July 10 (THEWILL) — Nigeria’s 10-year strategic roadmap, anchored by the Nigerian Content Development and Monitoring Board (NCDMB) will impact the Nigerian National Petroleum Corporation (NNPC), which this month transforms into a limited liability entity (July 18, 2022). NNPC’s evolution into a Company and Allied Matters Act (CAMA) enterprise coincides with the NCDMB’s roadmap to accelerate the implementation of the Local Content Act created some 12 years ago.
The Local Content Act is a vital instrument that enables Nigerian companies to contribute immensely to the development of the Nigerian economy by encouraging value addition, job opportunities and further, the award of different oil contracts and commitments. .
The act established the Nigerian Content Development and Monitoring Board (NCDMB) with the mandate to oversee the implementation of the provisions of the act. It is seen as a revolutionary step towards improving Nigeria’s launch into the league of technology-driven economies spurred by the huge opportunities in the oil and gas industry.
The roadmap aims to retain more than $14 billion of the industry’s estimated $20 billion in spending in the country, create more than 300,000 direct and indirect jobs for Nigerians, and push Nigerian content from 27% in 2017 to 70% by 2027. To achieve this, the NCDMB has created a series of short, medium and long term plans touching on the research, production and development of human capital with delivery and evaluation well articulated and practically limited in time.
Among the programs is the promotion of science, technology, engineering and mathematics (STEM) education in Nigeria in partnership with stakeholders.
Speaking at the start of teacher training under the scheme, championed by Siemens Energy Nigeria, NCDMB, and Empowering Africa Through Education Initiative, ATEEI, in Yenagoa, Bayelsa State in July 2021, the Executive Secretary, NCDMB, said revealed that promoting STEM education in Nigeria would impact the country’s 10-year strategic roadmap, which has impacted many Nigerians. The program is being vigorously pursued among tertiary and research institutes across the country with the aim of empowering Nigerian operators to technologically develop and transform the oil and gas sector.
The Niger Delta University (NDU) has confirmed that it is considering closer collaboration with the NCDMB, particularly in research and development, following the Board’s various capacity building interventions that it initiated at the university, including the donation of the Econometric Center, staff capacity building, among other support initiatives. . According to the university’s Vice Chancellor, Professor Samuel G. Edonmiekumo, the partnership will deepen NCDMB’s pursuit of effective implementation of the strategic roadmap.
In 2016, the NCDMB, NNPC, Imperial College London and four leading Nigerian universities unveiled a framework to develop world-class research for Nigeria’s oil and gas industry. The collaboration, which is led by the NCDMB under the roadmap, aimed to establish a Center of Excellence (CoE) for oil and gas research at Federal Universities of Technology in Minna, State. from Niger; Federal Universities of Technology in Akure, Ondo State, and Owerri, Imo State, and Niger Delta University, Yenagoa.
According to the NCDMB, the project aims to address problems in the oil and gas industry in Nigerian universities and local research centers, thereby increasing local research capacity and retaining the huge expenditure that stakeholders normally spend on research. abroad.
Link to the new NNPC
By the provisions of the Petroleum Industry Act which came into force in August 2021, the Nigerian National Petroleum Company Limited became from July 1, 2022 a limited liability company, but with official unveiling scheduled for the 18th of the month.
The Corporate Affairs Commission (CAC) had on September 21, 2021 completed the incorporation of NNPC Limited in accordance with the new PIA. Launched with an initial capital of N200 billion and with the required regulations in place, anchored by the PIA Transition Committee, stakeholders say the stage was set for the official take-off of the new NNPC. The NCDMB roadmap will assume a seamless link with the new NNPC to activate the huge potentials of the oil and gas industry that have been tied to the bureaucratic apron of government.
“Being now a business-oriented and for-profit entity, NNPC should be run like a private sector enterprise, hence the need for an active link to the NCDMB roadmap. In fact, the NCDMB should effectively support the new NNPC to achieve the goal of privatizing the national oil company,” said Ben Amadi, an oil and gas expert.
“Furthermore, like all other companies in the country, NNPC will pay taxes to the government and may eventually pay dividends to its shareholders, represented by the government in its early stages and later by the public when it decides to have a public company. initial offer (IPO).
“Furthermore, the new NNPC will serve as the holding company for all of its subsidiaries, more than a dozen of them, in the post-PIA era, which explains the optimism regarding the role of the NCDMB in the new operations of NNPC,” Amadi added.
Amadi further explained that since NNPC does not and cannot operate without partners or third parties, those of them with ongoing contracts and joint operating agreements with NNPC will also have their fate determined by the PIA. .
This development is based on Section 54 of the PIA, which provides that all assets and liabilities of NNPC will be transferred to NNPC Ltd within the first 18 months of the entry into force of the PIA.
As a company under CAMA and with relevant guidelines from the PIA, NNPC Ltd, the new NNPC will enter into new investments and partnerships in upstream assets to increase gas production. There are also plans to expand its downstream operations, while modular or small-scale refineries will be developed in addition to current investments in the rehabilitation of existing refineries to accelerate refining in the country. Experts believe this is why linking to the NCDMB roadmap becomes more imperative.
The era of local content
The last 12 years have revolutionized the oil and gas sector through strategic capacity development in a way that has had a positive impact on the country’s GDP through job creation, skills acquisition, tax revenue and the economy. It has also strengthened the absorption of local communities who now own the projects in their communities.
“We have expanded our business beyond measure; we now do almost everything locally without the help of expatriates; it’s part of the benefits of the local content policy,” a Port Harcourt-based oil and gas service operator, who wouldn’t want his name published “because of these taxpayers,” told THEWILL. He applauded the NCDMB’s role in monitoring the industry.
Credit goes to the man at the helm of NCDMB affairs, Engineer Simbi Wabote, who took over as executive secretary in 2016. In a recent interview with THEWILL Downtown, Wabote said the board has recorded milestones important.
“The idea is that in Nigeria, we have made a lot of progress in terms of developing local content in the oil and gas sector. Before we started, the oil industry spent about $21 billion a year on our operations and less than $5 billion stayed in the country.
“Today as we speak we have increased that ‘under five per cent’ to around 42 per cent Nigerian participation. It is a strategic plan of more than 10 years. He revealed that his predecessors had increased local content to 25% before his appointment in 2016. “From 2016 to today, we have increased it from 25% to 42%. Ninety-eight percent of contracts awarded in the oil and gas industry are awarded to Nigerians. All activities between land and marshes are reserved for Nigerian companies. Today, in oil services, nearly 99% of oil service activities are carried out by Nigerians. These are guys who open their shop taking advantage of the Local Content Act.
Industry operators who spoke to THEWILL argue that the success of local content policy relies on capacity building, particularly in the aspect of human capital development. They argue that oil and gas is technology-driven and rapidly shifting to another level where the focus is less on fossil fuels. .
NCDMB media and publicity supervisor Obinna Ezeobi said the board was serious about capacity. He mentioned the research centers of excellence established in five universities by the Council. Engineer Wabote had revealed in 2021 that the Council had established a $50 million research and development fund to support research findings that have practical use and the ability to be commercialized and applied to solve critical problems in the world. national economy.
The Act has played a fundamental role in promoting local capacity development in the Nigerian oil and gas sector. Now, in combination with the Petroleum Industry Act, which will complement it, it is expected that the target of 70% Nigerian content by 2027 will remain on track. By 2027, Nigeria plans to achieve 70% local content.
Some players also lament the involvement of Indians and Chinese hired by some indigenous companies to do the work that Nigerians are doing, especially in the downstream sector, thus jeopardizing the local content policy.
The Nigerian Content Development and Monitoring Board (NCDMB) said in February 2022 that the Nigerian Content Response Fund had surpassed half a billion dollars.
This was revealed by Wabote, during a speech at the Sub-Saharan Africa International Petroleum Conference (SAIPEC) organized in Lagos by the Petroleum Technology Association of Nigeria (PETAN).
He said the NCI Fund, which is provided as a low-cost credit to qualified oil and gas companies, covers asset acquisition, project financing, manufacturing, working capital, loan refinancing , women in oil and gas and research and development.
The NCI Fund is a component of the Nigerian Content Development Fund, NCDF, which is accrued through deductions of 1% on contracts awarded in the upstream sector of the oil and gas industry.
Mr. Wabote added that the Council is using the NCDF to catalyze the construction of modular refineries, gas processing plants, LPG terminals and bottling plants, LPG cylinder manufacturing plants, oil blending plants, base oil production plants, methanol production plants and many more. .