‘Why IOCs want indigenous firms to cut contracts cost’
The Nigerian Content Development & Monitoring Board (NCDMB) has attributed the call by International Oil Companies (IOCs), for reduction in the cost of executing projects by indigenous oil firms to declining oil prices.
IOCs in the wake of the oil price crash had directed indigenous contractors’ to cut costs by at least 50 per cent; a development the firms said was suicidal to their businesses.
Speaking during a courtesy visit to Niger Dock in Snake Island, Lagos, the Executive Secretary of NCDMB, Simbi Wabote, explained that the low oil price regime had forced many oil companies to embark on cost-cutting strategies.
According to him, this is just one of the ways oil companies are trying to remain in business. “The call for reduction in the cost of executing projects is not peculiar to the Nigeria oil environment. This is what is being done everywhere around the world. Companies are trying to survive the tough oil environment and it will in no way affect the quality of project executed,” he added.
He however promised that the Board will continue to protect the interest of indigenous operators and the implementation of the local content policy in the country.
He added that the Board is planning to expand local content projects in the country, with strategic partnerships with the IOCs, noting that “Before 2010, local content services in Nigeria were attaining three per cent, but since 2010 the attainment has increased to over 20 per cent.”
The assertion comes as Niger Dock Nigeria said it has invested over $500 million in infrastructure at Snake Island, Lagos.
The Director, Corporate Affairs, Jagal, Joy Okebalama, said Nigerdock the company would continue to work towards the development of the Nigeria content initiative.
She described Niger Dock facility as a World Bank/Federal Government project, privatised in 2001, and acquired by Jagal in 2003, adding that Nigerdock is the first privately owned free zone that is 100 per cent Nigerian, with all the full free zone benefits.
Similarly, the Lagos Deep Offshore Logistics base (LADOL), is currently playing host to the fabrication of $3.8 billion oil and gas logistics service facility commonly known as the Floating Production Storage and Offloading (FPSO), otherwise called the Egina project.
The NCDMB lauded activities at LADOL, describing it as a testimony of the success story of Local Content laws in Nigeria.
Wabote, who led a team of the Board and other top industry service providers on a facility tour of the base at the Apapa Ports Complex, Lagos, expressed satisfaction that oil and gas logistics firm is moving up in compliance with its directives.
While urging the management to remain committed to set goals and objectives in ensuring cost savings, jobs creation as well as technology development, he said the Board will apply “all available instruments to galvanise patronage for the facility.
“The current administration is working hard to create jobs, and that is part of what LADOL is doing here. They have embraced local content and that has a multiplier effect of lowering cost of doing business,” he said.
The Managing Director, Ladol, Amy Jadesimi, said “LADOL has come to prove that real local content actually lowers cost because one of the excuses that people give for not complying is cost. But if you look at what happened in Brazil, Norway and even China that have carried out real local content, where everybody complied, you actually have cheaper cost of doing business.”
The Executive Chairman of LADOL, Ladipupo Jadesimi, appreciated the visit of the NCDMB, describing it as “an assignment in deepening local content in Nigeria,” while thanking the Federal Government for upholding the sanctity of the local content law in Nigeria.