Abuja — Participants at a two-day workshop on local content and indigenous participation in the oil industry rose here Friday stressing that a lot of work needed to be done to make Nigerians play a dominant role in the most important sector of the countrys economy.
While some called for legislation to secure a certain percentage of jobs for Nigerians and indigenous firms, others said it should be left at the level of policy framework that defines the roles of indigenous and foreign firms in the industry. Still others said Nigerians have first to cultivate an entrepreneurial spirit that seeks to build institutions that can create value for the economy.
"As a nation and as a people, we have yet been unable to establish a culture of institutional capacity-building in our enterprise management," Austin Avuru, Technical Manager, Allied Energy Services said in his presentation.
Most speakers at the workshop blamed the low level of indigenous participation in the industry on the inability of local firms to compete with foreign interests in project execution. Speakers argued that local firms lack both the financial and technical capacity to compete with their foreign counterparts.
But Avuru argued that this situation persists because "most business and entrepreneurial opportunities tend to create layers of rich individuals rather than sustainable institutions."
Several speakers at the workshop painted a picture of the degree to which Nigerians are edged out of the industry.
Rilwanu Lukman, Presidential Adviser on Petroleum and Energy, set the tone. Lukman disclosed that government invests over US$5.0bn annually into the oil sector.
He regretted however that "over 90 percent of the yearly expenditure escapes the domestic economy as capital flight through technical services rendered by foreign companies and goods procured outside the country at the expense of indigenous and Nigerian owned companies."
Government spends this amount as its equity contribution to joint venture projects with multinational companies. It has an average of 57 percent in these ventures.
Another speaker Thursday noted that construction of the Nigeria Liquefied Natural Gas Plant in Bonny, Rivers State cost US$3.8bn. Out of this, she said, only US$200m was spent within Nigeria. The rest, according to the speaker, was spent outside of Nigeria.
Many speakers therefore called for legislation. "Let us legislate," urged one speaker. The legislation, he explained, should provide for a measurable target, specifying that "within this period, this is where we want to reach."
Before that legislation, however, Nigerians individuals, governments, institutions and organizations - should first put their houses in order, said other speakers. One speaker observed that the state-run Nigerian National Petroleum Corporation (NNPC), organizers of the workshop, "should practice what it preaches." He noted that NNPC has always wielded the "big stick" but has never used it on the multinational companies, which made it possible for them to flout measures that could have led to increased indigenous participation in the industry.
Besides, said the speaker, NNPC as the leader in the industry, should blaze the trail in local content utilization by developing models for others. In this respect, he said, the Nigeria Petroleum Development Company (NPDC), a subsidiary of NNPC, should by now have attained complete local content utilization.
The speaker noted that NPDC has rather taken a retrogressive step, by appointing a foreign partner last year to help it develop an oil field. Like other speakers, he said the road to increased local content utilization and indigenous participation lay in developing Nigerias industrial base, especially in tools and equipment fabrication.
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Lukman called on participants in the oil and gas industry "to cooperate with us in ensuring acceleration of the indigenisation of the operations of the industry in Nigeria up to the highest level in order to ensure that the industry contributes fully to the nations economic development."
Government also plans to use the allocation of marginal fields to indigenous firms as a means of encouraging more indigenous participation in the industry. Marginal fields are those previously operated by multinational companies, but have become less attractive to them due to decreased output and higher production costs.
Government has identified a number of such marginal fields, and plans to open bidding for them from the end of August.
Already, an indigenous firm, the Niger Delta Exploration Production, is raising about US$5.9m from the local capital market for the development of a marginal field, the Ogbelle Fields, which it acquired from Chevron Nigeria Limited last year. -0-
