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Tag: Ernest Nwapa

  • Nigerian Content Fund to hit $1b by 2017

    Nigerian Content Fund to hit $1b by 2017

    The Nigerian Content Development and Monitoring Board (NCDMB) has said its special fund, Nigerian Content Fund,  is expected to double to $1 billion by 2017 from $500 million.

    Oil and gas industry stakeholders say this is good news for indigenous oil firms because access to funds from financial institutions has been a major challenge to them. With the Fund, which stands as guarantee and collateral, its increase means more access to funds by more local firms.

    The Executive Secretary, NCDMB, Ernest Nwapa, who spoke to The Nation at the just-concluded fourth yearly ‘Practical Nigerian Content Forum’in Yenagoa, the Bayelsa State capital, said the Fund was expected to grow to $1 billion by 2017.

    He said: “This Fund started four years ago as a zero Fund but today, we are looking at half a billion dollars and we believe that in the next two years, that Fund will hit $1 billion.”

    On how much has been spent from the Fund as interventions for oil firms, Nwapa said the Fund was not meant to be depleted because it acts as partial guarantor for oil firms.

    He said:  “Partial guarantee is a simple model. Banks are designed to give loans and the Nigerian Content Board has, under its administration a Fund derived from one per cent of all upstream contracts. The Board doesn’t have the capacity to operate as a bank, so what we have done is to put the money in banks but the banks don’t lend the money.

    “The banks lend their money and use the Fund as a form of guarantee to strengthen their confidence and the collaterals from the beneficiary oil firms.

    “That is what the banks are doing and that is what you will begin to see increasingly. “Beyond that, if you are buying stock for the oil and gas sector and you are doing capacity building in that regard, your interest rate is rebated to the tune of 50 per cent and that is a major improvement in the situation that we used to have.

    “For instance, if your bank gives you 18 per cent interest rate, the Fund will take nine per cent the moment you start repaying the loan. This  is what we are doing and we are doing a lot to educate the Nigerian populace about this because it is a major game changer for loans from banks.”

    He noted: “Many of the loans that are being taken are being taken because the banks have confidence they have our money in their pockets. Therefore, you wouldn’t be able to know much of it that has been spent because 70 per cent of the entire Fund is intact and nobody will take a dime from it.”

    He stated that the 30 per cent side of the Fund is being used for the oil and gas park and Polaku pipe mill, among others. “We have already bought land and have started doing sand-filling in the Polaku project, we have finished the conceptual design for the pipe mill and the same thing for the headquarters building. Those are the direct interventions of the Fund but for the guarantee section, if any of the banks that are the custodians of the Fund wants to give a loan to the oil and gas service companies, they apply that Fund as 30 per cent guarantee to enable them to give their own money. This is the way it is linked,” he added.

    Nwapa stated that the Nigeria Content Act has achieved a lot because there were things NCDMB never thought could be fabricated in Nigeria because either they were too big or they were too complex. But because of the Act, Nigerian firms have upgraded their fabrication yards to the extent that they have a lot capacity to lift 2000 pounds (lbs) equipment, for example Nigerdock. He added that NCDMB has a lot of new capacities and capabilities.

  • Govt to ban gas cylinder import

    The Federal Government is planning to ban the importation of gas cylinders to encourage local production of the product, the Executive Secretary, Nigerian Content Development Monitoring Board (NCDMB), Ernest Nwapa, has said.

    He said the government through the Nigerian National Petroleum Corporation (NNPC) is promoting the use of cooking gas as an alternative to kerosene due to its cheaper, safer and cleaner attributes.  But the issue resulted in a concomitant increase in importation of gas cylinders into the country.

    Nwapa told The Nation that the government would ban importation of the product if people refused to stop the importation cylinders as directed.

    He said: “The government is advocating the use of cooking gas otherwise known as Liquefied Petroleum Gas (LPG). People are capitalising on this to flood the market with imported gas cylinders and we will put a stop to it. From the administrative point of view, we have a system in the Ministry of Petroleum Resources that ensures that things are against Nigerian content laws are stopped.”

    He said the government has outlined processes that would lead to the banning.  He said:  “A public notice to discourage the importation of gas cylinders is coming this week. Through this, importers would know the implications of engaging in the business. We are going to let them know that they are violating the local content laws and that they are responsible for some problems in the sub-sector. These are warning systems we develop to encourage attitudinal change.  Whenever we realise that people continue to import the product, we would apply sanctions.

    “Soon, Nigerians would see the impact of the policy formulated to facilitate the revival of the gas cylinders plants. The policy would bring about attitudinal change among importers of gas cylinders and importers that are amenable to change would stop the business, while the erring ones would face sanctions.”

    He said the government is promoting local content development through its policies and programmes for growth. ‘’Apart from establishing the Nigerian Content Development Monitoring Board, the government is pushing for the development of local initiatives. One of these is the decision to revive the gas cylinders manufacturing companies to discourage importation of the product,” he added.

    Nwapa said a committee had been set up to implement the policy and further ensure that indigenous cylinders were used. He said the initiative, among others, would force importers of gas cylinders out of business, create jobs, and improve socio-economic activities.

    Nwapa said the oil and gas industry is setting the pace in the area of local content use, adding that the issue is  affecting the economy.

    “Today, the telecoms and power sectors are working seriously to adapt the local content practices that have worked in oil and gas industry,” he said.

  • ‘How local content is aiding foreign, direct investment’

    ‘How local content is aiding foreign, direct investment’

    The Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Ernest Nwapa, has said the country is creating a new set of indigenous operators who will soon attract Foreign Direct Investment (FDI) worth billions of dollars.

    Speaking at the launch of Future Concerns Safety Office in Lagos, Nwapa said the industry was experiencing a shift from small to bigger ticket transactions, going by the projects executed by indigenous operators.

    He said were operators forging alliances with bigger firms abroad to finance big ticket transactions adding that the partnership between MSA, a United States–based manufacturer and distributor of safety equipment and Future Concerns Safety Limited, would impact on the local content policy.

    He said: “Without doubt, the local content policy of the government is yielding fruits. Gone are the days when Nigerians celebrated the award of fat contracts in the industry as the only dividend of local content.

    “We have gone beyond that. Nigerian entrepreneurs are now taking on bigger roles by attracting Foreign Direct Investment (FDI) and forging alliances with global brands with the purpose of technology transfer and capacity development that could aid the progress of the local content policy.

    “I congratulate Future Concerns on this milestone and urge you to move to the next level which is the sustenance phase. Maintain the standards that swayed the decision of MSA by delivering consistently quality service to your clients.”

    Nwapa said the oil and gas industry is recording appreciable progress due to the improved participation of indigenous operators like Future Concerns, who have taken the bulls by the horns through their substantial investment in the industry.

    Nwapa said local operators have taking advantage of the enabling law to improve their investments, adding that their efforts have validated the position of the Federal Government to improve local participation in oil and gas industry.
    The company’s the Chief Executive officer, Tony Oguike, said a climate that would allow local companies to operate well is emerging, adding that a lot of synergies is taking place in the industry.
    Oguike said local firms that want to play well must have enduring business propositions, arguing that foreign-owned companies are looking for those that can compliment their efforts.
    This company came out with what he describes as ‘’ 3&T business propositions, noting the idea culminated in the partnership forged with MSA to provide a centre that would help in providing safety services in the petroleum and allied sectors.
    Oguike said: “The 3 S&T propositions include sales of MSA equipment; spares locally available; service and maintenance made locally, and training with global certification locally. That is what MSA indentified and nurtured a few years ago, and for the first time gave us the rights to build an independent service and maintenance centre in West Africa.”
    Mr. Colin Oliver, Managing Director, Sub-Saharan Africa, MSA, hailed the enterprising spirit of Oguike and the professionalism and integrity of Future Concerns. He noted that the relationship between the two companies has been further strengthened by the core values of quality service, integrity and responsiveness that Future Concerns has displayed all through the years of the relationship.
    He said: “MSA is no doubt the biggest brand globally in safety equipment manufacturing and maintenance. We have provided solutions to various clients across the world. The African market, particularly Nigeria, is very huge and we are excited to be a major player in the industry. Our partnership with Future Concerns so far has enabled us to provide better tailor-made solutions and services to our clients.”

  • ‘Nigeria incurs huge cost on imported oil equipment’

    ‘Nigeria incurs huge cost on imported oil equipment’

    Nigeria is spending a fortune on the importation of oil and gas equipment because of the poor state of local market. At an energy forum in Lagos last week, participants said the country spends billions of dollars on the importation.

    Among the participants are Executive Secretary, Nigerian Content Development and Monitoring Board, Ernest Nwapa, the Managing Director, the National Petroleum Development Company(NPDC) Mr Victor Briggs and former Director, Department of Petroleum Resources, Tony Chukwueke.

    Nwapa said efforts were now geared towards domesticating manufacturing of these equipment.

    He said there were equipment that could be manufactured locally, adding that the government and operators were planning to ensure such facilities are produced in Nigeria. The need to keep a higher percentage of the yearly oil spend within, he said, was imperative to move the country forward, adding that the country would realise a lot of money from production of vessels, pipe and others.

    He said the pilot project of a pipe mill would soon be launched, adding that the idea will help in encouraging local expertise, provide jobs, and save the country a lot of money.

    Nwapa said: “We are working with the operators to establish pipe mills for the carriage of crude. Projects worth billions of dollars are going on across the country. We want to see a revamp of the dockyards and subsequent construction of oil vessels. Indigenous marine vessel operators include Aero Marine, Britannia, Vigeo and others. We want to see an expansion of local segment of the oil and industry in the next few years.

    “We want to see a situation whereby rigs and fabricated yards are owned by Nigerians, and not foreign oil services companies. We should get our people owing these assets for growth. We are trying to increase what we are doing in terms of facilities and human resources deployed to the sector. That is the fundamental thing the Board is doing. Nigeria has been buying ideas and equipment, a development that has resulted in capital flight and loss of opportunities to employers locally.

    Nwapa said the nation was moving towards entrenching the Nigerian Content Perspective in the industry, saying the Board has engaged the managing directors of International Oil Companies (IOCs) on the issue. “We are training people holistically, Thereafter, we attach them to a company to demonstrate what they have taught,” he said.

    Nwapa said the Petroleum Industry Bill (PIB) has resulted in a change in the mindset of operators, suppliers and vendors, stressing that they have a local content benchmark in what they are doing in the industry.

    Briggs said the PIB was having a spillover effect on other sectors, noting that many organisations were introducing local content policies.

    He said hitherto, indigenous oil production accounted for less than ten per cent of the upstream operations, but added that local producers have increased their output to over 30 per cent.

    “Local producers produce lower quantities of oil because there is shortage of blocks. There is an aspect of PIB that make provision for increase in the production of indigenous companies. When the bill is passed, there would be blocks for operators to work with. The bill ensures that idle blocks are made productive. We are looking at a tax regime of between 55 per cent and 57 per cent for small operators, as against 88 per cent tax rate imposed on them. There is provision for tax holidays as well, explaining that based on this, small firms would be able to play well and grow their businesses.

    He lamented the government inability to get enough oil royalties, stressing that things would change when the bill is passed. He said there are lots of gas export projects compared to domestic gas market, adding that PIB will remove cross- subsidisation of gas market and its attendant inefficiency.

    “There is an aspect of PIB that is devoted to strengthening of the domestic market.The bill will galvanise the interest of the stakeholders when passed into law,” he said.

    Chukwueke urged the government to improve oil production for growth, saying no crude oil producer would like the price to crash because of the benefits derived from it.

    He advised the government to put in place measures that would improve production, arguing that the development will help the country absorb volatilities in the market.

    “The reason oil price has not fallen to $6 per barrel is because countries are not ready to crash for the sake of their economies. They need high price of crude. If Nigeria does not do something now, when the price is crashed, the impact will be on the country, “ he said.

  • Shell promises $5m jetty for pipe mill

    Shell Petroleum Development Company (SPDC) will build a jetty worth $5 million in support of the pilot pipe mill being promoted by the Nigerian Content Development and Monitoring Board (NCDMB).

    The Executive Secretary of NCDMB, Mr Ernest Nwapa, stated this when he received members of the Senate Committee on Petroleum Resources (Upstream) who went on oversight visit to the Board in Yenagoa, Bayelsa State.

    The jetty would be used for shipping raw materials and finished products from the 250 metric tonne pipe mill being located in the same precincts with the Shell Gbaran Ubie’s gas plant and the National Integrated Power Plants (NIPPs).

    He said the pipe mill would create over 1,000 direct jobs and several thousand indirect jobs for Nigerians as well as provide an invaluable platform for training Nigerians. He said the mill will also supply pipes for the over 2,000 kilometres of new gas pipelines to be laid in the gas master plan, replacement of aged existing pipes, as well as supply pipes for the numerous fertiliser, LPG and gas-to-power projects planned for the next few years.

    Nwapa reassured the Senate Committee, led by its Chairman, Senator Emmanuel Paulker, that the Board was focusing on developing local capacity which will ensure that industry jobs are executed in-country and employment is created for qualified Nigerians.

    He stressed that the existence of local capacity and manufacturing of components of industry equipment was a sure way to grow the Nigerian Content, generate employment and reduce dependence on importation for industry operations.

    Other initiatives of the Board, according to him, includes the on-going plan by the Board to establish the Nigeria Oil and Gas Industrial Parks in proximity to the oil fields to spur Small and Medium Enterprises (SMEs) to grow their capability in manufacturing through partnerships with multi-nationals and original equipmentmanufacturers (OEMs).

    “We intend to use the industrial park model to establish physical infrastructure and create enabling environment for low-cost manufacturing of equipment components, with a view to maximise utilisation of Nigerian made goods in the oil and gas industry; and to integrate community entrepreneurs into oil and gas value chain,” he said.

    In his remarks, Paulker reminded the Board that it has an important role to play in the development of the economy, especially in increasing the participation of Nigerians in the oil and gas industry and developing indigenous capacity.