THE CHALLENGE OF SUSTAINING LOCAL CONTENT DRIVE

L-R; Victor Sodje, MD, Newcross, NCDMB Executive Secretary, Simbi Wabote, Former ES, NCDMB, Ernest Nwakpa and Toyin of Shell and Bank Okoroafor

At the 8^th Practical Nigerian Content (PNC), which was hosted by the Nigerian Content Development and Monitoring Board (NCDMB), the Executive Secretary of the Board, Engr. Simbi Wabote, gave an overview of his vision for Local Content. He spoke on some of the challenges in the industry in terms of driving local content to the next level. The Board intends to achieve its objectives and it is at the right path of it. One of the challenges of the Board is continuity of planned projects.

Wabote recalled when the Act was drafted that the NCDMB team travelled to Brazil to have view of how it was driven in the country. The country demonstrated the array of projects that it has for the next ten years in developing local content. The projects were not fictitious ones. The country knew when those projects will be executed such that the drive was sustained. This enables investors and financiers to invest because they saw the opportunity. Wabote noted that “The greatest challenge I think we are facing today in the country, is the continuous stream of projects in the oil and gas sector.” He said, Egina FPSO has been sailed to its destination and production will soon commence, but “The question is all these capacities that we have built, the likes of SAIDEL, EWT, SAIPEM, AVEON, if you visit those yards which I have done personally, you will see that there is indeed a significant change in terms of where they were and where they are today.” He asked, “Where is the next big project to occupy those yards.”

He reiterated on projects like Zabazaba, Bonga west, proposed Train 7, Perewei and Ikike of Total, these projects should have embarked upon to keep the local content drive alive. He decried that the country is still struggling in terms of sanctioning those projects. This is a key challenge for the industry, investors and those who have developed capacity.

The ES also spoke on sectorial challenges in terms of assisting to sensitize the process of other sectors of the economy to key into the local content drive. Most people who intend to set up shop in terms of manufacturing, need incentive which the law provides such as tax holidays and financial incentives. It is always a struggle to get other agency of government to agree to a common drive. This is a big challenge for the Board.

NCDMB still battles with fund. This is a huge one and the Board has endeavoured to create a $200 000 000 fund to help local vendors and finance them as well. A major challenge is that those who could have access to the fund are leverage to banks hence it becomes difficult to get bank guarantees to be able to assess the fund. Fund is a challenge to operators because loan were gotten from the banks when crude oil was more than $100 when it fell to $27 a barrel, they were affected by the unfortunate circumstance. In 2019, NCDMB will re-model the finance structure in order to support local businesses in the country.

Simbi opined that the infrastructures in Nigeria which includes power and road networks pose a serious challenge. Power challenge and poor road network hamper progress of work with additional days. This has potential to escalate cost as well. These challenges hinder local content agenda to progress beyond where it is.

Notwithstanding, there are key opportunities for continuity. Wabote commended his predecessors and laudable projects they left behind were being improved. This is a boost for the Board. He said the Board has been led by professionals who have improved its standard despite challenges.            

Giving his perspective on Local Content, General Manager, Conventional Oil and Gas Projects, Shell Companies in Nigeria, Toyin Olagunju, extolled knowledge transfer and some assets being divested by the IOCs. In-country manufacturing has been a good journey and it is accelerating very fast with Egina achieving over 70% of Local Content in terms of manpower and local production of chemicals and human capacity. The eighty years of Shell in Nigeria has been prolific not just for oil and gas but producing of talents. Shell has trained a lot of talents and build local capacity that have transcended the oil and gas industry in Nigeria with almost 90% of different Shell trained personnel. This is the contribution Shell has brought to the nation. In his submission, “People who have worked and trained in Shell that are outside the company are more than those presently in its employ. Shell will continue to build and improve on this positive gesture. 

One of the groups that has helped in supporting practical content in the industry, is the Petroleum Technology Association of Nigeria (PETAN). Chairman of PETAN and also a governing member of NCDMB Board, Bank Okoroafor, made it known that PETAN viewed the achievements of the NOGIC Act including the definition of the objectives which is to develop Nigerian Content in the Nigerian oil and gas industry.

PETAN bears in mind four ‘Gs’ of Local Content which include the growth in the number of Nigerian owned asset and equipment. For instance, in rigs, at present there are companies like Oando Energy Services owning rigs, also there are UNITA, SVF among others that owned assets. It is an experience that never existed before the NOGIC Act. There are indigenous marine vessels such as PETROLOG, STARZS, MARINE PLATFORMS including other companies that were no where in sight before the Act. The second G is the growth of Nigerian Service companies. Before the NOGIC Act, there were only twenty seven indigenous owned companies operating in Nigeria but now the number has risen to two hundred and eighty-seven companies operating in Nigeria. The belief was that indigenous companies had no technical knowledge to involve in the industry.

The NOGIC Act is strategy formulation with strategic execution hence NCDMB and its management has brought change management. The third G is the growth in the value of goods sourced within the country. Formerly, pipes were coated either in China and elsewhere to Nigeria. According to Okoroafor, because of “The NOGIC Act, we have the pipe coaters and many of the companies in Nigeria coating pipes, this used to done outside the country.” There are pipe mills and the NOGIC Act is working, “If anyone says the NOGIC Act is not working that person does not have the fact.” The fourth G is the growth in the number of trained Nigerians. Before the Act, less than five hundred thousand man hours of training were skeletal. Surprisingly, at present more than six millions man hours of training are done in-country.

Compliance and enforcement have been on positive note. For instance, during the construction of Usan, in-country training was one hundred and fifty thousand man hours but during Egina FPSO, it was four hundred and fifty thousand man hours. Engineering in Usan was four hundred thousand, while that of Egina, one million, one hundred and sixty-seven thousand. The key aspect of the engineering works was that there was collaboration between indigenous companies and their foreign counterparts. Local companies were fully involved in the process which has never happened.

Okoroafor commended Total for working with NCDMB ensuring that the NOGIC Act is enforced and complied. There are new facilities built across the country manned by qualified Nigerians with full yard certification.

Basically, before the NOGIC Act and the Act itself, a lot have been achieved, “But a lot more needs to be done.”