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Content board chides IOCs for idleness of Nigerian yards


As Kaztec targets $800m investments
Asks for concessions in contract awards

Nigerian Content Development Management Board (NCDMB) has expressed concern over the low level of activities in indigenous fabrication yards operating in the oil and gas industry

The Board observed that “A lot of these fabrication yards are almost lying fallow; they’re dying because of lack of jobs.”

Speaking with journalists after a tour of the Kaztec Engineering Limited Fabrication Yard on the Snake Island, in Lagos last week, the Acting Executive Secretary, NCDMB, Denzebah Patrick Obah, said the Board will no longer continue to condone excuses by International Oil Companies (IOCs) for not domiciling more of their jobs in-country.

He said: “If we sit down and continue to paint or add coloration of excuses then the situation will remain. What we need to do is to tell the companies that we have fabrication yards that can wheel things to world class specification.”

The development comes as Kaztec Engineering is planning addition $800million investments in the Fabrication Yard that will generate more jobs in excess of 1500 over the next three year, which it pegged on continued patronage from the IOCs.

The company said it had already invested up to $600million and employed almost 2000 workers in the last three years to put up the world class Fabrication Yard, which it hoped will serve not only the Nigerian, but West African markets.

It also asked for concessions in contract awards in the industry, as being done in other climes to keep big yards like its own busy.

Obah, who was accompanied on the facility tour by the Nigerian Content Managers of the IOCs, including Agip, ExxonMobil, Chevron, and Addax, said the “visit affords us the opportunity to take stock of what is on ground in these facilities.”

He confirmed that “What we saw in the Kaztec Fabrication Yard is a testimony that Nigerians can really do a lot and meet world class standards in the oil and gas industry.” He however appealed to all the indigenous yards to close up “whatever leakages that exist in the oil and gas industry so that more jobs can be created.”

He added that given the state of the economy, government “should expand the frontiers of local content to cover other sectors so that there will be more jobs,” to increase economic activities across all the sectors.

Also speaking with journalists, the Technical Adviser to the Group Chairman, Kaztec Engineering, Israel Nweke, noted that indigenous yards are not getting enough patronage from the IOCs operating in Nigeria.

“We’re not getting enough support from the IOCs… Most of the jobs that are regular in the oil and gas industry are the very small pools for small fabrication items; we haven’t really got the big ones,” he said.

Nweke attributed the low patronage from the IOCs to the fall in oil price and attendant slashing of industry’s capital expenditure, saying, the cause of lack of patronage is the oil price fall. Basically, before you do anything right now, you have to check how much you’re making vis-à-vis how much you’re going to spend. This is what is making most of the oil companies not to spend so much.”

Noting that the Nigerian industry infrastructure are over 40 years and need revamping, he, however, said: “But the revamp activities are not as much as we would expect because the oil price, which is supposed to match those activities is not robust enough to accommodate those costs.”

Urging government’s intervention to keep big yards like Kaztec’s busy, Nweke called for concessions in the award process, saying, “For big yards like this like in Singapore and other parts of the world where we’ve seen capacity being grown, you identify yards like this and give them jobs. You don’t put them out to bid, what they do is to sit with them because the companies who want to give the jobs have their estimates; they know how much it will cost them, so they will sit down with you and negotiate a cost.”

He argued that such a concession will not lead to lack of confidence in the bid process, noting that throwing every job up for bidding will lead to frivolous bids thereby undermining the process.

“We need the concession where government says a percentage of this work should be given to specific yards… the only way government can do that is to give a different kind of approach,” he added.

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