Nigeria Content Online

The
federal government anticipates an average of $18billion (about
N2.7trillion) as savings from its total annual budget for the nation’s
oil and gas industry as a result of the Nigerian Content Law.

At
the formal unveiling of the new law to industry operators yesterday in
Abuja, Dieziani Alison-Madueke, Minister of Petroleum Resources, said,
coming more than 50 years since the commencement of oil and gas
operations in the country, the law will serve as “major enabler for
building the relevant capacities that will guarantee the long survival
of the industry”.

The
Nigerian Content Act was initiated in February 2005 to give legal teeth
to government’s aspiration to ensure that about 70 percent of the
nation’s oil and gas operations are domiciled in-country, to boost the
sector’s contribution to the gross domestic product (GDP).

Mrs.
Madueke, who described the Act as a “significant milestone”, said all
operators and service companies in the industry are henceforth required
to comply with the designated scope of work performance spelt out in
the law signed last week by Acting President Goodluck Jonathan.

Scope of work

The
work scope spells out about 23 domiciliation guidelines covering
engineering design, fabrication and construction as well as material
and procurement services to be provided by local firms to facilitate
the achievement of government’s target of 70 percent of local content
by 2010.

Besides,
the Act guarantees access to prospective foreign investors in the
industry; provides privileges for indigenous companies as well as
creates employment and training opportunities for Nigerians.

Acknowledging
similar requirements in other oil producing nations like Brazil,
Venezuela, Kazakhstan, Qatar, Malaysia, Indonesia and Norway, which
have local content development models, the minister said this will give
special attention to indigenous participation in the industry,
facilitate technology transfer and drive linkages to other sectors of
the national economic development.

“In
the past, to address local content, over 90 percent of all goods and
services used in the industry were actually imported from overseas,”
she said, pointing out that despite government’s continuous investments
of resources, the impact from the industry on the wellbeing of the
people is still not at par with international benchmarks.

Implementation

Mrs.
Alison-Madueke noted that the implementation of the Act, will be a
major investment opportunity for local and international investors that
will benefit from the commercial incentives it guarantees.

“It
will certainly create employment for our teeming youths in the Niger
Delta and other parts of the country as well as set the template for
expanding the concept into other sectors of the economy,” she said,
adding that the unveiling of the new law, marks the formal kick off of
the new implementation framework, beginning with the creation of a
Nigerian Content Development and Monitoring Board (NCDMB) charged with
the responsibility of regulation of all Nigerian Content activities.

Ernest
Nwapa, the Group General Manager, Nigerian Content Division of the
Nigerian National Petroleum Corporation (NNPC), was appointed the
acting executive secretary of the board.

Responding,
Mr. Nwapa acknowledged the tremendous progress recorded since 2003 in
government’s effort to promote local content in the industry through
collaboration approach of domiciliation, saying that if government does
not sustain the momentum in the pursuit of the policy, it risks going
back to the pre-2003 era.

He
said that prior to the introduction of the policy, the industry was
faced with the challenge of low capacity, resulting in the importation
of virtually all goods and services used by the operators, saying that
currently the country accounts for 35 percent.

The target

“The
target is to quickly focus on those capacity-enhancing issues that have
kept us from making the gigantic strides necessary to achieve the 70
percent target by government,” he said. “We need to focus on the
development of the nation’s shipyards, heavy industries, pipelines,
equipment manufacturing, local service training institutes, vessel
ownership, research and development to attract international service
companies to set up and do business in-country.”

Also
speaking, Shehu Ladan, NNPC’s Group Managing Director, said with the
new law, which defines and delineates the role and responsibilities of
institutions Nigerian Content Board, the corporation is committed to
operating like other oil companies, with a focus on the integration of
the law into its corporate business and operational strategy.