Tony Akowe, Abuja
The House of Representatives has expressed concern over the slow pace of the implementation of the local content in the oil and gas industry leading to huge loss of revenue in the sector
The House is therefore to investigate the implementation of local content involvement in the nation’s oil and gas sector with a view to determining the level of compliance with the Nigerian Oil and Gas Content Development Act (NOGICD) by stakeholders in the Industry;
The House is also to investigate the extent of the utilization of the 1 percent Nigeria Content Development Fund in capacity building, human capital development, project implementation, especially in the catchment areas and value addition in the industry.
This followed a motion sponsored by Hon. Kolade Victor Akinjo which was adopted during Thursday’s plenary.
Hon Akinjo expressed concerned that despite the benefits accruing to indigenous oil and gas firms from the NOGIC Act, there is still a low involvement of indigenous companies in the industry, adding that despite the NOGIC Act having a threshold that applies to projects of $1,000,000 (one million US dollars) and above, the targets stipulated in the Act are far from being met;
He stressed that since 2010; the Nigerian Content Development Board has not transmitted a review of the local content schedule in the NOGIC Act to the National Assembly as stipulated in Section 102 of the Act;
He observed that Indonesia, Venezuela, Kazakhstan, Angola and Brazil, through specific legislations have had local content successes, adding that in Brazil, the average local content commitments resulting from bid rounds has increased from 27% to over 84%, while the local content target in Angola has been met for unskilled workers and has been exceeded for midlevel staff, while in Malaysia, the utilization of the local content in upstream oil and gas projects is in excess of 54.15%.
He expressed worry that Angola, Brazil, Malaysia among others have achieved higher local content levels than Nigeria even though the four countries discovered oil about 60 years ago, adding that after 9 years of implementation of the Nigerian Oil and Gas Industry Content Development Act (NOGIC), Nigeria is still importing over 70% of goods and services in the offshore and deep water projects while also failing to meet the obligation of providing 100% of goods and services for land and swamp operations by Nigerian indigenous businesses.
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The lawmaker reminded his colleagues that the Nigerian Oil and Gas Industry Content Development (NOGIC) Act was enacted to promote indigenous participation in the management and control of the Oil and Gas Industry in the country.
He said that in 2002, the National Committee on Local Content Development (NCLCD) discovered that local participation in the upstream sector of the oil and gas industry in Nigeria was less than 5%, adding that what this meant was that 95% of the then yearly expenditure of about $8 billion left the country through capital flight.
According to him, the National Committee on Local Content Development (NCLCD) proposed an initial target of 40% by 2005 and 60% by 2010 for aggregate local content value in the oil and gas industry from all the categories.
He said that with the signing of the bill into law, the Nigerian Content Development and Monitoring Board (NCDMB) was created to regulate and monitor the implementation of the provisions of the Act and ensure that oil and gas companies operating in the country comply with the local content practice in the industry, adding that that many Nigerians who worked and gained experiences working with the International Oil Companies (IOCs) have established their own oil and gas outfits.
He said further that the Act provides that there should be a preference for Nigerian companies whenever a bid is made for license, permit or contract in the industry, while the Petroleum Technology Development Fund (PTDF) and the Petroleum Training Institute (P.T.I.) were established to train Nigerians as professionals so as to meet the labour force demands of the oil and gas industry.
He revealed that the PTDF, through its Overseas Scholarship Scheme (OSS), has trained over 2417 MSc. and 642 PhD students while 897 students received training through its Local Scholarship Scheme (LSS).
He acknowledge the fact that 1% of total contract sums awarded in the upstream sector is placed in the Nigerian Content Development Fund established for the purpose of funding the development of local content in the Nigerian Oil and Gas industry while the oil and gas sector accounts for about 35% of Nigeria’s GDP and 90% of foreign exchange earnings.
He emphasised that If Nigeria can achieve local content compliance of about 60%, the nation’s economy will achieve a major boost on account of the oil and gas sector.
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