Prior to Nigeria’s independence in 1960, government initiated efforts to establish policies and legal measures to promote the development of local content in the oil and gas industry in the late 1950’s.
A number of policies and legal measures were adopted to encourage the use of local content in the industry but to a large extent, such measures were not considered comprehensive, and they also failed to achieve the desired goals of indigenising the industry and facilitating Nigeria’s economic diversification.
Determined to achieve this objective government in 1999, introduced initiatives to establish a comprehensive policy regime to promote the development of local content in the oil and gas industry. As a result, several committees were set up to create ways beneficial to the increase of local content levels in the industry, while increasing the industry’s contribution to Nigeria’s gross domestic product (GDP).
It was further identified that Nigerian content development initiatives required “an exhaustive systemic approach that would assess local content levels, identify constraints, develop clear policies and processes to stimulate growth and clearly define the roles and responsibilities of stakeholders,”as a result of which The Nigerian Oil and Gas Local Content Policy was created leading to the enactment of the Nigerian Oil and Gas Industry Content Development Act, 2010.
Standing firm and without any contradiction, the Nigeria local content” refers to the deliberate effort by the Nigerian government to ensure that a significant portion of goods, services, and laboir used within the country’s oil and gas industry are sourced from within Nigeria itself, aiming to develop domestic capabilities and maximize economic benefits by utilizing Nigerian resources and manpower, primarily through Act which mandates companies operating in the sector to prioritise local content.
Unambiguously, local content in Nigeria is defined as the value added to the Nigerian economy through the use of Nigerian resources, services, and human capital within the oil and gas industry, fostering indigenous capacity building and the Nigerian Oil and Gas Industry Content Development Act (NOGICDA) is the primary legal framework that governs and promotes local content development in the oil and gas sector.
The Nigerian Content Development and Monitoring Board (NCDMB) is responsible for overseeing the implementation of the local content policy and ensuring compliance by companies operating in the industry.
The Act has simply set a number of benefits by promoting domestic job creation, stimulates local businesses, and generates revenue within the Nigerian economy, encourage training and capacity building for Nigerian workforce, leading to improved technical expertise and facilitate knowledge transfer from international companies to local businesses through partnerships.
The Nigerian Content Development and Monitoring Board (NCDMB) was established in 2010 by the Nigerian Oil and Gas Industry Content Development (NOGICD) Act and is vested with the mandate to make procedures that will guide, monitor, coordinate and implement the provisions of the NOGICD Act signed into law on April 22, 2010.
The Board is saddled with the responsibility to review, assess and approve Nigerian Content plans developed by operators, set guidelines and minimum content levels for project related activities across the oil and gas value chain, engage in targeted capacity building interventions that would deepen indigenous capabilities – Human Capital Development, Infrastructure & Facilities, Manufactured Materials & Local Supplier Development and grow and manage the Nigerian Content Development Fund.
It is also the responsibility of the Board to establish, maintain and operate the Joint Qualification System (NOGICJQS) in conjunction with industry stakeholders, monitor Nigerian Content Compliance by operators and service providers. This will be in terms of cumulative spending, employment creation and sources of local goods, service and materials utilised on projects and operations.
It will award Certificate of Authorisation for projects that complies with Nigerian Content provisions and conduct studies, research, investigation, workshops and trainings aimed at advancing the development of Nigerian Content.
The foundation for NCDMB was laid in 2001 when former President Olusegun Obasanjo, inaugurated the Presidential Committee on Local Content in the Oil and Gas Industry. He mandated the Nigerian National Petroleum Corporation (NNPC) to drive the policy and set certain targets.
In its efforts to implement the policy, the national oil company set up the Nigerian Content Division within its system and issued some Nigerian Content directives to industry stakeholders.
Since there was no force of law behind the Nigerian Content directives, operators of the industry found it convenient to comply on best endeavor basis.
This situation provided the impetus for the Ministry of Petroleum Resources, NNPC and other industry stakeholders to work closely with the National Assembly to develop the Nigerian Oil and Gas Industry Content Development (NOGICD) Bill.
During the succeeding administration of late President Umaru Yar’Adua/Goodluck Jonathan, the National Assembly passed the NOGICD Bill.
President Goodluck Jonathan assented the Bill into law on April 22 and this gave birth to the NCDMB.
Dr. Ernest Nwapa, former staff of the Nigerian Content Division of NNPC served as the pioneer Executive Secretary from April 2010 to May l 2015.
He was succeeded by Arc Denzel Kentebe.
In September 2016, Engr. Simbi Kesiye Wabote was appointed as the 3rd substantive Executive Secretary of the Board.
Apparently though through insightful and perspicacious work done by erudite scholars experience shows most perfection in the inputs by various committees raised by government while pursuing a pragmatic approach to provide opportunities to local firms through a well articulated legislation.
With their pioneering exploration and production activities, the International Oil Companies, IoCs, were well-entrenched, determining the pace in Nigeria’s petroleum industry.
Foreign oil services companies also dominated the scene, executing juicy contracts to the detriment of indigenous companies, despite the existence of experts and companies with required skillsets.
Consequently, some observers did not even expect the Nigerian Oil and Gas Industry Content Development Act, NOGICD Act of 2010, which stated that “All regulatory authorities, operators, contractors, subcontractors, alliance partners and other entities involved in any project, operation, activity or transaction in the Nigerian oil and gas industry shall consider Nigerian content as an important element of their overall project development and management philosophy for project execution” to yield fruits very early for a reason. Comparatively, the multinationals were more sophisticated than the locals.
However, the Act started to impact positively, especially as many locals were given more opportunities. This would not have been possible without the strong foundation laid by past ministers of Petroleum Resources, in particular Senator Dan Etete, who was the Minister of Petroleum from 1995–1998, during the administration of the late General Sani Abacha as Head of State and Commander in Chief of the Armed Forces.
It is on record that a few weeks after mounting the saddle as Petroleum Minister, Senator Etete issued a directive informing the IoCs, that the “sidelining’’ of indigenous companies in preference to for foreigners would not be acceptable. Senator Etete is still widely celebrated as the champion of indigenous participation in the industry.
Specifically, his tenure produced the policy instrument for the marginal field bid round, conducted after his tenure in 2001, thus encouraging the IoCs to sell small oil and gas assets to indigenous investors interested in buying them.
Under the Petroleum (Amendment) Act No. 23 of 1996, enacted during Etete’s tenure, the president of Nigeria had the power to declare an oil field with about 10,000 barrels of oil per day (bopd) a marginal field to encourage indigenous businesses to participate in oil and gas exploration and production.
Before the Act, the deployment of indigenous practitioners and other resources accounted for only five per cent of the over $10 billion yearly industry expenditure, due mainly to lack of legislation. But with the Act, it became compulsory for the IoCs to set aside certain categories of jobs for local companies and within the next 15 years, the contribution of local content rose to over 30 per cent from a mere five per cent.
Consequently, the number of indigenous service companies increased to over 90 after the Act, from 44 before the enactment of the Act while the rigs and marine vessels owned by Nigerians, which were less than five per cent before the Act also rose to over 40 per cent.
The strides have given hope for the future, causing the NCDMB to profess that “the Board will continue to work on its plans to achieve the 70 percent in-country value retention in line with its 10-year Strategic Roadmap by the year 2027. The industry can only look forward to sustaining the drive to deepen local content, building on the 56.7% the Board thus far even though the Nigerian Oil and Gas Industry has been riddled with Forex crisis, revenue deficit and Gross Domestic Product (GDP) challenges. We hope that the remaining half 2024 will bring a full resurgence of the oil and gas sector and the achievements of the key focus areas of the Board 2024.”
Unfortunately, not many people remember Senator Dan Etete as an architect of local content and indigenous participation in Nigeria’s oil and gas industry and this is for a convoluted reason.
Their recollections are beclouded by the controversies that surrounded the sale of the Oil Prospecting License 245 (OPL 245), which became the subject of long legal tussles between the government, Shell, and a Malabu Oil and Gas Limited, between 1998 and 2011.
The 2024 Practical Nigerian Content (PNC) provide the NCDMB ample opportunity to showcase the outcome of the Act’s implementation in the last 15 years.
Indeed the current Executive Secretary (ES) of the NCDMB, Engr. Felix Omatsola Ogbe, excitedly expressed confidence that the Act and its implementation process have gained traction and building capacity of local firms.
At the event the ES, expressed profound gratitude to industry stakeholders, top-ranking vendors and staff of the Board for their contributions to the success of the Practical Nigerian Content (PNC) Forum 2024.
Speaking at the official closing ceremony of the four-day event at the Conference Centre of the Nigerian Content Tower (NCT), he said their active participation enriched discussions as the Board charts a pathway to the next frontier for Nigerian Content implementation.
Engr. Ogbe reiterated the Board’s determination to deepen engagements with local communities and oil and gas industry players through sundry schemes newly introduced, such as the Back-to-the-Creeks Initiative, the Revised Nigerian Content Community Contractors Financing Scheme, Nigerian Content Academy, and creation of more conducive and befitting zonal offices to enhance service delivery by the Board.
According to him, the Back-to-the-Creeks policy is “designed to equip youths in our communities with the skills to meet industry demands” through improvement of basic educational facilities and motivation of teachers. In regard to the Contractors Financing Scheme, he explained that the Board has increased the single obligor limit from N20 million to N100 million.
“What that does,” he noted, “is that it gives more opportunities for local contractors to be able to access higher figures” to enable them to secure and execute meaningful contracts in the oil and gas industry. In that way, the Scheme would serve as a mechanism “to bring the benefits of local content to communities.”
The Executive Secretary, who was represented by the General Manager, Corporate Communications and Zonal Coordination, Barr. Esueme Dan Kikile, expressed joy that the Board’s partnership with the Bank of Industry (BOI) is working well, that “performance is at optimal level,” and that the new funding scheme would be hugely beneficial to local contractors.
On the Nigerian Content Academy, he said NCDMB has the experience, the capacity in-house, and “the understanding of what it means to practise Nigerian Content,” having done that for 14 years, and that he believed the industry would take advantage of what the training facility has to offer.
He assured all industry stakeholders that the Board would continue to collaborate with them to fulfil its mandate as set out in its enabling statute, the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, 2010.
Ogbe has maintained that the Board would achieve its target of pushing local participation in the oil and gas industry to 70 percent by 2027.
Engr. Ogbe said jobs in the industry can only be out-sourced when there was no in-country capacity and would continue its stringent monitoring of projects in the country to ensure that where local capacity exists, Nigeria companies were given the opportunity to bid for the jobs.
He stressed that the “board will only approve local content plans that consist of contractors meeting the legal definition of Nigerian companies and demonstrating the capacity to execute projects within Nigeria”.
He added the NCDMB would continue to ensure that all services provided in the industry “generate values within the country”.
Despite all the aforementioned achievements the implementation is challenged by Capacity gaps:
Some local companies may lack the necessary technical expertise and financial capacity to fully participate in large-scale projects.
Also, Ensuring consistent adherence to local content regulations and addressing potential loopholes can be challenging while there are concerns Balancing the need to promote local content with maintaining competitiveness against international players.
