Minister of the strategic petroleum resources ministry, Mrs. Diezani Allison-Madueke oversees the most maligned sector of the nation's economic domain.
But even under very challenging environment, Nigeria's first female petroleum minister deploys uncommon strength, focus and vision to transform the nation's foremost revenue earner. LOUIS ACHI examines the challenges, especially her achievements in pushing the local content dimension...
Over 50 years' experience in the oil and gas industry continues to reveal the complex dynamics of balancing global energy security, domestic economic growth, climate, and environmental considerations. This riveting insight was shared recently by the Minister of Petroleum Resources, Mrs. Diezani Allison-Madueke with journalists. With little question the petroleum sector is the primary driver of Nigeria's socio-economic development - being the chief foreign exchange earner.
Currently, all alternative revenue generation efforts and options for the country pall when compared to the sheer size of petroleum revenue in Nigeria. It's then little wonder why the sector has drawn and continues to attract the lion share of focus, wrangling and debate in the national space.
In effect, being the key driver and supervisor of this all-important ministry then poses the most policy-making, operational and structural challenges - more than that experienced by any other Nigerian minister. This has been the lot of Mrs. Diezani Allison-Madueke, the nation's first lady petroleum minister. But significantly the Bayelsa-born technocrat has shown surprising strength, focus and vision.
One of her most important achievements is putting together the Petroleum Industry Bill (PIB), now before the National Assembly.
The Bill essentially targets a fundamental restructuring of the petroleum industry to maximize returns on the country's investment in the oil and gas sector.
Stemming from the Oil and Gas Reform Implementation Committee (OGIC) empanelled to review the subsisting 16 laws that governed the nation's hydro-carbon resources arena, the PIB represents a one-stop-shop legislation that would guide the sector and effect a pro-Nigeria restructuring of the country's lop-sided relationship with international oil companies (IOCs).
The Initial efforts to push the PIB were scuttled in the Sixth National Assembly. No thanks to intense intrigues thereby provoking business divestment from Nigeria as well as prospective investors heading to nearby countries such as Angola, Ghana and Burkina Faso which boasted more stable policies. Today, for Nigeria, the story appears different.
The PIB cobbled under the watch of Diezani essentially incorporates the legal outline that will delineate and shape the oil sector.
The creation of a conducive business environment for petroleum operations; optimization of domestic gas supplies, especially for power generation and industrial development; establishment of a progressive fiscal framework that encourages further investment in the petroleum industry while optimising revenues accruing to the government; the establishment of commercially oriented and profit-driven oil and gas entities; as well as the deregulation and liberalization of the downstream petroleum sector form central pegs of the PIB.
Both chambers of the National Assembly have confirmed receipt of the magical Petroleum Industry Bill and pledged accelerated consideration. Between vision and specific executive action, what remains to give teeth to the painstaking efforts to produce a transformative blue-print to guide operation of the nation's petroleum sector is consideration and endorsement by the national parliament. As Nigerians wait with bated breath, it will be worthwhile remembering the soft-spoken Amazon who gave life to the script.
The local content challenge...
As the PIB currently enjoys the limelight, the international oil firms are expressing reservations at the impending passage of the bill. But it could be recalled that the IOCs were also very wary about the passage of the local content law. Today, it is in operation and progressing swiftly to achieve its vision targets.
The Nigerian Oil & Gas Industry Content Development Act 2010 (the "Local Content Act" or "NCA") received presidential assent on Thursday, 22nd April, 2010. Now in operation, the Act seeks to increase indigenous participation in the Nigerian oil and gas industry (the "Industry") by prescribing, inter alia, minimum thresholds in relation to the utilization of local services and goods.
The Local Content Act which derives from the Nigerian Content Policy focuses on the promotion of value addition to the Nigeria economy through the utilization of local raw materials, products, and services in order to stimulate growth of indigenous capacity.
The NCA accords certain privileges and preferential treatment to companies that qualify as "Nigerian Companies" pursuant to the Act, including preferential treatment in the award of contracts for projects in the Industry. To qualify as a Nigerian Company under the NCA, a minimum of fifty one per cent (51%) of the issued shares must be held by Nigerian shareholder(s); whilst the remaining forty nine per cent (49%) of its issued shares can be held by foreigners.
According to the Managing Director of the NNPC, Andrew Yakubu, the NNPC had achieved over 40 per cent in the area of encouraging local participation in the oil and gas industry. "The participation of Nigerian Companies in the oil and gas business, especially the upstream segment has substantially increased from a meager 10 per cent before the enactment of the law to more than 30 per cent even in the deep offshore as recently demonstrated in the just commissioned Usan Deep Offshore Field development."
The Minister of Petroleum Resources, Mrs. Deziani Alison-Madueke, described the signing of the Nigerian Oil and Gas Industry Content Development Act by President Goodluck Jonathan in 2010 as arguably the most heralded development for the industry in the past few years.
While receiving the leaders of the pan-Ijaw socio-cultural group, Ijaw National Congress (INC) in her office during a recent courtesy visit, she let that she has discussed the need for a sensitization program with the Acting Executive Secretary of the Nigerian Content Development Board, Engr. Ernest Nwapa, and had mandated him to draw up a program aimed at educating the people of the Niger Delta on their rights under the law and how to take advantage of the law to empower themselves.
"We are at the implementation stage of the local content law. As you know, implementation is key and all is being done to ensure that those whom the law is meant to benefit are carried along. I will ensure that a major sensitization drive begins in the next few weeks," she told the INC leaders.
Although some stakeholders want far more speed in meeting vision targets of the local content policy, like Governor Seriake Dickson of Bayelsa State, it cannot be denied that significant grounds are being covered.
According to Gov. Seriake, "The top players in the sourcing and lifting of crude from these devastated communities don't have offices here in the Niger Delta. We have discovered that we produce the oil and these other states take the wealth at our own detriment. Some of these top operators become millionaires and develop other states but they breed militants, create unemployment and environmental degradation in the region."
But Deziani would have none of that. Speaking recently at a Nigerian Content Workshop in Yenegoa, the Bayelsa State Capital, the Minister of Petroleum Resources said the country must keep faith with the programme.
According to her, implementation of the Act was transparent and predicable and would not be subject to policy somersaults; other prosperous nations adopted one form of industrialisation or development policy and succeeded because they kept faith with the shared vision and sustained the programme for long periods.
Her words: "Government is committed to this programme and would continue to encourage our partners in the private sector and international community to support the implementation, which is not an effort to drive foreigners out of the industry but a requirement to develop genuine partnerships between local and foreign companies."
The minister disclosed that the Nigerian Content Development Fund (NCDF) would soon be inaugurated. She was optimistic that the Nigerian Content Development and Monitoring Board (NCDMB) would use the fund to create the much desired enhancement of local capacity and access to single digit interest rate.
Indisputably, there has been a remarkable increase involvement of Nigerian oil services firm in the construction of facilities in the oil and gas sector. There was for example, the design and fabrication of the Abang & Itut Satellite Field Development Project Platforms by Nigerdock at Island Integrated Free Zone for Mobil Producing Nigeria.
Additionally, very recently there was the laying of the first ever set of made-in-Nigeria oil and gas grade pipes at the ExxonMobil's Edop-Idoho offshore field. Prior to this time, such a contract would have been executed by an engineering company which is only a subsidiary of a foreign owned company.
Flowing from this feat, multinational oil companies including Shell, Agip and Chevron had since placed orders for about 100 kilometers of line pipes in the Stress Corrosion Cracking ("SCC") plant located in Abuja, a move that is likely to sustain the employment of over 200 Nigerians in the facility.
From LEADERSHIP checks, many indigenously owned shipping companies which render services in the oil and gas sector appear to be getting more contracts and getting more involved in the sector and becoming more relevant. These developments affirm that the enactment of the NCA was a step in the right direction. Additionally, it would appear that the NCDMB is taking further steps to give effects to the intent of the NCA.
Against the background of these positives, the emerging consensus is that credit must be given to whom it is due: in this case, the petroleum minister Diezani Allison-Madueke as she hold firm to her focus, despite the tough mission challenges.