Lack of local content as well as lack of capacity to shore up value chain especially in the oil and
gas industry led to capital flights for over 50 years amounting to almost $350b, according to
industry experts. This huge loss, according to the Nigerian Content Development Monitoring
Board (NCDMB), necessitated the need to look inwards in the creation and promotion of
products and services.
Discussions started sometime during the Obasanjo’s Administration as to how to recover the
missing funds and address loss of jobs. Accordingly, a policy on local content was enunciated
which was domiciled with the Nigerian National Petroleum Corporation (NNPC) to implement
and push the boundaries in order to claw back some of the money.
This target was a herculean task given that, at that time, there were challenges regarding the
policy as most of the companies did not see any legal basis to operate effectively. At that period,
oil services within the oil and gas industry were the exclusive preserve of the international
service companies like Schlumberger, Halliburton, among others. There was a cap for Nigerians
in the attainment of key positions. Less than 5 per cent of all activities was done locally while
others were taken out of the country.
But the push and pull in the pursuit of local content in the oil and gas industry led to the
establishment of the Content Development Act of 2010 which came with a number of provisions
with regard to what is required of participants, as implemented by NCDMB. At the moment, the
NCDMB has a strategic 10-year road map where it wants local content attainment at 70 per cent
in 2027. This strategy is hinged on capacity building and development through alignments with
sectoral linkages.
Through the 2010 Act, the industry has been able to move from less than 5 per cent to about 32
per cent in the pursuit of local content. Nigerians are now employed and given opportunity to
participate in the oil and gas sector and value chain. Now, there are opportunities for investors
because their investments are now protected. Domiciling NCDMB in the Ministry of Petroleum
Resources has provided an opportunity to synergise with the industry within that ministry. Most
of the International Oil Companies (IOCs) are now headed by Nigerians. For instance, the
managing directors of Shell and NLNG are Nigerians.
The IOCs have embraced the local content law, as their benefits have been articulated. One of
the benefits is that what it takes to pay five expatriates is now drastically reduced to hire a
Nigerian to save high maintenance cost. It is obvious that there has been security of supply in
this Covid-19 situation despite the departure of most of the expatriates because of health
challenges. Nigerians who have built capacity over time, have to keep sustaining the oil and gas
business. Nigerians are practically dominating the business in the service and upstream sectors.
For instance, it was mandated by law that drilling in the swamp and land location would be
reserved for Nigerians.
There are other initiatives by the industry that focus on infrastructural deficit, gas pricing,
sanctity of contract, creating an environment for investor-friendly businesses to thrive, checking
issues of pipeline vandalism, among others.
The industry is reactivating its business continuity plan which could be likened to the economic
sustainability plan of the federal government. One key document being considered for
implementation is the National Gas Policy 2017.
Industry watchers have described Nigeria as more of a gas player than crude oil. Hence in the oil
and gas parlance, the refrain is “a tiny drop of oil and an abundant natural gas resource.” Major
stakeholders have disclosed that the country has about 203 trillion cubic feet of proven gas and
over 600 trillion cubic feet of unproven gas. That is the quantum of gas which is drastically
under-utilised. The industry has sectoral linkages with the power sector, gas-based industries,
agricultural and transportation sectors. The Ministry is focusing on exploration in the inland
basin and offshore to further increase the abundant gas resources.
Some months ago, President Muhammadu Buhari flagged off the Ajaokuta-Kaduna-Kano Gas
Pipeline Project. According to stakeholders, the project is a 6.4km gas pipeline that will unlock
about 2.2 billion cubic feet of gas per day. Experts say this can resuscitate over 232 industries
that became moribund as a result of power crisis. The Abuja-Kaduna-Kano Independent Power
Plant along this corridor will also spring up industries and create jobs for Nigerians.
Besides, the National Gas Expansion Programme has to do with using gas as a precursor for
production of other items. The programme seeks to gather gas resources across the broad
spectrum of the gas value chain and ensure they get to the end user at a good price. This will
further deepen the domestic market with Compressed Natural Gas (CNG) and Liquefied
Petroleum Gas (LPG) which can eliminate the use of kerosene and firewood for domestic use.
There is also the Nigerian Gas Flare Commercialisation Programme whose transaction,
commercialization and design have been completed. The programme came up with a regulation
called the Flare Gas (Prevention of Waste and Pollution) Regulations 2018 that is now being
implemented by the Department of Petroleum Resources (DPR).
Early this year, the Ministry commissioned one of the deficit areas in the gas sector which is the
National Gas Transportation Network Code that would address integrity issues, metering,
transparency and investor confidence. Looking at the different gas development activities in the
country, the Ministry declared last year 2020 “the year of gas.”
That suggests the country is beginning to look deeper in seeking ways to improve the economy
with gas. A small country like Trinidad and Tobago has globally expanded its industry with gas.
That country has 1.4 million people with 11 trillion cubic feet of gas, way below Nigeria’s
proven gas reserve. That country has a globally competitive petro-chemical industry, as it ranks
number one worldwide in ammonia export, and number two in methanol export. This contributes
significantly to its GDP.
Shoring up local content is a clarion call that should target not only the oil and gas sector but also
the non-oil sector of the economy such as banking, shipping, automobile, aviation, textile,
agriculture, among others. These should have guidelines to enhance opportunities for Nigerians.
Partly for this reason, an Executive Order was signed in 2017 to improve local patronage of
made-in-Nigeria goods and services. The Order was signed by the Vice President, Professor
Yemi Osinbajo, who was then Acting President. Later on in February 2018, President
Muhammadu Buhari signed Executive Order 5 to ensure that procuring authorities gave
preference to Nigerian companies in the award of contracts, and prohibit the issuance of visas to
foreign workers with skills that are readily available in Nigeria.
This explains the preparation of a new legislation called the Nigerian Content Development and
Enforcement Bill to revive the country’s regulatory approach to its companies in both the oil and
non-oil sectors of the economy. The bill which has made slow progress was submitted to the
House of Representatives in December 2019. The bill seeks to promote indigenous participation
in key sectors of the economy such as information and communication technology (ICT),
mining, construction, oil and gas, and power.
With Executive Orders 3 and 5 that promote local content and local capabilities, other sectors of
the economy can provide local services and products. One of the 17 parastatals under the Federal
Ministry of Industry, Trade and Investment known as the National Automobile Design and
Development Council (NADDC), has shown positive signs in this regard. NADDC is currently
developing, designing and carrying out engineering work on two specific Nigerian vehicles that
will be in tune with the country’s culture, climate, terrain and economic structure.
The automobile sector has the capability to create hundreds of thousands of direct and indirect
jobs. For this reason, the sector is implementing the National Automotive Industrial
Development Plan which has key elements of investment promotion that will encourage local
production of vehicles as opposed to continued importation.
To address poor patronage of indigenous automobiles even at the governmental level, the sector
has gotten involved in market development to empower Nigerians to purchase vehicles
assembled and produced in Nigeria. To achieve this, the sector is working with Jaiz, Zenith and
Wema banks to provide single digit automotive financing. According to statistics from this
industry, about $1b was invested in the sector in 2019 by a number of companies such as
Innoson Motors, the Dangote Group, Nissan, among others.
According to the authorities, the sector, through its skills acquisition and development initiatives,
is training youths across the country in automobile engineering and mechatronics. For this
purpose, the sector has created seven automotive training centres across the country to ensure
that Nigerians especially the youths are empowered, self-reliant, creative and innovative. The
centres are spread across the six geopolitical zones and the Federal Capital Territory (FCT). The
training focuses on advanced automotive technology with a view to enlightening the trainees on
some of the latest automobile technological systems, given that modern-day vehicles are
basically computers on wheels.
Another component of the big picture is vehicle electrification. This entails migrating from
vehicles that use petrol and diesel to vehicles that are powered by electricity. There are also plans
to migrate to vehicles that can be powered by CNG and Liquefied Natural Gas (LNG).
With the Covid-19 pandemic, many countries have become insular and protectionist including
Nigeria, and are unable to import certain materials and products. The development and utilisation
of indigenous capacity has become a task that should be pursued vigorously if the country must
find solutions thrown up by the Covid-19 pandemic and other external factors that could lead to
economic shocks.
The adverse effects of the pandemic should be a wake-up call for the government to accelerate
processes that focus on long-term sustainability approach in opening up the economy. This
means that relevant authorities have to look beyond the immediate and begin to play key roles in
ensuring local content practice against the background of the present Administration’s agenda
that the country must produce what it eats and eat what it produces.
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