• Saturday, July 13, 2024
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Stakeholders advocate implementation of local content laws to protect indigenous companies


Stakeholders in the Nigerian oil and gas industry, has called on the Nigerian government to ensure effective implementation of the local content laws, to protect the indigenous companies in the oil and gas sector.

Speaking during a panel session at the 2024 NOG Energy Week in Abuja on Monday, Ernest Azudialu – Obiejesi, the chairman, Nestoil Limited said that though Nigeria over the years has built much capacity in the sector, there was need to promote laws that ensures the protection and development of indigenous companies.

According to him, there was need for countries, including Nigeria to enact laws that enforceable, stressing that lack of enforcement laws on the sector will leave local companies undeveloped while foreign investors repatriate investments to their countries.

Read also:Building a future-ready workforce: Prioritising skills development and innovation in Nigeria’s Oil and Gas industry

He said, “I want to tell you that if you want your local content or if you want your capacity to grow, you have to enact local content laws that are enforceable. Making law is one thing. The other one is enforcing it, administrating it, and making sure that it works.

“If you do not do that, what you’re going to see is a typical example where investments come to a country, stays, and the country becomes a major producer for 50 years, and the whole money will just be drained out of that country. The locals will not be able to develop.

“Nigeria has built quite a lot of capacities within the country. And one of the areas where we can pride ourselves is in the area of oil and gas. And we know that some of these capacities, we can’t export them, but the ones in the oil and gas, we can export to other countries. And exporting them means we need laws to make sure that those companies that are in Nigeria are already developed.”

He explained that there are setbacks in the sector, affecting the growth of local companies, one of which he said was the bidding process. Local companies according to him are not doing well due to the poor bidding process in Nigeria.

Read also:Oil and Gas as a catalyst for growth: Critical reform ideas

He said, “And there are a lot of people who are briefcase contractors who don’t have capacity, but they will tell you they have connection and because of that, they go and bid for jobs they cannot do. So these things have to be checkmated.

“So that when you are bidding for a job in the oil and gas industry, you compare apples to apples, not apples to oranges. So people of the same technical capacity can bid for a job. And when they are given that job, they’ll be able to do the job timely and within budget,” he said.

Speaking further, Azudialu-Obiejesi noted that addressing the barriers to effective trade among countries is part of the mandates of the Africa Continental Free Trade Agreement (AfCFTA), adding removal of trade barriers would ease exportation of skills.

“So those are things we are trying to advocate. And by the time Nigeria has entrenched itself with all this capacity, very well as we have done, we can then go to other countries and then start helping them. Start also making money by bringing those experiences to all those countries.

“And that is what the African continental free trade zone is trying to achieve, so that they will break up the barriers, break up all the things that is inhibiting other countries from going to other countries to do business.

He explained that the Nest Oil has grown from a service company in 1991 to an oil producing company. The company which according to him has become one of the biggest pipeline companies in Nigeria, serving the IOCs.

In his remarks, Abdulmalik Halilu, Director, Monitoring & Evaluation, Nigerian Content Development & Monitoring Board (NCDMB) stated that the Board has continued to ensure that the necessary procedures that will accelerate approvals for contracts to be awarded to qualified Nigerians are in place.

He reiterated the commitment of the Board to ensuring that first consideration is given to Nigerian companies, irrespective of the type of company, while ensuring that local content is not compromised on the basis of standards.

Read also:Navigating Nigeria’s Energy Landscape: Key milestones in midstream operations for uninterrupted oil and gas delivery

“So we have pushed the discussion around standardization by making sure that the Nigerian content equipment certificate that you need to obtain for you to be able to participate in the industry has elements of certification, be it ISO certification, process certification, and so on.

“So that enables us to ensure that all these companies operate in global standards, and that is why you can see that they are able to operate in countries like India, U.S, and so on. Finally, all of us as Nigerians, as investors, must have faith in the law.

“We have been very lucky, today we have a president that also supports local content and that is why there’s a push with the enabling executive orders. Beyond that, we also have enabling business efforts by the government to ensure that all regulators, not just NCDMB, ensure that they make life easy in terms of business enablement.

“So all these point to the fact that we must build capacity before talking about exporting capacity, and that is why we’re having this discussion,” he said.

Also speaking, Olusegun Olutayo, a senior trade policy expert at the National Action Committee on Africa Continental Free Trade Agreement (AfCFTA) urged indigenous companies to leverage the AfCFTA to strengthen available capacities in the sector.

He stressed that the AfCFTA is guided by protocols, one of which is aimed at promoting local content within the region.

“The moment you move out of the multilateral and then you are forming the regional, the critical element there is called the rules of origin, because we want to know how many percentage of your local inputs you are having to make up to the final product.

“So AFCFTA is saying you don’t need to go to other third parties. That input you are looking for, you can easily get it within the context of AFCFTA.
Paraventure, you could not get it. Then we have what we call threshold. So there is a percentage or threshold of input that must come within the African states