Senate probes local content implementation in oil industry

The Senate Joint Committee on Petroleum Resources (Upstream) and Gas Resources, has commenced investigation into the implementation of local content in the oil and gas industry in the country.

Opening the session of an investigative hearing on the issue on Tuesday in Abuja, President of the Senate, Bukola Saraki, said the National Assembly was concerned with the level of implementation of local content in Nigeria.

Saraki, who was represented by the Leader of the Senate, Sen. Ahmed Lawan, said that most multi-national companies had yet to substantially comply with the provisions of the law.

He said that under the Nigeria Oil and Gas Industry Content Development Act, investors were mandated to consider Nigerian companies as an important element in their project development and management.

“The Nigeria content in this context refers to firms registered in Nigeria in accordance with the provisions of the Companies and other Allied Matters Act.

“The National Assembly is challenged to ensure that the oil and gas industry provides an avenue where more jobs and opportunities are given to qualified local experts in the industry.

“We are here to discuss to know where we are today in the implementation of the Nigeria Oil and Gas Industry Content Development Act since it was enacted in 2010.

“We are also here to know where we have made progress and identify the gaps and where we need help to up the game.’’

Saraki explained that a rich local content was one of the most efficient ways to stimulate the economy for a multiplier effect in different sectors.

To achieve that, he said that full implementation of the Act was necessary because it would help in creating employment among other benefits.

He called on the stakeholders at the hearing to make robust contributions that would propel local operators to have increased capacity, industry knowledge and expertise.

In his remarks, Sen. Omotayo Alasoadura, Chairman, Joint Committee on Petroleum Resources (Upstream), said that the committee was determined to find lasting solution to the problem.

He recalled that the Senate, at its sitting on Sept. 27, 2016, mandated the committee to carry out an extensive investigation into the level of compliance by multi-national companies with the law in the industry.

“The Senate, arising from a debate on the need to ascertain the degree of local content in the industry, mandated the committee to determine compliance with the Act by operators,’’ he said.

Mr Simbi Wabote, Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), said that the board had made tremendous progress since enactment of the Act in 2010.

He said that the board was currently implementing a 10-year strategic roadmap anchored on delivering five pillars of sustainable local content.

Wabote explained that the board had a target of achieving 70 per cent of local content in the next 10 years.

“A lot has been achieved in terms of local content development. It is a key for our nation’s development.

“A lot has also been done to get the agency to its enviable position.

“Part of it is to develop the required technical capability and also to ensure strict compliance and enforcement of the provisions of the Act.

“The other pillar is to facilitate business environment in order that investors will be attracted to Nigeria.

“Then, most importantly is to enhance the organisational capability of the board to carry out its mandate and ultimately create sectoral and regional market.’’

According to Wabote, the board has set up the Nigeria Content Development Fund Account and has mobilised stakeholders towards remittance of one per cent of contracts awarded.

He added that the agency monitored Nigeria content compliance and applied sanctions to defaulting companies in line with Section 68 of the Act, among other achievements.

“Nigeria content has recorded six million training man-hours since the inception of the Act.

“Out of 20 billion dollars spent in the industry from five per cent participation, we have been able to get back five billion dollars into the country.

“And, we desire to increase sales to 15 billion dollars in 2027. Before the Act, all marine activities in the industry were in the hands of experts outside this country.

“Today, we have been able to get back 36 per cent of those marine activities for equitable participation of Nigerians and establish about six world-class fabrication facilities.

“So, today Nigeria is able to handle 60,000 metric tonnes of fabrication capacity in the country. This was at zero level before the enactment of the Act.

“All electrical cables used in the oil and gas operations are manufactured in Nigeria and we are able to manufacture 670,000 of metric tons of pipes,’’ he said.

The executive secretary said before the law came into being seven years ago, all fabrications, engineering and procurement activities were done outside the country.

According to him, the development had resulted in a capital flight of 380 billion dollars from Nigeria in the past 50 years.

Wabote explained that the capital flight necessitated the exporting of jobs that would have been made available for Nigerians, leading to loss of two million jobs.

“There was high unemployment rate due to the dearth of skills and the total local content utilisation before the enactment of the Act was put at just five per cent.

“That was when the government decided to intervene seeing the way the industry was going and it culminated in putting in place the Nigerian Content Act of 2010.

“The main goal of the Act is to develop the capacity of local supply chain for effective and efficient service within the oil and gas industry without compromising standards.

“It is also aimed at enhancing development and inclusion of Nigerian services and manpower.’’

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