realization of NCDMB’s efforts to address persistent funding challenge that hindered capacity and growth of local service providers in oil and gas.
The Board has consistently channeled its efforts into supporting the Federal Government’s drive to stop importation of petroleum products, and the Fund is expected to strategically help achieve 100 per cent local fabrication of modular refineries being promoted by the government.
Aside the Fund, the NCDMB, has another $100 million set aside for Project Finance, Asset Acquisition & Contractor Finance under its Nigerian Content Intervention Fund (NCIF).
The Contractor Finance Fund was unveiled less than a year after the Board sealed a similar deal with the Bank of Industry (BoI). The BoI/NCDMB $100 milion initiative is specifically meant for the manufacturing of components in the oil and gas industry. The interventions are drawn from the Nigerian Content Development Fund (NCDF), which value is put at about $600 million.
On the initial $100 million for manufacturing in the oil and gas, the understanding is that BoI would be responsible for its deployment to qualified contractors. NCIF provides long-term facilities to contributors to NCDF at eight per cent interest rate.
LEADERSHIP learnt that as soon as Board finalised the process for the release of the initial $100 million (about N31 billion) to BoI for the pilot phase, contributors to the Fund with manufacturing proposals in the oil and gas industry can approach BoI for the NCIF facility, which has a single obligor limit of $10 million and tenor of up to five-10 years.
Responding to the Project 100 initiative, chief executive officer, Oilserv Limited, Mr Emeka Okwuosa, said that the Project 100 is a very good idea because some of stakeholders have been saying this in different ways.
“Some of us that have built capacity all the years have to be sure that it will be utilised. If I have capacity based on $100 million lying there and maintaining these equipment, I’m employing people and don’t have jobs for them, how does it work? There has to be a process of guaranteeing jobs for companies that have invested.
It is not only Oilserv, there are quite a few other companies who have invested and taking the risks. It is important that going forward, there would be guarantee jobs, instead of trying to give contracts or opportunity to briefcase contractors.
Okwuosa, said Project 100 concept will help address that because they will look at few companies with capacity and help them raise fund for business and this will enable us employ more people.
Which party candidate would you vote for president in the 2019 general election?
- Muhammadu Buhari (APC) (53%, 6,068 Votes)
- Atiku Abubakar (PDP) (36%, 4,155 Votes)
- Other Party Candidates (6%, 709 Votes)
- I Will Not Vote (5%, 543 Votes)
Total Voters: 11,475
How To Permanently Cure Premature Ejaculation, Weak Erection And Last Longer in Bed With Increased Manhud
Why Buhari Will Win
PMB Won’t Leave Niger Delta Behind – Dokubo
Polls Shift: INEC Acted To Frustrate Opposition’s Rigging Plot- BCO
JUST IN: Abdulsalami C’ttee, INEC Officials Meet
WORLD7 hours ago
Revealed: How I Was Serially Raped By Catholic Priest
NEWS13 hours ago
Tsav, Others Accuse OBJ, INEC Officials Of Conspiracy To Rig Polls
WORLD8 hours ago
Gaddafi’s Son, Saif, To Vie For Libyan Presidency
NEWS14 hours ago
Police Arrest Suspect With 2 Bags Of Specimen Ballot Papers In Sokoto
NEWS13 hours ago
Accord, APC In Alliance Against Gov Wike Rivers – Briggs
NEWS13 hours ago
Gov Okowa Visits Family Of Slain Aide, Ngozi Ijei
AFRICA8 hours ago
Court Charges Politician Over Fake Election Results
NEWS13 hours ago
Ag CJN Muhammad: Between NJC Rule And Court Order