Reps probe utilisation of multi-billion dollar accrued to NCDF

The House of Representatives on Thursday unveiled plans to probe the utilisation of multi-billion dollar accrued from oil and gas industry into Nigerian Content Development Fund (NCDF).

The resolution was passed sequel to the adoption of a motion sponsored by Hon Kolade Akinjo who stressed the need to ascertain the degree of implementation of the requirement of Local Content in the Nigerian Oil and Gas industry.

In his lead debate, Hon Akinjo observed that the Nigerian Oil and Gas Industry Content Development (NOGIC) Act was enacted to promote indigenous participation in the management and control of the Oil and Gas Industry.

According to him, in 2002, the National Committee on Local Content Development (NCLCD) discovered that local participation in the upstream sector of the oil and gas industry in Nigeria was less than 5%, meaning that 95% of the then yearly expenditure of about $8 billion left the country through capital flight.

“The National Committee on Local Content Development (NCLCD) proposed initial target of 40% by 2005 and 60% by 2010 for aggregate local content value in the oil and gas industry from all the categories.

“The House further notes that the Nigerian Content Development and Monitoring Board (NCDMB) was created to regulate and monitor the implementation of the provisions of the Act and ensure that the oil and gas companies comply with the local content practice in the industry.

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“The House observes that many Nigerians who worked and gained experiences in International Oil Companies (IOCs) among others have established their own oil and gas outfits.

“The Act provides that there should be a preference for Nigerian companies whenever a bid is made for the license, permit or contract in the industry.

“The House is conscious that the Petroleum Technology Development Fund (PTDF) and the Petroleum Training Institute (P.T.I.) were established to train Nigerians as professionals so as to meet the labour force demands of the oil and gas industry.

“The House is also conscious that the PTDF, through its Overseas Scholarship Scheme (OSS), has trained over 2,417 M.Sc. and 642 PhD students while 897 students received training through its Local Scholarship Scheme (LSS),” he noted.

Hon Akinjo argued that despite the benefits accruing to indigenous oil and gas firms from the NOGIC Act, there is still a low involvement of indigenous companies in the industry.

He observed that the NOGIC Act has a threshold that applies to projects of $1 million and above, yet the targets stipulated in the Act are far from being met, adding that the: “1% of total contract sums awarded in the upstream sector is placed in the Nigerian Content Development Fund established for the purpose of funding the development of local content in the Nigerian Oil and Gas industry.

“The House also acknowledges that the oil and gas sector accounts for about 35% of Nigeria’s GDP and 90% of foreign exchange earnings and as a result, If Nigeria achieves local content compliance of about 60%, then Nigeria’s economy will achieve a major boost on account of the oil and gas sector.

“The House is disturbed that since 2010, the Nigerian Content Development Board has not transmitted a review of the local content schedule in the NOGIC Act to the National Assembly as stipulated in Section 102 of the Act.

“The House observes that Indonesia, Venezuela, Kazakhstan, Angola and Brazil, through specific legislations have had local content successes and Brazil, in particular, the average local content commitments resulting from bid rounds has increased from 27% to over 84%.

“The House recognizes that in Angola, the local content target has been met for unskilled workers and has been exceeded for midlevel staff while in Malaysia, the utilization of the local content in upstream oil and gas projects is in excess of 54.15%.

“The House is worried that Angola, Brazil, Malaysia among others have achieved higher local content levels than Nigeria even though all four countries discovered oil about 60 years ago and despite 9 years of implementation of the Nigerian Oil and Gas Industry Content Development Act (NOGIC), Nigeria is still importing over 70% of goods and services in the offshore and deepwater projects while also failing to meet the obligation of providing 100% of goods and services for land and swamp operations by Nigerian indigenous businesses,” he stressed.

While ruling, Deputy Speaker, Hon. Idris Wase mandated the Committee on Nigerian Content Development and Monitoring to investigate the extent of the utilization of the 1% NCF in capacity building, human capital development, project implementation, especially in the catchment areas and value addition in the industry.

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