BusinessDay
Nigeria's leading finance and market intelligence news report.

Oil/gas sector: New Bill to unlock $10bn in Nigeria’s local content yearly underway

An amendment on a new bill in the oil and gas sector that will ensure that Nigeria joins the league of industrialised nations and further help the government save $10 billion yearly via local content is in the works at the National Assembly.

The proposed law, called Nigerian Oil and Gas Industry Content Development bill (NOGICD bill), came out of decades of agitation for local value and has the capability to facilitate growth of local content in the oil and gas sector by 70 percent.

Simbi Wabote, executive secretary, Nigerian Content Development and Monitoring Board (NCDMB), said as much as $380 billion was going out of the country as capital flight when the content law was not in place.

“With the new bill about 300,000 jobs would be generated yearly,” Wabote said at a Nigerian content summit with the theme “Nigerian Content Development: Facing the Future.”

According to Wabote, the recent disruptions caused by Covid-19 pandemic should force Nigeria to prioritise local content development.

At the virtual event, Rosario Osobase, secretary general at Petroleum Contractors Trade Section (PCTS) of the Lagos State Chamber of Commerce, said the essence of the bill was for the domestication of the value chain of Nigeria’s oil and gas sector and not “Nigerialisation.”

“Nigeria also needs to encourage local firms to invest in research and development like its counterpart in other oil-producing countries,” Osobase said.

Vassily Barberopoulos, chairman, Manufacturers Association of Nigeria Local Content (MAN-LOC), said the new bill would help in industrialisation, which will make it easier for Nigeria to drive its exportation agenda.

In addition to proposing new requirements and regulations that would further increase and support indigenous participation in the petroleum sector, the NOGICD bill ambitiously proposes similar reforms for the Nigerian mining, Information Communication Technology (ICT), construction and power sectors.

According to Umar Danbatta, CEO, Nigerian Communications Commission (NCC), the new bill is a welcome development while noting that there are no barriers to entry into the telecoms industry being a fully liberalised sector that promotes competition.

Chairman, Senate Committee on Local Content, Teslim Folarin, said the proposed amendment to the Nigeria Oil and Gas Industry Content Development bill would afford stakeholders the opportunity to make inputs based on their experiences in the sector.

Folarin listed two other private bills that would be legislated to complement the gains recorded in the industry, assuring that if the bills were passed it would aid investment promotion, economic competitiveness, and others.

The two fresh bills, which will receive the parliamentary legislation, he said include “Nigerian Local Content Development and Enforcement Bill, 2020, and the “Nigerian Local content Development and Enforcement Commission Bill, 2020.”

He explained that the ninth Assembly would ensure that the oil and gas industry would work on the bills that address human capital development; public procurement; ease of doing business in Nigeria and infrastructure with a special emphasis on how the absence of developed infrastructure impacts on the development of local business, saying those thematic areas had been elusive for long.

Deputy managing director, Deep Water, Total Upstream Companies in Nigeria, Ahmadu-Kida Musa, said: “We believe in the development of local capacities and will continue to work with all stakeholders, especially the NCDMB to ensure sustainable economic development of Nigeria.”

Using EGINA FPSO as a testament of the company’s commitment to local content in Nigeria, Musa described the vessel as the largest in the Total Group and the first to be fabricated and integrated in Nigeria with 77 percent engineering man-hours done in-country.

According to Musa, 100 percent of the project management man-hours is being performed in Nigeria.

Managing director of Shell Nigeria Exploration and Production Company (SNEPCo), Bayo Ojulari, noted that recent executive order by the country was pushing the need for local content in other sectors of the economy.

Ojulari stressed the need for legislative backing to compel policy in construction, power, ICT and others.

He, however, said the fiscal instability and harsh operating environment in the country would affect the pace of investment, slowing down efforts to grow the industry.

He also decried lack of technology know-how, state of infrastructure and cost competitiveness. If local content is prioritised, he expects reduction in lifecycle cost of projects and assets.

Get real time updates directly on you device, subscribe now.