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Nigerian Content: Petroleum Minister and the domination of IOCs

By Yemie Adeoye
PRIOR to the appointment of the current Minister of Petroleum Resources, Mrs Diezani Allison-Madueke, and the subsequent signing into law of the Nigerian Content Act, the domination of International Oil Companies (IOCs) in the upstream sub-sector of the Nigerian oil and gas industry was an issue that past administrations either considered as part of the system or simply felt all was well enough and requires little or no attention.

*Mrs. Diezani Alison-Madueke, Minister of Petroleum Resources.

Hence, when the Petroleum Minister initiated the move that resulted in the signing of the Nigerian Content bill into law on April 22, 2010 by President Goodluck Jonathan, not a few stakeholders expressed doubts on how far she could withstand the might of IOCs, especially as she is perceived as a product of the IOC’s.
Specifically, the NOGICD Act was signed into Law on the 22nd of April 2010 heralding a new implementation framework for the Nigerian Content Policy of Government. The concurrent establishment of the Nigerian Content Development and Monitoring Board (NCDMB) with a clear mandate to superintend over all matters pertaining to NC development in the Nigerian Oil and Gas industry provides unfettered impetus for addressing the challenges of promoting indigenous participation in industry activities.

It is estimated that over 150 times more jobs are created in other countries than in Nigeria on the back of Nigerian projects at the expense of National development. Apart from the obvious negative impact of unemployment on the economy, poor participation of indigenous companies in juicy oil contract had  denied the nation of opportunities for industrialization and technology transfer;

Before the law was enacted, the domination of the IOCs continued unchecked even though a division was created by the Nigerian National Petroleum Corporation (NNPC) as a measure to fight the menace.

But to what extent can such a division challenge and stop the IOCs without appropriate law in place? Enforcement of the guidelines on Nigerian Content was therefore a difficult thing to do by officials saddled with the responsibility of ensuring compliance. Indeed, the news filtered around that the first Group General Manager of the Nigerian Content Division was sacked for stepping on toes of those considered to be highly placed and benefiting from the domination of the IOCs.

The estimate of jobs going to local firms remain below 20 per cent of the annual industry spend of over $18 billion and the Nigerian Content achievements of  IOCs remain mainly as paper work while physical assessment request was always rejected by top Nigerians working with IOCs.

Another victim of the attempt by IOCs to frustrate the participation of indigenous companies lost his job as the head of the Nigerian Content Division in one of the IOC’s on  allegations relating to giving the true information about the company’s implementation process of the Nigerian Content Policy.

Also senior officials of multinational oil producing firms during an interaction in Lagos before the enactment of the Nigerian Content Bill into law noted that the implementation of the policy continued to suffer setbacks because top Government officials were acting as agents of foreign oil services firms.

According to these officials, some members of the National Assembly at that time were known to be champions in spearheading negotiation for award of contracts for foreign oil services firms executing jobs in their home offices located in Houston, United States (US) and Aberdeen in Scotland among others. “How can we expect success in the implementation of the Nigerian content policy when 70 per cent of managers in a company belonging to a Senator committee are expatriates?”, they queried.

The official noted that this was the main reason why Allison Madueke should be commended for the passage of the bill and the signing of it into law by President Jonathan against all odds and resistance by top Government officials benefiting from domination of foreign oil services firms.

At the unveiling of the Nigerian Content Act recently, the Petroleum Minister stated that the administration of President Jonathan was determined to make the huge investment in the oil and gas industry to impact positively on the economy and the lives of Nigerians through the new law.

“We are determined to get this right and to make it work. That is why the Bill was signed into law only a few days after it was presented to me to enable us go to work expeditiously,” she said.

Alison-Madueke lamented that before now the impact of the over $18 billion annual spend in the oil and gas industry was not felt in the Nigerian economy because most of it was transferred to other countries to import materials and services for the industry because of the absence of a law to force the International Oil Companies, IOCs, and other players in the industry to source materials and services locally.

“With the Act now in place, operators and service companies providing services to the Nigerian Oil and Gas industry will finally be required ‘by law’ to perform designated scopes of work set out within the Act in Nigeria,” she declared.

In setting the implementation agenda, she mandated the Nigerian Content Monitoring and Development Board to commence the full implementation of the Act to make Nigerian Content count in all industry activities; ensure that the critical operations of the industry suffer minimum disruptions; identify critical resources required to meet the targets set in the schedule to the Act; embark on a comprehensive enlightment programme to educate stakeholders on the Act’s provisions and opportunities presented by the Act for Nigerians especially the inhabitants of the oil producing areas;

To implement her mandate, Engineer Ernest Nwapa, former Group General Manager of the Nigerian Content Division was appointed as the Executive Secretary.

His appointment was again approved by Allison-Madueke because of her understanding of the challenges faced by the Nigerian Content Division of NNPC  as a former Executive Director of Shell Petroleum Development Company (SPDC).

Achievements of the Act
Engr Nwapa recently gave account of his 100 days in office and was quick to list achievements recorded by the board during a media workshop in Yenagoa, Bayelsa State. According to him, the implementation of the Act based on the mandate of the Petroleum Minister has resulted in the establishment of the headquarters in Yenagoa, Bayelsa State.

The board he said has also put in place a functional management team, professional cadre and support staff up and ramping up in executive capacity.
Nwapa disclosed that contracting strategies have been adapted to the law provisions to promote investment by Nigeria companies in implementation status of key equipment. For instance, he noted that marine vessels are being put up for Nigerian owner category.
Also on the organisational development, he disclosed that professional services support have been deployed to expand and deepen the implementation of the Act.

Concerning operational developments, Nwapa pointed out that tenders  subjected to full requirements of the law  has resulted in sharp increase in work load for local companies and employment opportunities, He said  that interventions to establish marine facilities in the country are at various stages of development following renewed impetus from the law. He added that commitments have also been extracted from new projects to develop major infrastructure for dry docking and topsides integration in Nigeria.

In recognition of benefits to be accrued to local companies during the construction of new gas pipelines contained in the Gas Master Plan, the executive secretary  announced that companies willing to establish pipe mills in Nigeria must procure pipes in Nigeria.

Recently, the board also signed memorandum of understanding with NIMASA on effective collaboration in a way that more Nigerians will benefit from offshore oil and gas operations and crude oil lifting.

Other achievements recorded by the board is the commencement of  the process of developing systems and processes to capture all relevant operational data covering upstream, midstream, downstream, indigenous operators, etc into a consolidated industry-wide database in compliance with the law.

This, according to the board would be utilised  for the purpose of establishing information streams to guide capacity building, utilization of local capacity in the operations during tender and compliance monitoring.

Way forward
Allison Madueke promised at the unveiling of the Act that collaboration strategy adopted in the process of passing the bill into law would be replicated in the process of implementation. To sustain the feat recorded, experts at a recent forum organised by the Nigerian Association of Petroleum Explorationists (NAPE) suggested dedication to  investment in infrastructure and access to credit facilities from Nigerian banks .

The Chairman, Petroleum Technology Association of Nigeria (PETAN), Mr. Shawley Coker urged Nigerian deposit banks to rise to the challenges of funding oil and gas projects in Nigeria. He added that government should provide friendly loans through the Nigerian Content Monitoring and Development Board to finance oil and gas projects .

The General Manager of Nigerian Content Development Shell Nigeria, Mr. Simibi Wabote in his submission called for transparency in the implementation of the law.

However, Engr Nwapa   noted that for Nigerians to benefit immensely from the implementation of the Act, they must begin to invest in projects that will eliminate foreign sourcing of raw materials needed in execution of oil and gas projects.

He also gave the assurance that errant firms would not be spared of stipulated sanctions contained in the Act.
“The Board will intensify engagements with the Banking sector, particularly with the CBN to provide enablers to Nigerian Banks that promote lending on longer term and lower interest rates.

We are confident from feelers, that with sufficient interactions between the key stakeholders in the banking, and oil and. gas industries, the pragmatism in the leadership at CBN will understand the transformational potentials of the Nigerian content capacity building initiatives and provide the necessary guidelines”, he assured.


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