Oil and gas industry act 2010: How tenable?

Ik

On Thursday April 22, 2010 the long awaited Nigerian Oil and Gas Industry Content Development Bill passed by the National Assembly became law when Gooduck Ebele Jonathan, then Nigeria’s Acting President assented to the Bill, thus, giving birth to the Nigerian Oil and Gas Industry Content Development Act (2010).

The aims and objectives as provided for in the act are the re-enactment of, and reminiscent of the Nigerian Indigenization Decrees of the 1970s that were ostensibly promulgated by the then military government under Yakubu Gowon. For instance, the aims and objectives of the 1972 Indigenization Decree and its 1977 amended version (otherwise known as the ‘Nigerian Enterprises promotion Decrees’) were policy attempts to strengthening the Nigerian economy through regulatory and legal frameworks and mechanisms which amongst others include: 1) The transfer of ownership and control to Nigerians in respect of those enterprises formally wholly or mainly owned and controlled by foreigners.

2) Fostering widespread ownership of enterprises among Nigerian citizens. 3) The creation of opportunities for Nigeria indigenous businessmen and 4) The encouragement of foreign businessmen and investors to move from the unsophisticated area of economy to the area where large investments are more needed.

Having failed to meet the set aims and objectives, these economic management and industrial policy frameworks were abandoned in the 1980s and replaced with neo-liberal Structural Adjustment Program (SAP) in 1986 and Trade and Financial Liberalization (1989) frameworks.

The act is considered by its protagonists as a ‘child of necessity’ in the nation’s oil and gas enclave economy so that it accelerates the process of both economic growth and sustainable economic of development. I am usually not a pessimist; particularly when it comes to discussing Nigerian national, regional or local issues. My reason for being an optimist has always been my ardent believe that God Almighty loves Nigeria and is always at hand to rescue the nation and its people in time of dire need.

There are ample examples to attest to this fact; the trials and tribulations leading to the ascension to the Nigerian Presidency by Jonathan being the most recent one. Hence, my choice of writing about the possible critical challenges to the realization of the aims and objectives of the Act is premised on my believe that the implementation of the law in the oil and gas sectors of the Nigerian economy is realizable but it is going to be daunting and subject to addressing a number of inhibiting factors peculiar to the Nigerian clime.

For example, the creation of an unnecessary bureaucracy together with the Act in the name of Nigerian Content Development and Monitoring Board (NCDMB) and its funding mechanism and the absence of critical infrastructural facilities such as: adequate, regular and reliable electricity or power supply, lack of a pool of well trained skillful technical, scientific and knowledgeable manpower in all gamut of the oil and gas industries to support design, engineering, fabrications and constructions are going to continue to be the major stumbling blocks towards the realization of the noble aims and objectives of the Act.

Nigeria can import some of the requisite materials needed in the core activities involved in meeting local contents in the oil and gas industries such as for example, steel and other highly sophisticated engineering products. However, all that will come to naught if it cannot generate and supply adequate uninterrupted electricity and cannot provide a very congenial environment for local Nigerian businesses to partake in the business of servicing the basic engineering needs of the multinational and indigenous oil and gas companies operating in the country.

A congenial environment that makes it easy and affordable for Nigerian owned businesses to access finance capital from local Nigerian financial institutions, for Nigerian polytechnics, and other technical institutes and universities to produce adequate skilled manpower for the oil and gas sectors and for the governments at all levels to provide adequate security to life and property – these are some of the necessary conditions needed towards realization of the local content act.

But unfortunately these basic necessities are still lacking in Nigeria today. For instance, today, Nigeria does not have adequate functional engineering fabrication yards with the required technical and other capacities to handle the local content policy to say the least. Of course, there must be a starting point in building the required capacities.

Therefore to begin with, the Act must address these deficits with a view to start breaking grounds and making inroads towards making the provisions under the Act realizable. One of the best ways to go about doing that is to vigorously partner with the existing public establishments and agencies in fields of technical capacity building and funding. These are the Nigerian polytechnics, technical institutes and universities.

Furthermore, the rightful place to house the newly created NCDMB is within the ambit of a regulatory agency such as the Depart of Petroleum Resources (DPR) pending the passage and assent to the Petroleum Industry Bill (PIB). In addition, the Petroleum Technology Development Fund (PTDF) is the best existing funding mechanism to fund the implementation and management of the Act. It is a waste of resources creating a new funding mechanism under the new Act.

In conclusion therefore, as the oil and gas industries’ project activities revolve around technical skills and scientific know-how industry, it may be very difficult to realize government’s targets as contained in the Act without adequately addressing the challenges facing the Nigerian Science and Technology education sector. In addition, the Federal Government of Nigeria must urgently address the basic issues of epileptic electricity supply and insecurity in order to make any meaningful progress towards realization of the Act.. Besides, for such an important policy to succeed, government should partner with key stakeholders including civil society to monitor its implementation.