By Yemie ADEOYE

The Nigerian Content Act was signed into law on April 22, 2010, thus signaling the first most significant achievement of President Jonathan after his re-election. Two years down the line the story has been one of success and great expectations, as several indigenous players agree that the Act was long overdue.

However there are still some challenges being faced by indigenous operators in the oil industry, Yemie Adeoye, takes a detailed look into some of the achievements of the Act in the period under review as well as pointing out areas for review and improvement.

WHEN the Nigerian Content Development Act was signed into law in 2010, not a few people in the industry hailed the Goodluck Jonathan-led Government for such a swift response upon assumption of office as the Acting President, even as some see the move as a little too hasty, especially as the Petroleum Industry Bill, PIB, supposed the single piece of document regulating the entire oil industry was yet to be passed.

However, two years down the line, the Content Act has been established as a welcome development, as Nigerian companies now play a significant role in oil and gas activities across board, even as engineering plants and companies, which were hitherto dormant have all bounced back with several activities to keep them in business.

As a result of this Act, American energy giant, ExxonMobil, pioneered the use of made in Nigeria pipes in the oil and gas industry. The company is also set to deploy Helical Submerged Arc Welded (HSAW) pipes fabricated locally by SCC Pipe Mills for its Usari-Idoho pipeline replacement project in Akwa Ibom State.

The Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Earnest Nwapa, said that the  project was in the shallow water oil fields of ExxonMobil and that the pipes would be used to replace the 24-inch oil pipeline connecting the Usari and Idoho platforms, which in water depth of 21 meters.

This will be the first time made in Nigeria pipes are used for an oil and gas project in the country by any international or local operating company and is expected to unlock investments in pipe mills and other oil industry support facilities,” said an excited Nwapa, who expressed optimism that the next FPSO integration would happen in Nigeria, as over five years of studies have been carried out in this regard.

According to him, a number of investors have made plans to establish pipe mills and related facilities in Calabar, Koko and Gbaran Ubie, and this can only be attributed to the existence of an existing law, which stipulates all that investors need to know regarding their operations in the oil sector.

Not a few industry watchers acknowledged that besides the PIB, which is yet to be passed by the National Assembly, the Nigerian Content Act remains the single most important piece of legislation in more than 50 years of oil production in the country.

Mr President himself already noted that Nigerians and the national economy can only derive maximum benefits from the oil and gas industry if the Nigerian Oil and Gas Industry Content Development Act is implemented to the letter. Speaking recently while commissioning the Abang & Itut Satellite Field Development Project Platforms-designed and fabricated at Nigerdock Island Integrated Free Trade Zone for Mobil Producing Nigeria, President Jonathan explained that merely earning money from the sale of crude oil to pay salaries and build infrastructure is not helping the economy in the desired way.

According to him, “Until we make sure that the requirements of the industry; at least a reasonable per cent are produced in the country, Nigeria as a nation cannot benefit from the industry.”Our gross national earning from the sector is more than 80 per cent, so it is from the oil sector that we can become industrialised.

The President noted that it was through the development of local capacities and owning of assets used in industry’s operations that the sector can increase employment opportunities, produce and utilize more locally manufactured goods and components.

He expressed dismay at the failure to attain the targeted 70 per cent local content in the industry by 2010, a development he blamed on limited indigenous capacity, adding that the accomplishment by Nigerdock will boost capacity building in other companies.

The President described the completion of the Satellite Fields Development Platforms- the first to be achieved completely locally-as a proof that the Nigerian Content Act was already yielding the expected transformation results.

According to him, “What we have witnessed today is a demonstration of the rightness of the local content law. When you consider that oil and gas sector accounts for over 80 percent of the country’s income then you will appreciate the importance of what the law can do to transform our economy.”

Commending Nigerdock for the feat, the President also reassured investors and other stakeholders of his administration’s commitment to the full implementation of the Nigerian Content Act.The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, on her part recalled that for several decades, similar ceremonies were celebrated in yards located in Asia, Europe and the Americas where the Nigerian oil and gas industry traditionally procured, Production, Storage and Offloading FPSO vessels, offshore platforms, line pipes, marine vessels, LNG tankers, drilling rigs, power plants and other equipment packages servicing the oil and gas industry.”

The result is that while revenue from oil production activities has been impressive, there is no employment growth and little impact on our GDP from industry activity.”Notwithstanding the success and achievements of the Act, there are still areas that require the attention of the NCDMB, the regulator and executor of the Law, as well as the federal government because if the Act is aimed at domiciling jobs in-country, it simply means that efforts should be made to ensure that there are no loopholes through which such jobs can either be exported or undermined.

Knotty issuesSweetcrude checks reveal that not all of the foreign companies registered in Nigeria are operating in the country. These foreign companies are working against the provisions of the Nigerian Content Act. If part of what the Act is meant to check is capital flight then with this development it has been established that more needs to be done by government in this regard.

An oil chief executive, who spoke in confidence on the development, disclosed that a major negative happening in the industry that the Law has not checked and the NCDMB has not done anything about is rate discrimination in the industry.

According to him, when Nigerian companies bid for jobs, the International Oil Companies expect that if you are Nigerian you should be charging very low, like Nigerian engineers would earn an average of $50/per hour, but the same engineer that is a foreigner would be demanding four times more than what the Nigerian engineer is being paid, and the IOCs would oblige this request.

“When you ask questions regarding such discriminatory act their response would always be because they are expatriates and that just settles it, because they have to pay security, relocation and all that.” ”But all of these are really in effect, discriminating, and more or less depressing the market for Nigerians, and it is something I can say is structural, and until we can reduce the differentials where you will have talented Nigerians accepting jobs in this industry at a rate lower than their foreign counterparts, then Nigerian engineers will be struggling to compete.”

He further stated that the situation can be checked if the regulator sees this as an issue that could become an embarrassment to the Government and the country in the future. “It is something I think the regulators can do something about, generally, when you have a market where there is no competition, some charlatans will have the opportunity to become players.”

So we need a regulator that not just checking the quantity of Nigerian man powers but also checking the value of the Nigerian man hours compared to the value of the expatriates man hours.