Nigeria's 70% Local Content Target By 2027 Under Threat - Investigation

20 August 2019

The nation's quest of attaining 70 per cent local content growth by 2027 has been threatened as the operational capacity of dockyards, used for the fabrication of oil and gas facilities has been threatened because of lack of jobs for indigenous service companies in Nigeria.

An investigation by Vanguard showed that the low patronage has culminated in skeletal operations and in some cases retrenchment of labour at the various dockyards, including Dorman Long, Niger Dock, Nestoil and Ladol.

The managing director, Lagos Deep Offshore Logistics Base, Ladol, Dr Amy Jadesimi, did not respond to Vanguard's request.

But a well-informed source in the company said: "Since the completion of work on Ejina integration, which has since moved to the site, we are not doing much. The entire facility is currently underutilised."

An investigation by Vanguard in others, including Nestoil and Dorman Long, indicated that their facilities were also highly underutilised, because of lack of jobs.

Expert

In an interview with Vanguard, Prof. Omowumi Iledare, a Professor of Petroleum Economics and Policy Research and former Director of Energy Information Division of the Center for Energy Studies, said: "We keep missing the opportunity to demonstrate to investors that we are back on track. We failed again despite every effort made to pass the governance bill. We started 20 years ago when we told the world we will reform and we for whatever reasons backed down in the very last minutes of the 7th Assembly. That is one.

"Second we changed key players on the government side as if we are changing suits in the closet. Over the last 10 years, how many changes have we made with respect to the governance of the industry? These things matter when you ask someone to bring billions that may take 8-10 years to get first oil and perhaps another 5-8 to breakeven. So the little investment we get is to develop existing assets not to seek for new ones, hence the utilisation rate of the dockyards. (local content)

"The competition for investment is higher now. You have a new producing region at the stage than we were in the 60s. They find them easier to deal with and our rent-seeking and rent sharing mentality are pitching one region against another in the reform efforts and investors perceived this. So my friend the completion is a lot keener now than before.

"What one expects if we have taken advantage of the momentum the PIGB process created and brought it to a conclusion, it would have been different. It is also unfortunate that the last bid round was 2007 for the new block. So no new discovery implies no new fabrications and the assets development efforts are not commanding the type of job creation a new discovery could bring."

Way forward

On the way forward, he said: "First is the reform and I am glad to hear what the National Assembly is planning to do. Reinventing the PIB in NASS is not the way to go. Look at what can be done to speed and get the PIGB signed. Next, the oil & gas block round sale is critical. Third, we did before, incentivise investors without compromising revenue. We cannot close our eyes to the emerging new oil and gas dynamics in the coast of Africa, not just West Africa.

"NNPC still has a big role to play in achieving the local content target, but the emphasis must not be the Agency role of advising the government on oil and gas industry. It has not helped the government of the country, instead, it is a divide and rule tactics that must be avoided by the government. NNPC Act does not make the corporation a substitute for the Ministry of Petroleum."

Target

Early this year, the Executive Secretary, Nigeria Content Development and Monitoring Board, NCDMB, Mr Simbi Wabote, had disclosed that the board was committed to achieving 70 per cent local content growth by 2027.

Vanguard

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