Local Content in Nigeria’s Oil and Gas Industry Hits 47% – Wabote
Local content in the Nigerian oil and gas industry has reached 47 percent, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote, has said.
Wabote who made the disclosure in an interview to mark his sixth-year in office said that in 2016, local content in the Nigeria oil and gas industry was about 26 percent.
Between 2010 till date, he said while Foreign Direct Investment into the sector is about $60 billion, through local Content implementation, the country  retains about $7 billion out of about $21 billion yearly industry spends, with the target to get to $14 billion by 2027.
Recall that NCDMB had in December 2021 Â said that out of the $20.4 billion industry spend on key projects between 2016 and 2020 in the country’s oil and gas industry, 42 percent local content was achieved.
The aggregate industry spend, which was captured from the projects covered by the Board’s Monitoring and Evaluation Directorate focused on five key areas which include Engineering, Procurement, Fabrication, Project Management, and Services.
“When the Local Content law came into being, the industry took an evaluation of where we were and came to the generalisation that we were at just about five per cent in terms of growing local content in the country.
And today, we pride ourselves that we are about 47 per cent in terms of the growth of local content from when it was enunciated as a policy, it came as a law and up until date,” Wabote said.
“In 2016, we found ourselves around 26 per cent in terms of growth, but today, we’re at 47 per cent, which is a significant achievement when you look at the process of local content development, which we always say, is a marathon and not a sprint.
It takes time, it takes perseverance, it takes consistency, it takes focus to be able to develop local content in the oil and gas industry, which is highly technical intensive.
So, when you give all that and you look at where we’re today, after about 12 years of operating the Act, you would agree with me that we have made substantial progress.”
The Nigerian Oil and Gas Industry Content Development (NOGICD) Act was enacted in 2010 to deepen indigenous capacity and promote domiciliation of skills in-country.
Wabote said that why International Oil Companies (IOCs) operating in the country have been very supportive to local content, the Board is having challenges with indigenous companies. This, he said, is because many of the indigenous operators had thought local content does apply to them.
“I think where we are having the most challenge is not with the IOCs, is with the indigenous operators, ironically, which again, is a difficult pill to swallow, especially when we did all you did in promoting Local Content for their benefit, and now that it is time for them to actually practise it, you then see all manner of sharp practices.
So that is where we have the greatest challenge, not the IOCs. Like you know, local content is applicable to everybody, whether you are indigenous operator or you are international oil company. So, that is where the challenge is, and of course, we are dealing with those challenges as they come,” he said.
“I think, my interpretation of it is that, initially, they felt local content was not for them because they are local companies, hence we should face the IOCs on that.
But that’s not it, because the law is for everybody. Secondly, they want to maximise their profit as much as possible without taking cognisance of the reason why they exist in the first place. It’s human nature as it were. I think that’s the major reason for that.”
As part of its 10-year strategic roadmap, NCDMB has set out to achieve a number of goals by 2027. Part of that is creation of 300,000 direct jobs; retention of $14 billion of the estimated $20 billion spend in the oil and gas industry every year, and other lofty goals.
According to Wabote, the Board is on track towards achieving these goals. He said that two of the Nigerian Oil and Gas Parks (NOGAPS) under construction will be commissioned by next year, adding that NCDMB is getting into venture partnerships to create jobs for Nigerians.
As of 2021, the Board had committed a total of $332million under its commercial ventures partnership programme, and targeting to attract more project developments in-country valued at $3.7bn.
Some of the partnerships undertaken by the Board include the 5,000 barrels per day Waltersmith Modular Refinery at Ibigwe, Imo State; Azikel Refinery in Bayelsa State; and NEDO Gas Processing Company in Kwale, Delta State for the establishment of 80 million standard cubic feet per day (MMscfd) gas processing plant and a 300MMscfd Kwale Gas Gathering hub.
Other investments include the development of 5,000 metric tons LPG Storage and loading terminal facility by Triansel Gas Limited in Koko, Delta State and construction of Energy Park, inclusive of a modular refinery, power plant and 40MMscfd gas processing facility at Egbokor, Edo State by Duport Midstream.
Also, the Board, the Nigerian National Petroleum Company (NNPC) Limited and ZED Energy Limited last year signed shareholders agreement on the construction of Brass Petroleum Products Terminal Limited (BPPT), to be located at Okpoama, Brass Local Government Area, Bayelsa State.
At a recent oil and gas conference, Wabote had announced that the Nigerian Content Intervention Fund had grown to $500 million. Discussing how the Board was  able to achieve this feat, he said:
“We rolled out $350 million which we gave to BOI (Bank of Industry) to manage on our behalf. Today, all that money has been taken up by various businesses in the country and the pay back has been almost 98 per cent successful at that.
This has also helped to a large extent, in cushioning the effect in terms of doing business in the country, because today, the interest rate on the back of that fund is just six per cent, whether you borrow in naira or in dollar. It has been hugely successful.
And we are doing the same thing with NEXIMBANK that we gave $50 million, with them bringing in their own counterpart funding of $50 million, in order to support working capital as well as women in oil and gas. So, those have been very successful and the testimonies are there to show.
“In terms of what we are doing with NEXIM, it took time for it to kick in. So, all this while, they have been developing the backend because we wanted an online process. We didn’t want people to be swarming banks to apply for those funds. So, they needed to build their backend to be able to meet clients’ needs.
Since they competed that, we now started seeing movements in terms of people accessing those funds and the rest of it . So, it has been hugely successful, and I think it’s also part of the strategic achievements that we have made within the board.”
At the Nigeria Oil and Gas Conference and Exhibition in July this year, NCDMB unveiled the Seven Ministerial Regulations to promote local content compliance and implementation.
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Speaking on how  oil and gas companies are responding to this new regulations, he said: “I think the regulations in themselves are not new in terms of implementing the Local Content Act as it were. The regulations only try to address some of the lacuna that we saw within the NOGICD Act.
An example of such lacuna is the process of prosecution. If you look at the Act itself, it says that, upon conviction, the decision is to cancel the project or to fine the culprit as it were. But when you look at the word, ‘upon conviction’, which means you have to go through the court processes and that will take eternity to get a conviction of any culprit who have breached the provisions of the Act.
So what the regulation did was to come up with administrative sanctions as a way of ameliorating that legal process in order to get a conviction.
So most of the regulations are not new. It’s only trying to fine-tune the lacuna that we saw. I think they (oil companies) embraced it because it’s not new to them, and some of the questions they have been asking in the past, which of course, we have answered.”
On the unveiling of the Insurance Guidelines for the Nigeria oil and gas sector at the same the same conference by NCDMB and the National Insurance Commission (NAICOM), he that the initiative was informed by the fact that the NOGICD Act pays a lot of premium to insurance of the oil and gas business.
However, the insurance companies in Nigeria do not have the capacity to carry out this responsibility at their current state.
“So we felt it was time to work with them (NAICOM) actively to enforce the provisions of the Act when it comes to insurance. Hence those guidelines on how we will go through to actualise insurance, re-insurance, as the case may be,” Wabote noted.
