Local Content: How Nigeria Lost $380bn, 2m Jobs in 50 Years

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Engineer Simbi Kesiye Wabote

Executive Secretary

Nigerian Content Development & Monitoring Board (NCDMB)

Engineer Simbi Kesiye Wabote, Executive Secretary, Nigerian Content Development & Monitoring Board (NCDMB) says Nigeria lost over $380 billion and two million jobs in a period of 50 years over the issue of local content.

Speaking on ‘Local Content Journey in Nigerian Oil and Gas Industry’ at a breakfast meeting with members of the Guild of Corporate Online Publishers (GOCOP) in Lagos, Wabote said that prior to the adoption of local content, the Nigerian oil and gas industry was characterised by:

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

He said the situation was so severe that former President Olusegun Obasanjo directed the Nigerian National Petroleum Corporation (NNPC) to introduce Local Content Policies in the oil and gas industry as part of the nation’s national economic development imperatives in 2004.

Wabote traced the local content journey thus:

“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. Having witnessed initial resistance to the NNPC directives by most of the E & P companies, the 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.”

The NCDMB ES said the NOGICD Act of 2010 established NCDMB as the sole agency of the Federal Government with the responsibility for driving Nigerian Content in the oil and gas industry with the following mandates:

• 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

Wabote added that the NOGICD Act has been implemented in 3 phases in the past 11 years:

• 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 percent Nigerian Content as at end 2016
• Phase 3: 2017 – 2027: Implementation of a 10-Year Strategic Roadmap to achieve 70 percent Nigerian Content in the Oil and Gas Industry.

“The 10-Year Strategic Roadmap in underpinned by five (5) pillars namely – Technical Capability Development, Enabling Business Environment, Organisational Capability, Sectorial & Regional Market Linkages and Compliance & Enforcement. And also four (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 percent in 2016 to 42 percent 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 percent 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 percent 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 5,000 bpd Waltersmith Modular Refinery at Obigwe, Imo State; the refinery is currently in operation with the products completely sold out.
• Launched the $350 million 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 $50 million special loan product for women in the oil and gas business to enable empowerment of the womenfolk in the industry.
• We also established another $30 million 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 $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 1.2 million 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.

Wabote said the listed achievements became possible through the adoption and implementation of local content in the oil and gas industry.

Looking ahead, the NCDMB Boss said:

“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 percent Nigerian Content; creation of 300, 000 direct jobs; retention of $13 billion of the estimated $20 billion 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.”