• Saturday, May 18, 2024
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BusinessDay

Local content law crippled by lack of oil sector investment

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The lack of investment in the oil and gas sector is crippling Nigeria’s local content development programme which was expected to add value to the economy.

Over 3,000 skilled Nigerian workers have been thrown out of work by some oil service companies either due to total closure of fabrication yards or their inability to get constant contract jobs due to little or no investment into the industry.

The Nigeria Oil and Gas Industry Content Development Act signed into law in 2010 seeks to increase Nigerian participation in the oil and gas industry.

According to industry analysts, however, more Nigerians may be laid off in the near future if the oil servicing industry keeps on shrinking by the day as the investments which sustain them fail to materialise.

The uncertainty surrounding the Petroleum Industry Bill (PIB) currently stuck at the National Assembly, which aims to unify all the necessary legislation in one bill and provide a clear framework for investment in the energy sector, is contributing to the lack of investment.

Analysts estimate investment of at least $28 billion has been lost or deferred since 2010 as a result, with the beneficiaries being other producers in the sub-region such as Angola and Ghana.

Industry stakeholders told BusinessDay that some of the companies are still downsizing because, according to them, they cannot continue to support the number of employees currently in their services.

BusinessDay investigations show that companies like Niger Dock, Dorman Long and Free Zone Fabrication International and Delta Afrik are currently limping and have shed employees because of lack of investment in the oil and gas sector.

Eddy Wikina, a former external affairs relation manager of Shell Nigeria Exploration and Production, says the lack of investment in the oil and gas sector has destroyed the industry and by implication the realisation of the dream of the local content development policy.

“Some of these fabrication yards are nearly empty because there is no work for them to do,” Wikina asked.

“The local content programme has been negatively impacted by lack of investment. If you don’t have investment where would contractors get work to do in their yards? It is when they get jobs that Nigerians can improve their skills or learn on the job.”

According to Diran Fawibe, the chief executive of International Energy Services (IES), the companies that are not getting jobs would probably have to resort to the laying off of some of their employees.

“Such a situation implies that the industry is not buoyant,” Fawibe said. “If it was, the industry would accommodate a large number of companies”.

In his own reaction to the lack of investment in the oil and gas sector, Biodun Adesanya, managing director of Degeconek, an oil servicing company, said the level of investment is proportional to the ability to generate local content jobs. 

OLUSOLA BELLO &

PATRICK ATUANYA