In what ways do you think emerging technologies will drive local content development in the country
Of course, the oil and gas sector is highly technical and the technology doesn’t remain stagnant.
It changes over time. And I think in terms of local content, most of the businesses that have established capacity also are aware of this and they try to meet up with the changing technology.
It is only those who don’t make those changes that go out of business. So technology will continue to evolve and at a very fast pace.
As an example I used to tell people that today a typical FPSO like Egina FPSO has about 150 Body-On-Board, BOB, but in another 15 years time, that whole facility will not have any body because it will be remotely controlled.
So that is how technology is evolving and people are aware of this and they are doing everything to catch-up.
But are we able to adapt to technology as fast as it is growing? The answer is probably no because I don’t think as a country we are investing heavily on research and development.
Because we are not doing that we will continue to do catch-up. Nobody is going to transfer technology to you, it is never done. Transfer of technology is a myth as far as I am concerned, but adaptation of technology is a possibility.
But if you don’t invest in research and development in this sector, then you will continue to play second fiddle and I don’t think as a country, we have paid great attention to research and development in the oil and gas sector.
NCDMB itself is trying to pick up that pace in terms of research and development. We have just developed a 10-year strategic roadmap for research and development, R&D, in the industry.
We have set-up an R&D council and we are trying to create research and development fund that will be available to researchers in order for us to enhance that area because if you don’t do that we will continue to be on the back burner in terms of technology.
The other bit again is that if you Google and look at annual spending in each country on research and development, there is no African country on that list apart from South Africa that spent 0.02 percent of its GDP on research and development. No other African country. Little wonder we are still a third world country because we are not really investing in R&D.
What are you doing to push government to realize the essence of this in the years you have been working as executive secretary of NCDMB
NCDMB is also part of government. So what we are doing is also what the government is doing and all we need to do is to advocate more for most of these activities and see how we can extend it to most of the sectors in terms of focusing on research and development.
You talked about funding and there is this Nigerian Content Intervention Fund, how far has it gone to help development in the sector and how many people have benefitted
Tremendously. Like you know we launched the $200 million intervention fund with the Bank of Industry in 2017. Today, I can safely tell you that almost 85 percent of that fund has been accessed by Nigerian companies unlike most funds that you don’t see people accessing them.
That fund has about five products: asset financing, contract financing, manufacturing, loan refinancing and community contractor refinancing. And it’s been a tremendous success. It has enabled most Nigerian companies to refinance their loans because we have fixed 8 percent interest rate. We also have five years period to pay back and one year moratorium. It’s been very successful working with the Bank of Industry.
How many companies have benefitted from this fund
I think we have about 20 companies that have really accessed and benefitted from it.
They implemented projects with it
Have they been able to pay back
It is five-year loan, so they will be paying bank constantly.
Are you monitoring the projects they are using the funds for
Absolutely. We have a monitoring team that goes around to see how … but most of it is primarily loan refinancing. We know those assets which they have bought and are refinancing.
Can you tell us some companies that have benefitted
I don’t know if that is possible. But you can get that from the Bank of Industry because most of these companies are in public domain. They should be able to give the names.
How did the idea come, you originated it
If you look at the Act that set up the NCDMB, it says that one percent, which is contributed by the contractors in the upstream sector of the oil industry is set aside for building the capacity of Nigerians.
And one of the greatest challenges Nigerian businesses face is access to funds because like you very well know, when you go to the banks, they will be offering their loans on 23 to 24 percent interest rate.
And then the foreign counterparts get loans at single digits, so it is difficult to compete with them if you are getting at double digits and high interest rates, while others are getting next to nothing. You cannot compete with them in terms of price.
So the only way to help the Nigerian vendors is to introduce this fund, which they are contributing to.
Mind you it is not government grant, it is contributed by the contractors because the law says one percent of every contract awarded in the oil and gas industry should be paid to NCDMB.
So it is not a government grant. It is meant to develop their capacity and that is what we are deploying the funds for.
With this fund, do you think indigenous operators can now handle major projects in the industry?
Even before the funds, Nigerian companies have really developed their capacity and are doing heavy duty projects. For example, before the advent of the law itself, all fabrication works were done outside the country.
But between now and then, like you know this year is the 10th anniversary of the establishments of the board, Nigerian companies are now fabricating 60,000 metric tonnes.
That is quite substantial and today we are able to integrate FPSO in-country, we are able to manufacture all the cables we use in the oil and gas sector, we are able to manufacture pipes and there have been tremendous achievements in terms of heavy duty activities.
The first integration facility in Africa was done here in Nigeria. And we integrated the largest FPSO in the world that is producing 200,000 barrels per day.
So that is a huge achievement and it is heavy lift and we have been able to do that. The fund in itself is just galvanizing that process the more, but in terms of capacity, we have built substantial capacity.
Do you have statistics on the capacity you have built in the sector so far?
Of Course. It is available everywhere. Today, 75 percent of the contracts are awarded to Nigerian companies. Today, we have been able to fabricate, for instance, in the Egina FPSO, 70 percent of local content was done in-country.
These are very clear statistics for everybody to see. In terms of human capacity development, most of the indigenous operators companies are owned 100 percent by Nigerians.
If you go today to a company like the NLNG, 95 percent of the staff in that organization are Nigerians. You go to Shell the same statistics.
So it is everywhere for everybody to see. It’s been a phenomenal success in the oil and gas sector and in terms of local content.
Talking of success story; you have built a headquarters for the board. Did you conceive it or was it on before you assumed office?
When I came on board in 2016 November, they just finished the foundation of the headquarters building. Between that period and now, it is a short period to complete a 17-storey building. You know the antecedent of Nigerians in terms of project completion.
Some projects have stayed for 15 years, NPDC headquarters in Benin is an example. But between 2016 and 2019 we completed the NCDMB headquarters.
How did you manage to complete the building, is it because you have been in the private sector that you are now bringing that experience to bear in making sure that once a project is started, it has to be finished?
That is one of it. There is the private sector experience that we brought to bear. Secondly, I’m a project engineer; that is my background and I have been known for starting and executing projects. Just for your information, I built the Osubi Airport in Warri, which was built by Shell.
It was my project. I was the project manager there and I delivered it. At some point, it was the best airport in Nigeria that we built. As an engineer, I get excitement by starting and finishing things. So the private sector, to a large extent, contributed 80 percent of that thinking.
And then the other thing is selflessness to be sure that you want to deliver things and that you don’t want to walk away haphazardly.
Every activity that I get involved in like a project, we must deliver it. I have this knack for perfection and to get things done. Is that drive and desire to see result that drove us to ensure that the project was completed. Like you know, it is the tallest building in the south-south and southeast put together.
We have a 1000-seater auditorium, which I think perhaps is the best auditorium in this country that is owned by government. We also have a four-storey car park.
That project is thinking ahead in places like Bayelsa, where you never thought such project could come alive and having a car park built. So we are ahead of our time in terms of our thought process on that project. By the grace of God, it is something one looks back and be happy with.
Congratulations. But the project, the 17-storey building, will it be fully utilized? Are you going to rent some of the floors out?
We intend to get tenants and like I said, we are ahead of our time. I believe personally that for you to be able to get companies to come to the state, you must create conducive environment.
You must put infrastructure on ground. You can’t force it to happen. I believe with that head office, if we are able to also enhance accommodation in and around the place and also hotels, we will be able to attract indigenous and international players to come and become part of our tenants.
And on the back of that, we built a 10 megawatts power plant, gas-fired power plant. So we are guaranteed 24/7 electricity. That is also ready and waiting for inauguration. So it is end to end thinking.
When is it going to be inaugurated?
We thought it could have been on February 14, but due to political crisis in Bayelsa State, it was postponed. So we are hoping that in April, we will do the inauguration because that will mark the 10th year of NCDMB.
What are the programmes lined up to mark this 10-year anniversary?
We have set-up a committee that is working and we hope to roll out the programme very soon as soon as the committee is ready to talk about it.
But we are working very hard to see that we celebrate 10 years of achievement. You may say a decade, the word decade sounds a very long time, but strictly speaking, it is by the corner. If you don’t plan and you don’t do things, you can’t measure your achievements. But when you pronounce a decade, it looks like eternality. It is just 10 years.
If we extend local content to other sectors does that mean we have to establish other boards to manage them or is it going to be domiciled within the board?
I don’t know. But I don’t think that will be a good idea for you to begin to proliferate boards to implement local content. I think that will make it look like a joke.
But I think that there are options that the legislatures are looking at. Of course, the executive orders are there to drive local content. So how do you put a legislation allowing those executive orders to ensure that ministries and parastatals also respect the need for local content?
I don’t think proliferating the boards will be a good idea neither do I also think that you have to bring everybody under one board because the peculiarities of oil and gas industry are different from other sectors of the economy. I think something is being worked out, we are yet to see and as at when we see it, we will make our own input.
And you achieved so much, built the headquarters when there was economic downturn and the revenue flow to the country declined. So how did you raise the fund, did you borrow?
NCDMB has not borrowed a penny from anybody. We have not even taken an overdraft.
How did you raise the funds?
Like I said one percent was being paid by the contractors and we believe in prudent management and we believe in setting up budgets that we have money to spend.
It is that kind of process and prudent management of resources that you need to push your agenda even in the face of dwindling resources. You don’t over commit, you don’t budget what you don’t have and you remain disciplined.
And one other achievement is that when I came in, we have to exit appropriation because we are having this fund at the same time going to government for appropriation and I said it doesn’t make sense.
Why can’t we manage the funds that we have so that government will have enough money to face other sectors. So in 2017 we exited appropriation. So we don’t go to government for any subvention or appropriation.
So government doesn’t give you any money?
Because I know that when the Board started they were relying heavily on NNPC?
We stopped that. In 2017, I made sure that we stopped receiving money from government.
You rely solely on one percent?
Absolutely. Like I said. it is discipline and prudent management of resources. We are not owing anybody not even our contractors. We didn’t borrow any money or take any overdraft.
And you are still lending through the intervention funds?
Absolutely. Discipline and prudent fund management and not going to frivolous things that do not make sense and that’s what we have done.
I’m just curious, you said you have exited government funding and every other thing since 2017. What was the state of the Board when you came in, what did you inherit?
Of course, the Board had some funds out of the one percent from 2010 and 2011. So they accumulated some of the funds. And thank God to the introduction of the Treasury Single Account, which I think is one of the great successes of this administration because there were so many leakages.
People had no idea of how much funds they had and how much they spend. So that helped us to consolidate and we knew where we are going and how much funds the Board gets and how do we plan our programmes to remain within the funds that we have. It is just discipline and prudent management.