Wabote lays proviso for African local content policy

Sopuruchi Onwuka

Executive secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr Simbi Wabote, has charged African countries the rapidly embrace the  Nigerian Content models in trapping the resource benefits for domestic economic development.

Engr Wabote who made a presentation at the 6^th Ugandan International Oil and Gas Summit titled “Developing A World Class Local Content Structure” made it clear that African countries must take responsibility in tapping the economic benefits of their hydrocarbon resources in order to break from pervasive poverty and advance towards industrialization.

The Oracle Today reports that the African petroleum resources are exploited by foreign multinational companies that hold the investment capital, industry technology and skilled manpower for the operations of the upstream oil and gas industry.

These companies seek energy security for home economies and also export oil industry jobs available in their operation to boost productivity in home economies, thus creating chasms that block huge petroleum industry budgets from triggering stimulus in African economies that own resources and host industry operations.

Until the evolution of the local content policy in Nigeria, less than two percent of the annual $20 billion upstream operating expenditure is spent in patronising foreign multinational service companies including Halliburton, Baker Hughes, Saipem, Schlumberger and many more multinational service providers that trap contracts from compatriot operating companies.

For instance, Shell’s contracts had flown to Amec of Aberdeen; Chevron and ExxonMobil had channelled their service contracts to Halliburton and KBR; Total patronised compatriot Technip; while Agip flowed contracts to Saipem.

Thus, while the Nigerian National Petroleum Corporation (NNPC) funded about 57 percent of cumulative petroleum exploration and production joint ventures operated by the foreign companies, the actual industry budget had no link with the Nigerian economy.

However, with the evolution and fervent implementation of the Nigerian Content policy, government has substantially linked the petroleum industry budget and activities to the domestic economy by domiciling jobs earlier executed overseas for in-country delivery.

Engr. Wabote stated that achieving the feat requires significant local capacity development, funding, policy incentives and the right regulatory frameworks.

Other requirements for driving successful local content implementation, according to him, are internal capacity for research and development, regular capacity gap analysis and creation of market access for local goods and services.

Engr Wabote told the audience at the conference that African nations seeking full benefits of natural resources must take full responsibility for industry capacity development by creating relevant programmes that domicile industry activities in the local economy.

Drawing from the successful implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, Engr Wabote made it clear that entrenching a sustainable local content practice brings economic development, empowerment, prosperity, and employment opportunities for the populace.

He made it clear that an enabling regulatory framework backed with the appropriate legislation is fundamental in creating boundaries for all practitioners in the sector. He added that periodic gap analyses to determine gaps in skills, facilities and infrastructure are critical in agenda setting.

“The oil and gas industry keeps evolving and regular reviews and monitoring of local content goals show where capacities have been met, current gaps, and where capacity upgrade is required to guide deployment of resources and investment decisions,” he explained.

He made it clear that policy drivers must strike a balance between aspirations and realistic targets in order to evolve credible action plans that prioritize areas of high impact.

He stressed that policy measures for local content development must also catalyze in-country manufacturing capacity, infrastructural development and human capacity development for execution of major industry projects.

He stressed that project based trainings are important for local job execution while availability of major projects is important for optimal capacity utilization and attraction of investments.

Engr Wabote pointed out that funding and incentives are also important to implementing local content programs, developing infrastructure, attracting new investments, and keeping existing businesses afloat.

He shared the Nigerian model of local content funding where one percent of the value of contracts awarded in the upstream sector of the petroleum industry is pooled into the Nigerian Content Development Fund (NCDF).

He pointed out that the model enabled NCDMB to establish the $350 million Nigerian Content Intervention Fund (NCIF) in partnership with the Bank of Industry and NEXIM Bank.

The NCDF, according to him, provided financing for creation of manufacturing hubs under the Nigerian Oil and Gas Parks Scheme; construction of the new 17-storey headquarters building, 1000-seater international conference center; and partnership with project promoters in the establishment of modular refineries, LPG terminals, manufacturing of LPG Cylinders, and others.

On research and development, Engr Wabote recommended a robust guideline to drive development of home-grown technology, adding that no nation can really develop by consuming imported technology and intellectual properties.

He stated that the NCDMB launched the R&D Roadmap alongside a $50 million Nigerian Content Research & Development Fund to drive basic research, commercialization of research breakthroughs, establishment of centers of excellence, and ponsorship of university endowments.

He explained that the roadmap is anchored on eight key pillars and 42 initiatives.

Engr Wabote reminded the audience that access to market forms a critical parameter for local content development, pointing out that all policies, laws, capacities and research efforts require commercial viability to be sustainable.

He said the NCDMB champions market access for local goods and services by using the ‘right of first refusal’ principle. He listed other tools such as the Nigerian Content Plan, the Nigerian Content Compliance Certificate, and the Nigerian Content Equipment Certification.

Engr Wabote noted that the experience garnered by the local businesses, and the capacities developed over the years have positioned them for the opportunities that would be realized from the African Continental Free Trade Agreement (ACFTA).