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Local content law to end apartheid in oil and gas sector – NCDMB

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By Oscarline Onwuemenyi
The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Ernest Nwapa has stated that the concept behind the establishment of the Nigerian Content Act was to end the era of domination by multinational oil and gas companies to the detriment of local companies.

To that extent, he has enjoined European nations to support the implementation of the Nigerian Content Act and encourage investors from their countries to set up oil and gas facilities in Nigeria.

The Executive Secretary of NCDMB, Engr. Ernest Nwapa who made the plea recently during a Nigerian Content forum organised by the European Union in Abuja, noted the long-standing partnership between Nigeria and EU countries in national economic development.

According to Nwapa, the Nigerian Content Act which was signed into law by President Goodluck Jonathan on April 22, 2010 represents the last opportunity to correct the past mistakes of oil industry operations in the country.

He noted that the implementation of the Nigerian Content policy guidelines initiated by the Federal Government in 2004 led to the development of in-country capacity to perform work scopes and patronage of the local service industry from a dismal 5 per cent in 2004 to 35 per cent in 2010.

The limited capacity of the local service industry had however, restricted further growth and patronage, hence over 65 per cent of industry work scope has continued to be done abroad, he regretted.

The Executive Secretary further explained that the Board is working to reverse this trend by collaborating with operators and other stakeholders to set up heavy industries, pipe mills, equipment manufacturing facilities and to develop dockyards and increase the utilization of existing shipyards for maintaining marine vessels.

Other initiatives of the Board include the transformation of ownership profile of marine vessels, setting up of Research and Development institutes and management of expatriate quota system in the industry.

He said the Board will leverage on the Nigerian Content Development Fund to support genuine investors interested in developing capabilities, acquiring equipment, installing facilities and infrastructure required to bridge critical capacity gaps in the industry so as to ensure the domiciliation of work and spend.

Nwapa also explained that the implementation of the Nigerian Content Act covers all operations in the Nigerian Oil and Gas industry. However there is often greater focus on international oil companies because they control over 80 per cent of the oil and gas business in Nigeria and usually outsource about 70 per cent of their operations to multinational service companies and their captives.

He stressed that getting the IOCs and multinational service companies to comply with provisions of the Act will go a long way in realizing the aspirations of the Federal Government.

He urged that this spirit of collaboration be extended to Nigerian Content implementation and gave assurances that under the provisions of the Act, any facility established in the country to service the industry will be patronized so as to ensure return on investment.

Nwapa explained that the implementation of the Act will not drive out foreigners from the Nigerian oil and gas industry, rather, with the specified domiciliation targets, it will increase participation of indigenes and the quantum of industry expenditure retained in Nigeria.

He added that one of the strategies for pursuing Government’s job creation agenda is to bring Nigerian jobs back home by progressively reducing the volume of Nigerian Goods and Services being procured from abroad.

By encouraging the establishment of yards and facilities in Nigeria, the implementation of the Act will create employment for Nigerians, link the industry with the wider Nigerian economy, increase the nation’s Gross Domestic Product and create continued access to the oil fields especially when indigenes of the oil producing areas are integrated into industry mainstream.

In attendance at the meeting which had as theme “Development of Nigerian Content in the Oil and Gas Industry: State of Implementation and Future Perspectives” were ambassadors of three EU member states and diplomats of six other European countries.

On the monitoring of compliance, the Executive Secretary said the Board has commenced a robust monitoring drive and is set to deploy third party task entities to support the Board’s activities in this regard.

In his remarks, the General Manager, Nigerian Content, Shell, Engr. Simbi Wabote hailed the enactment of the Nigerian Content Act and assured of Shell support for the implementation.

He expressed delight that a number of anxieties expressed by stakeholders concerning the Nigerian Content Act are already being addressed by the Board.

Wabote noted that successful implementation of the Act will lead to lowered cost of business and create a better relationship between the operating companies and their host communities.

He however, claimed that some targets set by the Act are ambitious considering the available in-country capacity and requested the Board to clarify some provisions of the Act which he said are ambiguous.

Also in his remarks, the Secretary of Petroleum Technology Association of Nigeria, (PETAN) Mr. Emeka Ene, noted that the growth of the business of his members is tied to the effective implementation of the Act.

He regretted that although the Nigerian Content Act gave exclusivity of jobs in land and swamp fields to Nigerian service companies, many of the firms are constrained by lack of capacity which can be bridged by partnerships.

He encouraged envoys of European nations to advise companies from their home nations who seek to operate in the Nigerian oil and gas industry to partner with credible local service companies.

Earlier his opening remarks, the Ambassador/Head of EU Delegation, in Nigeria, H.E. Dr. David MacRae explained that the forum was organized to enable the envoys understand the provisions of the Nigerian Content Act which has a great impact on the operations of oil and gas industry in Nigeria.

He explained that the European Union has a major stake in the Nigerian economy and member states are contributing in several ways to ensure its growth and development.

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