Local Content Journey In Nigerian Oil And Gas Industry – By Engr. Simbi Wabote, Executive Secretary, Nigerian Content Development and Monitoring Board

*Photo: Engr Wabote *

ES TALKING POINTS AT THE BREAKFAST MEETING WITH GUILD OF CORPORATE ONLINE PUBLISHERS (GOCOP)

Date:  17th February 2022

Lagos.

Protocols

• The President of Guild of Corporate Online Publishers (GOCOP)
• Distinguished online publishers and senior journalists
• Colleagues from the NCDMB

1. I am honoured and delighted to hold this breakfast meeting with this important segment of the media. As earlier mentioned by the Manager, Corporate Communications the importance of online media in today’s journalism space cannot be overemphasized.
2. To underscore the above, members of the Corporate Online publishers are distinguished media practitioners, who rose to the zenith in the mainstream media before veering off to set up your own online publishing business.
3. I can see some of my friends in your group here, who are members of the Nigerian Guild of Editors, the elite group in the Nigerian media space.
4. Let me underscore the importance the media with this famous quote by Thomas Jefferson, 3^rd President of the United States, from 1801 to 1809. He said and I quote, “Were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.”

• Why have we convened this breakfast meeting? 

• First, we want online publishers to understand the importance of Nigerian Content to the national economy; and to continue to advocate for Local Content in all spheres of the Nigerian economy. (This the first time we are formally engaging online publishers.) 

• The COVID-19 pandemic brought home the reality that every economy needs to develop local capacities and capabilities in the core sectors of its economy. So, all hands must now be on deck to push the Local Content narrative.

• Secondly, we want to use the opportunity of this engagement to give a historical excursion of the reason for the Nigerian Content imperative; the journey so far; and our plans going forward.

• Thirdly, we want to have a frank conversation with online publishers and encourage your members to censor fake news using the instrumentality of the law and self-regulation procedures, so you can maintain the enviable reputation you have earned in society.

1. Our guest presenter, Mr. Kemela Okara of Vale Partners has spoken eloquently on Media practice and the Law.

1. Personally, I believe that the social media space and online media should not be gagged by laws but must be regulated in such a manner that encourages the freedom of expression enshrined in the 1999 Constitution as amended. The free exchange of ideas should be allowed to blossom. However, citizens must not take the liberty to libel or slander one another.

1. As we all know, your freedom begins where the other persons freedom ends. As online publishers, you have a huge responsibility to condemn and weed out the bad eggs in your profession, and our society generally.

1. Some of the online media platforms are undermining government’s noble intentions of bringing in technocrats and professionals to serve as appointees because of the targeted and unwarranted attack against these persons under the cloak of investigative journalism, thereby tarnishing the image of your wonderful profession. 
2. We would get to these issues in detail much later in our discussions.
3. LOCAL CONTENT JOURNEY IN NIGERIAN OIL AND GAS INDUSTRY

Prior to the adoption of local content, the Nigerian oil and gas industry was characterized by:

1. Revenue focus with little emphasis on in-country value addition;
   1. Massive capital flights of over $380 Billion and an estimated two (2) million job losses over a 50-year period;
   1. The local content in the oil and gas industry was less than 5%.

1.  Former President Olusegun Obasanjo directed NNPC to introduce Local Content Policies in the oil and gas industry as part of our national economic development imperatives sometime in 2004.

1.  Following the presidential directive, NNPC issued 16 and 23 Directives in 2005 and 2006 respectively to drive local content as a key development imperative. These directives further raised the consciousness in the oil and gas industry and moved the needle a bit in getting some in-country value addition across the oil and gas value chain.

1. Having witnessed initial resistance to the NNPC Directives by most of the E & P companies, Government felt it was imperative to give legal backing to the directives and provide an all-encompassing framework for the development of Nigerian Content in the oil and gas industry. Hence, the NOGICD Act was enacted in 2010 and signed into law on 22nd April 2010.

1. The NOGICD Act, 2010 established NCDMB as the sole agency of the Federal Government with the responsibility for driving Nigerian Content in the oil and gas industry.

• The key thrusts of the NOGICD Act include the following:
  • Maximize utilization of Nigerian resources, that is, goods, services and assets
  • Maximize participation of Nigerians in the oil and gas activities
  • Attract investments to the Nigeria oil and gas industry; and
  • Link oil and gas sector to other sectors of the economy

21.         Let me inform you that the focus of the NOGICD Act is not “Nigerianization” of the oil & gas industry, but “Domiciliation” and “Domestication” of value-adding activities.

22.       The NOGICD Act defines Nigerian Content as “the quantum of composite value added to or created in the Nigeria economy by` a systematic development of capacity and capabilities through the deliberate utilization of Nigerian human, material resources and services in the Nigerian oil and gas industry.”

23.      Some of the key provisions of the NOGICD Act that enable the delivery of the Board’s mandate are as follows:

24.        Sections 3, 12, and 28 of the NOGICD Act together provides for first consideration to be given:

1. to Nigerian operators in the award of oil blocks and licenses,
2. to Nigerian goods and services in the evaluation of bids, and
3. for the employment and training of Nigerians in any project executed in the Nigerian oil and gas industry.

25.     These provisions are very fundamental and are at the core of the application of the Nigerian Content Act.

26.  Sections 20, 21, and 22 of the NOGICD Act clearly stipulates our touchpoints during pre-qualification, bidding, and award stages of the oil and gas tenders to ensure local content provisions are not circumvented.

27.   Section 104 of the Act requires that the sum of one percent of every contract awarded to any operator, contractor, subcontractor, alliance partner or any other entity involved in any project, operation, activity or transaction in the upstream sector of the Nigeria oil and gas industry shall be deducted at source and paid into the Nigerian Content Development Fund (NCDF). This provision has enabled the Board to fund several activities necessary to implement the provisions of the Act.

28.      Section 70 of the Act lists out the functions of NCDMB to include the following:

1. Monitor Nigerian content compliance by operators and service providers.
2. Engage in targeted capacity building interventions.
3. Set minimum Nigerian Content levels for project activities.
4. Conduct studies, research, investigation, workshops and trainings aimed at advancing the development of Nigerian Content and
5. Manage and Grow the Nigerian Content Development Fund

•   In the past 11 years, the NOGICD Act has been implemented in 3 phases:

Phase 1:  2010 – 2012: Transition from NNPC-NCD to NCDMB; Temporary offices in Yenagoa, Bayelsa State; Pioneer staff recruitment & training; Benchmark studies on LC practices; Created awareness on opportunities in the Act

•   Phase 2: 2013 – 2016: Implementation of CDIs & deployment of compliance monitoring tools- Participated in bids and enforced compliance with NC requirements; Monitored compliance with NC commitments in bids; Applied sanctions on defaulting companies; Achieved 26% Nigerian Content as at end 2016

•   Phase 3: 2017 – 2027: Implementation of a 10-Year Strategic Roadmap to achieve 70% Nigerian Content in the Oil and Gas Industry.

•  The 10-Year Strategic Roadmap in underpinned by 5 pillars namely – Technical Capability Development, Enabling Business Environment, Organisational Capability, Sectorial & Regional Market Linkages and Compliance & Enforcement.

•   4 Enablers, namely – Funding, Regulatory Environment, Collaboration &                   Stakeholder Engagement and Research & Statistics.

• Using these provisions, and the roll-out of the 10-Year Strategic Roadmap, the following achievements have been recorded in the oil and gas industry with the implementation of the Nigerian Content Act.

• Increase of in-country value retention from 26% in 2016 to 42% in 2022.

• Nigeria moved from near zero participation in the oil and gas sector to the point that our indigenous operators such as SEPLAT, AITEO, EROTON, and others are now responsible for 15% of our oil production and 60% of our domestic gas supply.

•  Before the Act, we had annual spend of $20 billion, with little or nothing retained in-country. Today, we now spend more than $8 billion in-country per year.

• We now have 2 world-class pipe mills and 5 impressive pipe coating yards

More than 40% of marine vessels used in the oil and gas industry are now owned by Nigerians.

•  In fabrication, today Nigeria can handle fabrication of more than 250,000 Tonnes per annum.

• Over ten (10) million training manhours have been delivered via our Human Capacity Development Programs. No surprise that our indigenous workforce was able to sustain oil production at the peak of the COVID-19 pandemic lockdown.

• Over 50,000 direct jobs have been created on the back of the implementation of the NOGICD Act.

• Completion and commissioning of our 17-storey headquarters building – the Nigerian Content Tower in Yenagoa, complete with a 1,000-seater conference auditorium and multi-level car park.

• Completion of 10MW power plant for the supply of electricity to the Nigerian Content Tower and the industrial park in Bayelsa State.

• Completion and commissioning of the 5,000bpd Waltersmith Modular Refinery at Obigwe, Imo State; the refinery is currently in operation with the products completely sold out.

•  Launched the $350million Nigerian Content Intervention Fund managed by the Bank of Industry and NEXIM Bank for single digit loans for Asset Acquisition, Manufacturing, Loan Refinancing, Working Capital and Loan for Women in Oil and Gas.

•  The only infrastructure in Africa for FPSO integration is available in Nigeria. The Egina FPSO which is the largest in the world was integrated at the SHI-MCI Yard in Lagos.

• Completed GSM training scheme for about 4,000 trainees in Kano, Bauchi, Yobe, Kaduna, and Cross River States as part of development of linkage sectors.

Completed the upgrade of two (2) Vocational Technical Colleges in Akwa Ibom and Enugu states.

•  We launched NOGTECH HACKATHON and ENACTUS STIC to nurture innovation amongst our young minds.

• NCDMB inaugurated a $50million Nigerian Content Research & Development Fund to drive basic research, commercialization of research breakthroughs, establishment of Centers of Excellence, and to sponsor University endowments.

•  The Board floated a $50m special loan product for women in the oil and gas business to enable empowerment of the womenfolk in the industry.

•  We also established another $30m Working Capital Fund to support oil and gas service companies. Both the Women and Working Capital funds are managed by Nexim Nigerian Export-Import Bank.

•  Last Thursday we secured the approval of our Governing Council to set up a USD$50 million fund for NOGAPS Manufacturing Product Line, to be dedicated to companies that would operate in the Nigerian Oil and Gas Parks, being constructed by the Board in Bayelsa and Cross River States. The beneficiaries would engage in the manufacturing of equipment components used in the oil and gas industry and linkage sectors.

• Capacity Development Initiative for the Completion of the Block Tower and Workshops in the PTDF Skills Development Center at Omagwa, Port Harcourt, Rivers State.

• The level of Expatriate Quota has continued in a downward trend due to our stringent monitoring activities and collaboration with the Ministry of Interior. We continue to utilize the Exchange Program and the Understudy Program under Expatriate Quota regime to develop required skills in the industry.

•  Construction of oil and gas industrial parks spread across six (6) states complete with the provision of infrastructure and utilities to enhance local manufacturing.

• Partnership for the local manufacturing of 1.2million composite LPG cylinders per year with the 1st phase scheduled for commissioning in 2022.

• Partnership for the establishment of additional modular refineries in Bayelsa and Edo States.

• Partnership for the construction of 300MMscfd gas gathering hub for gas supply into the OB-3 pipeline in Edo State.

•  Partnership to deepen LPG utilization in the North with the roll-out of LPG bottling plants and depots in ten (10) Northern States of Kaduna, Bauchi, Katsina, Kano, Nasarawa, Niger, Plateau, Gombe, Zamfara, Jigawa and Abuja.

• Partnership to establish base oil manufacturing plant in Omagwa, Rivers State.

We now boast of very high engineering design capacity as Nigerian companies now have the required skills to do conceptual, FEED, and detailed engineering designs.

• We now have capacity to manufacture low, medium, and high voltage cables and paints that can match any standard or quality in any part of the world.

These are just a few of the achievements through the adoption and implementation of local content in the oil and gas industry.

• Now that Nigeria has a well-established local content in the oil and gas industry such that other nations are even coming to learn from us, we need to now extend it to other sectors of the economy to further drive our National Development in the growth trajectory.

• It is important to state here that our plan in NCDMB is that by 2027, we will ensure 70% Nigerian Content; creation of 300, 000 direct jobs; retention of USD$13Bn of the estimated USD$20Bn spend in the oil and gas industry; ensure the domiciliation of major fabrication yards and manufacturing hubs in-country. These are no mean targets we have set for ourselves.

•  However, we are confident of hitting these targets, if not surpassing them, because of the can-do spirit of the Nigerian people.

• I will conclude by saying that the Nigerian Content imperative is a journey, a marathon one for that matter. We will require all hands to join forces with NCDMB and government to pursue this cause in ensuring that the benefits of the oil and gas industry is retained maximally in Nigeria.

•  Let me once again express my gratitude to the Guild of Corporate Online Publishers for the support you have provided to the Board in the last five years that I have been on the saddle as the Executive Secretary.

•  I do not take your support for granted.

•  Let me again emphasise the need for media practitioners, especially in the online media, to self-regulate and checkmate your colleagues who have deployed their platforms to propagate falsehood and perpetrate extortionist practice.

•  As you are aware, I dragged one of such platforms, Pointblank News to court in the United States and I am determined to pursue the case to its logical conclusion.

• I will be willing to share with you some background to the matter so that you can treat the story professionally when next it lands on your desk.

•  Thank you all for your attention.

Engr. Simbi Wabote (FNSE, FIPS)

Executive Secretary,

Nigerian Content Development and Monitoring Board

Thursday,17^th February 2022.