When lawmakers brainstormed on local content in oil and gas industry

The punctuality of the members of the National Assembly underscored the importance they attached to the two-day retreat. To further stress its seriousness, they left their bases in Abuja to Lagos Intercontinental Hotel in Vitoria Island for the event.

The retreat entitled “On Boarding Capacity Building Programme for Members of the Senate and House of Representatives Committees on Nigerian Content Development” had the theme: “Building Capacity for Effective Oversight towards the Realisation of the Objectives of the NOGICD Act, 2010 and its Amendment”. Issues in Nigerian local content in the oil and gas sector, as well as the laws guiding the initiative were dissected over the two days. They also examined the performance of the Nigerian Content Development and Monitoring Board (NCDMB) established by the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010.

Participants, who are members of the Senate and House of Representatives committees on Nigerian Local Content sought avenues to better discharge their constitutional responsibility of lawmaking and oversight in the sensitive, all-important oil and gas sector of the Nigerian economy.

Declaring the retreat open, the Chairman, Senate Committee on Local Content, Senator Teslim Kolawole Folarin, said the lawmakers had the opportunity to boost their knowledge of the law governing Nigerian local content and learn more about the mandate of NCDMB, its governing Act, identify areas of amendments and further understand their oversight functions. He said the oil and gas sector “is the dominant sector of our economy hence the need to pay special attention to the activities in sector.”

Folarin said: “With the dwindling revenue accruable to government of the federation from other key sectors of the economy, the enforcement of the NOGICD Act 2010 will enhance in-country value creation and retention and generate employment for Nigerians across the industry.” He noted that “while we are building on the investment of the international oil companies (IOCs), we have the responsibility as a legislature to protect the Nigerian industry.”

According to him, since the inauguration of the current National Assembly, “we have sought to significantly add value to the local content initiative to increase the impact and the enforcement of the NOGICD Act as well as work with the NCDMB to achieve success in its mandate for the overall interest of all Nigerians.” He said the Senate and the House of Reps “will therefore continue to collaborate with the NCDB in understanding the challenges of the regulators and the industry at large with a view to providing necessary legislative support for the Board’s drive to enforce the NOGICD Act.”

In his speech, the Chairman, House of Reps Committee on Local Content, Hon. Legor Idagbo, said many areas of the local content in the Nigerian oil and gas sector needed twitching. He regretted that the contribution of the oil sector to the GDP of the country was less than 10 per cent “and this is a sector which gives the country 65 per cent of its revenue and about 85 per cent of all our foreign exchange.”

Idagbo said: “What we want to see moving forward is how we can begin to ensure that the sector creates maximum jobs, how we can begin to ensure that Nigerians benefit maximally from the sector.” One of the issues he noted was the non-functioning refineries and expressed the hope that when we refine petrol locally, and when the refinery by Dangote comes on stream, there would be more petrol in the country, thereby freeing up funds expended on haulage of imported products, and payment of subsidy for which N750 billion was budgeted in the 2020 appropriation. Such freed funds he noted, “will do a lot in the sector in terms of creation of jobs and developing critical infrastructure that would help us in the sector.”

Idagbo said his committee is amending the NOGICD Act to cover areas not touched by the 2010 Act. “We are also going to commence strict oversight, and in over-sighting, we will ensure that all the right things are done. We will ensure that all the IOCs do the right thing in terms of local content. We hope that by the time we are done, Nigeria would get more value from the sector than we are presently getting.”

The NOGICD bill, according to him deals mainly with the oil and gas sector but there are other critical sectors that this bill needs to be expanded to. “We have talked about the solid minerals sector, how the Chinese have chased Nigerians out of business in that sector. There is also the power sector, the ICT sector, the infrastructure sector and so on. We need to ensure that there’s local content compliance in those sectors. That is the only way we can create massive jobs for Nigerians in those sectors.”

He said Nigeria must think outside the box to see how Nigerian companies can have a fighting chance against the foreign giants. While doing this, he said the lawmakers are also trying to create a delicate balance. “We want to encourage the IOCs to come and invest in Nigeria. We don’t want the bill to contain stringent provisions that would chase away investors. All we are saying to them is that as you come into Nigeria, you should operate in such a way that Nigerians can benefit from your operations and from your activities.”

What has the NCDMB Done?

The Executive Secretary NCDMB, Simbi Kesiye Wabote, who delivered a paper entitled “Implementation of Nigerian Content Act: the story so far,” hinted that the NCDMB was targeting $360 million as annual turnover from its various partnerships in commercial ventures. He gave some of the ventures as 5,000 barrels per day Waltersmith Modular Refinery in Ibigwe, Imo State and the 12,000bpd Azikel Hydroskimming Modular Refinery in Bayelsa State. He said other partnerships were the 400,000 units per day LPG Cylinders manufacturing plant at Polaku, Bayelsa State; a 168,000 metric tonne per annum loading and off-loading LPG terminal in Koko, Delta State and 48,000 litres per day facility in Port Harcourt, Rivers State for the production of base oil from used engine oil.

Wabotem an accomplished enginer, added that NCDMB through the NOGICD Act also achieved the retention of about $9 billion annually from the average $20 billion industry spend. He added that through the implementation of the Act, about 9 million man-hours had been achieved in training while indigenous players now own about 40 per cent of marine vessels that operate in the Nigerian oil and gas sector.

On issues affecting local content development and how to tackle them, Wabote said there was “the drought of Final Investment Decisions (FID) on major oil and gas projects,” and charged that “one major project should be sanctioned in the industry every two years interval to ensure continuous use of capacities and capabilities established in-country and sustainability and growth.”

The NCDMB boss sought the involvement of relevant government and private sector agencies in the negotiation of foreign loans to ensure due consideration of Local Content requirements in the foreign loans and the attendant projects. The NCDMB boss stated that the successes achieved by the board are in states of the federation, and the Senate acknowledged this.

Folarin said the upper legislative chamber notes the achievements of the Board in its years of driving local content, saying key among these were “the creation of an enabling environment for indigenous companies to thrive in the oil and gas industry; promotion of knowledge transfer, which has increased the role of Nigerians in the sophisticated industry; deepening in-country technical capacity in the oil and gas industry; ensuring Nigerian content implementation through mobilisation of appropriate bills, policies and frameworks and creating industry contribution to the national GDP and facilitating access to Nigerian made goods and services to regional markets.”

The NCDMB achievement the Senate saw as a landmark and for which Folarin lauded the board was its introduction of the Nigerian Content Intervention Fund (NCI) Fund, a pool of funds made available by the board, managed by the Bank of Industry for the purpose of meeting specific financial challenges of indigenous players in the oil and gas industry.

However, the Senate Local Content Committee chairman said “the issue on the front burner now is the amendment of the NOGICD Act to bring it up to speed with the current realities in the industry.

On the awareness of the local content in, particularly the South West region, Folarin said Nigerians who are active players in the oil and gas sector know about local content, mainly because the 2010 Act talks about only oil and gas. “Because of the success of the Act and the NCDMB, the president signed Executive Order 3 and Executive Order 5 that deal with MDAs. If you have been running an Act since 2010, there would be areas you’d have discovered need amendment. Secondly, other sectors of the economy too need a law backing local content, like power, construction, ICT etc. The challenge is: Do we put them under the same roof and so on? So, the idea of the retreat is to get a whole lot of perspectives, which we have got from the papers presented. We shall now go back to sit down and look at ways to harmonise the issues.”

He said “we have a technical committee that’s doing a wonderful job and members have also listened to what people are saying. These will help us in moving forward.” A member of the technical committee, Mr. Bamidele Ajibola, who gave a brief of his committee’s work at the retreat, among other speakers, said his committee’s role was to strengthen current legislations around local content in the oil and gas industry as well as find ways to extend the gains brought by the NOGICD Act to other sectors of the economy.