Eboh: Deepening local content development must go with capacity growth, certification
How do you rate the country’s 10-year journey towards deepening local content in the oil and gas sector?
IT has not been an easy trip since the enactment of the Local Content Law. The act brought a little stability even though in the beginning, it was not accepted by most International Oil Companies (IOCs). The oil majors did not want to accept the reality, but the outcome of the entire process is something that we must all commend because, for some strange reasons, they never thought that it was possible for local companies to participate in some oil and gas activities.
However, I think this was because they have been in the oil and gas industry for over 50 years. With the efforts put in, and efficient monitoring by the Nigerian Content Development and Monitoring Board (NCDMB), I can say that the situation is a little bit okay. So, kudos to the NCDMB executive team, starting from the first executive secretary who ensured that oil companies complied with the act.
Let me add that there are lots of successes in terms of our constitution and the roles that Nigerians are playing today in the sector, as the act has also opened the door and allowed Nigerians to play major roles in the sector. That alone is a very great success recorded so far.
To some extent, that has also added to the conservation of foreign exchange because, in the past, everything, including fabrications and disposals were done outside the country, and a good number of personnel, especially experts were brought in from abroad, and everything was manufactured abroad while only installations were carried out in the country. With local participation, we have saved about $10b over this period from our local manpower contribution.
We have also saved a lot of money from exchange retention in the country, but we can do more if organisations come up with more strategies to ensure that we have the requisite know-how in the country. That said, let me stress that knowledge acquisition and capacity development should be seriously encouraged.
Are there obvious loopholes inherent in the act, or gaps noticed in the process of enforcement?
The major challenge that we are still facing is the ability to scale up to the next level. Second, most local companies do not still have the financial capacity to become effective. In addition to this, more training opportunities are needed because the essence of putting in place the local content act is to develop in-country capacity in terms of human resources and facilities. In summary, access to funds, equipment, technology, etc, constitute the major challenges confronting local players in the industry.
The NCDMB edifice recently commissioned by President Muhammadu Buhari has a lot of input from the local front. But what value does it add to deepening local content development in the sector?
It is a landmark structure, but I don’t know the rationale behind that building, which is a very huge project. This is why I think that the NCDMB deviated a little from its primary role. However, if NCDMB says that the building is for investment, there are some other structures that still belong to it. Maybe the agency is looking at the future.
So, if we want to expand the Local Content Act to other sectors of the economy, then it would be okay to reference that building as an example. But for me, developing human capacity should be NCDMB’s priority because it has all the infrastructure in place already to monitor the initiative. In that regard, you cannot compare an investment in human capacity development to anything else.
But the NCDMB has exited government allocation and needs to raise funds to sustain itself. Do you not consider this enough reason for it to embark on projects that are revenue-generating in nature?
I do not agree with that because there are other ways that it can approach revenue generation to sustain the board. Specifically, the agency is not mandated to get involved in businesses, or sundry investments because one percent of every contract in the oil and gas sector goes to it. The proper utilisation of those resources is what should be its interest and not invest in, say refineries. We already have the NNPC that is saddled with the responsibility of refining the product. The NCDMB’s responsibility is simply monitoring and building capacity. So, what has a capacity building and monitoring got to do with establishing modular refineries for instance? No! I don’t subscribe to that because it constitutes wastage of resources.
It is important to note that it is not only NCDMB that is into this sort of thing, many government institutions are involved in deviating from their mandate to other things despite the laws making provisions for their means of sustenance. The main problem in this regard has always been their inability to think outside the box. Their managers should encourage capacity building and more local participation to retain some of these benefits. If they want to have more money, they should do proper monitoring, ensure that revenues are collected, and also make sure that contracts don’t go outside the country because some of these contracts are still going to firms outside this country.
Would you advise the Federal Government to expand local content beyond the oil and gas sector?
Yes, because the experience from the oil and gas is a very good one, which is capable of helping the government to build capacity in other sectors of the economy. For instance, in 50 years, no major local companies participated in massive welding works in the sector. But today, Nigerians are exploring, producing, supervising, and building. With that, more revenues are retained in the country.
COVID-19 went a long way in exposing our underbelly because most expatriates left the country, so most road contracts and rail projects were put on hold. That shouldn’t be. On the contrary, today, all aspects of the oil and gas sector are still running even though expatriates are not in the country. This is because we have good local companies that are up to the task. So, if you expand the local content initiative to other areas, we would be able to retain the knowledge from these expatriates, and before long, we would have a lot of indigenous companies taking up the responsibility of developing other sectors of the economy. We have lots of good Nigerians, so all that is needed is to give them time to enable them to excel in their respective fields.
The Lagos State government should be specifically commended because it gives contracts to local companies and that is why during the lockdown, it was still able to carry out maintenance and construction works across the state. The entire country needs to borrow a leaf from Lagos State to achieve self-reliability and in-country capacity. Once this happens, it is only a matter of time before we catch up with international standards, create more jobs, and retain more revenue in the country.
Different agencies appear to be playing the role of empowering and training manpower in the oil and gas sector.
Is there no need to harmonise these agencies? If there is, how can the government go about it skillfully?
The government needs to harmonise the functions of these training institutions just as we need to identify the training gaps. We need to know the kind of training that the Industrial Training Fund (ITF) is giving. The Petroleum Technology Development Fund (PTDF) and the NCDMB appear to be doing the same thing. It is important to ferret the skills-set and training programmes that the sector is in dire need of so that efforts are not duplicated. If the functions are harmonised, these institutions will be able to offer wide-ranging training programmes thereby creating enough opportunities for Nigerians. So, the government should take up the issue of harmonisation immediately.
With more African countries heavily involved in oil-producing activities, how can Nigeria position itself to benefit from this development through exporting skilled manpower to these countries?
Nigeria is ripe and in the position to export skills. It is a great opportunity for Nigeria having been in the business of oil and gas for so many years. We have supported Ghana. Mozambique for instance has about $15b oil and gas projects, but it does not yet have the required skills. Nigeria has the opportunity to participate in that area if we can develop our skills. Our skills have to be internationally recognised and certification has to be taken seriously because of its global nature. If we have labourers and technicians that are not certified in line with international best practices, they are not going to level up out there. So, we need to look at the aspect of the right skills to impart to Nigerians. However, I believe Nigerians have the requisite experience to actively participate and take up certain positions in most of these countries that are coming up in the oil and gas sector.
Do you think the country has made sufficient progress in addressing the issue of quality management in the oil and gas sector to necessitate the expansion of the local content development to other sectors?
To some extent, in the oil and gas sector, we are not working below the standard as the country has been able to step up to the table, even though we didn’t have institutions to provide the needed support at the beginning. But it is important to mention that a company like ours went outside the country to get its staff adequately trained and also got the system certified. Many other organisations that are today involved in oil and gas have also been able to certify their systems to meet the international requirements.
The Federal Government must spare no expense in ensuring that Nigerian products meet international standards. Except that is done, we will continue to have a lot of our products rejected across the world. We have a lot of opportunities in the free trade zone that is coming very soon in Africa, but how prepared are we? Without international best practices, we go nowhere. I think the government has to look into that. In the oil and gas sector, we have registered about 70-80 percent success but we are struggling in other sectors.
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