BusinessSix Years of Raising the Bar in Local Content Development

Six Years of Raising the Bar in Local Content Development

September 30, (THEWILL) – Six years ago this week, I was appointed Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB) by President Muhammadu Buhari, resuming full duties at the NCDMB’s Headquarters in Yenagoa eight weeks later with a determination to work hard with colleagues to take this critical federal government agency many notches higher.

But I must admit I also took up the job with a measure of trepidation. The new role in the public service seemed like a journey into uncharted territory because I had spent the previous 26 years at Shell Petroleum Development Company (SPDC) Limited working in different capacities, both locally and internationally. So, while I was quite familiar with the industry and the vital place of NCDMB in it, the public sector was a new experience.

It didn’t help that my appointment came at a challenging period for the oil and gas industry which was going through one of its cyclical crashes of crude oil prices, reduced activities, and difficulties in funding new projects.

NCDMB’s core mandate is holistic and multi-dimensional, with 16 components. Among other responsibilities, the agency is empowered to “make procedures, issue guidelines and set minimum local content level for projects and operations in the oil and industry”; carry out targeted capacity-building interventions to fill identified human and infrastructure gaps in the Nigeria oil and gas industry and “collect and manage the Nigerian Content Development fund for the growth and advancement of indigenous capability in the oil and gas industry”.

The mandate of the agency, in summary, is to ensure that Nigeria can salvage substantial and sustainable value from the oil and gas industry at a time that the world is transitioning from fossil fuels to cleaner renewable energy sources.

Happily, the journey has produced many positive fruits for the sector and the nation. Six years on, I can say with confidence that, despite the many challenges involved in navigating a system very different from the one in which I spent most of my working life, the organisation, thanks to hardworking staff, cooperative local and international partners, and supportive bosses, has delivered in many important respects.

As a result of our efforts, the depth and breadth of the Nigerian footprint in the oil and gas sector have deepened significantly. By boosting the manpower and technological capacity of Nigerians and Nigerian-owned businesses in the sector, we are helping to change the story of Nigeria’s oil and gas sector from well-known negatives to self-reliance and progress.

My immediate priority upon taking office was to lead NCDMB in discovering new opportunities in challenging circumstances, and identify what could be done differently to break new grounds within the context of the organisation’s mandate.

Fortunately, we had a strong foundation to build on. My predecessors deserve credit for building an institution that had performed creditably and earned the respect of the oil and gas industry as an effective regulator of local content in the industry and a model in Africa. But like most agencies of government, the organisation had become blunted and needed a new direction.

According to iconic painter Pablo Picasso, “Our goals can only be reached through the vehicle of a plan in which we must fervently believe and upon which we must vigorously act. There is no other route to success”.

With this focus in mind, one of my first assignments was to work with the staff of the Board and external consultants to develop the Nigerian Content 10-Year Strategic Roadmap to serve as the anchor and beacon for the Board under my watch.

The Roadmap includes a baseline of local content accomplishments in the first six years of existence, measurable targets for the next 10 years, and pathways to drive implementation going forward. It has five pillars and four enablers. We mapped long, medium, and short-term activities and timelines for each pillar and enabler and pursued the implementation with dedication and vigour.

Based on the clearly defined milestones and deliverables contained in the Roadmap, we have made significant progress. Six years down the line, most stakeholders of the oil and gas industry and beyond have good reason to laud us for surpassing expectations.

The latest accolade came a few weeks ago when NCDMB was adjudged the best among all Ministries, Departments, and Agencies in the country in the latest Executive Order (EO1) performance ranking for Ease of Doing Business from January to June 2022 – a report compiled by the Presidential Enabling Business Environment Council (PEBEC), under the office of the Vice President. This honour is a good index of the progress we have made and the recognition that this has attracted.

But perhaps our biggest accomplishment is changing the mindset of the stakeholders we engage with during our operations and instilling faith in local content and local capabilities. We successfully got Nigerian entrepreneurs to dream bigger dreams, think big, and make huge investments in the industry, acquiring assets, establishing facilities, and delivering work that no one ever believed was possible in Africa.

One of such company is Temile Development Company which in May this year signed an agreement with Hyundai Mipo Dockyard (HMD) for the construction of a new 23,000 cubic meters Liquefied Petroleum Gas Carrier Vessel. The indigenous company also signed a separate agreement with Nigerian LNG Shipping and Maritime Limited (NSML) – an integrated maritime services subsidiary of Nigeria LNG Limited for the construction supervision of the vessel.

Job creation is an area in which we have also made a substantial and measurable impact. Recently, we took stock of our efforts and we noted with delight that the implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act over the past six years has enabled the creation of over 50,000 new jobs in the local economy.

This included those that work directly in the operating and service companies and those employed in logistics, medical, and multiple layers of support services. The positive impact of this is felt in many individual lives as well as families and communities

As a result of our efforts, alongside various partners, more than $8 billion out of the $20bn annual oil industry budget – 47% – is now spent in-country, within Nigeria. This is a significant improvement from 2010 when less than 5% was retained in-country, and 26% in 2016 when I resumed office.

Such massive expenditure not only galvanizes the local economy but contributes to the country’s gross domestic product. This is a major achievement considering that the local industry suffered a capital flight of about US$380bn and the loss of approximately two million jobs in the first 50 years of oil and gas operations in Nigeria.

The phenomenal growth of local content has only been possible because, in line with our mandate, we are enforcing domiciliation and domestication of industry operations and the development of critical capacities and assets by local oil and gas service companies. This has resulted in the growth of the Nigerian Content level from 5% in 2010 to 26% in 2016 and to 47% presently.

NCDMB has achieved many other notable and impactful milestones that space cannot permit us to capture here. But these are few of the landmark achievements we have recorded over the past six years:

Enabling 50% Domiciliation of $12 billion NLNG Train 7 Project

We worked closely with Nigeria LNG Limited to domicile 50% of the $12 billion LNG Train 7 Project in-country. More than half of the project scope is being executed in the country by Nigerian vendors and is expected to create 12,000 jobs directly and indirectly and engender peace in the Niger Delta region.

We facilitated the project by granting all necessary approvals within a record time of 15 months and saved the economy $2bn on Engineering, Procurement, and Construction (EPC) through the insistence on Local Content for the project.

Introduction of Service Level Agreements (SLAs)

As part of our efforts to enable the business environment, we introduced the Service Level Agreements (SLAs) between the Board and critical oil and gas operating companies. This initiative not only shortened the protracted tendering cycle in the Oil and Gas Industry from 36 months to 9 nine months, but it also enhanced broad compliance with the requirements of the NOGICD Act, leading to a significant reduction in the unit cost of oil production in Nigeria.

Creation of US$500 million Intervention Fund

To address the challenge of funds in the industry, we created a US$350m Nigerian Content Intervention Fund (NCIF) managed by the Bank of Industry and NEXIM Bank, to provide affordable credit for Nigerian oil and gas service companies and community contractors, with a single-digit interest rate.

This contributed greatly to addressing the challenge of affordable capital which hampers the growth of many indigenous service providers. Nearly sixty (60) oil and gas companies have accessed credit from the Fund and they deployed it to grow capacity and employ more Nigerians.

To catalyse manufacturing, we launched a US$50 million fund for the NOGAPS Manufacturing Product Line, dedicated to companies that would operate in the Nigerian Oil and Gas Parks established by the Board and engage in the manufacturing of equipment and components used in the oil and gas industry and linkage sectors.

In further utilisation of our fund scheme, we endowed $50 Million Nigerian Content Research and Development Fund to support research findings that have practical utilisation and capability of being commercialised and applied to solve teething problems in the economy.

We also championed the establishment of R&D Centers of Excellence in five universities across the country, namely Federal Universities of Technology, Owerri, Minna, and Akure; Niger Delta University, Amassoma Yenagoa; and Modibbo Adama University of Technology, Yola.

To support the women folk in the oil and gas industry, we partnered with the Nigerian Export-Import (NEXIM) Bank to introduce the US$40m Women in Oil and Gas Intervention Fund, to benefit oil and gas firms where women hold majority shares or manage the firms.

We also introduced a US$30m Working Capital Fund for oil and gas service companies to support the operations of oil companies against the adverse effects of the COVID-19 pandemic, and loss of contracts due to low oil prices and to ensure the companies retain their personnel in employment.

Modular Refinery Initiative

One of our standout achievements is in the investment and partnership towards the completion of Waltermith’s 5000 barrels per day (bpd) modular refinery in Imo State. We made other investments in modular refineries: Azikel Group12,000 bpd hydro-skimming modular refinery in Polaku, Bayelsa State; Atlantic International Refinery’s 2000 barrels plant in Brass, Bayelsa State; and Duport Midstream’s 2,500bpd modular refinery in Edo State.

These practical steps created over 3000 jobs in the refining value chain and ensured value addition to Nigeria’s crude oil. It also grew our domestic refining capacity, created jobs in-country, and curbed pipeline vandalism.

Construction of Oil & Gas Parks Scheme

The development of two Oil and Gas Parks in Bayelsa and Cross River States is one of the Board’s legacy achievements. The projects are designed to spur the manufacturing of critical oil and gas equipment, tools, and spare parts in Nigeria. The parks are due for completion in Q1 2023 and would create over 2000 jobs each. We also commenced the construction of Oil and Gas Parks in Onna, Akwa Ibom State, and in Ilaje, Ondo State.

Introduction of Project 100 Initiative

We introduced Project 100 Initiative which identified 100 oil and gas start-ups and deployed special institutional interventions for their incubation, maturation, and growth into world-class service companies. These special interventions for Project 100 companies include access to capacity building, funding, and access to the market.

Upgrade of Vocational Colleges, Equipping of ICT Centres

Recently we donated the ultra-modern University of Ibadan Vocational School and renovated and equipped the Government Technical College Abak, Akwa Ibom, and Technical College Amoli, Awgu Local Government Area, Enugu State as part of our strategies to develop critical manpower needed to support various sectors of the economy. We also donated over 35 ICT centres and science laboratories to secondary schools across the country to enhance the quality of Information, Communication Technology (ICT) and Science, Technology, Engineering, and Mathematics (STEM) education.

Development of Gas-based Projects

One of the effective strategies we devised in our quest to increase Nigerian Content was to enter a direct partnership with investors to catalyse critical projects in the oil and gas industry. Our major focus lately has been on the gas value chain, in line with President Muhammadu Buhari’s declaration of the year 2021 – 2030 as Nigeria’s Decade of Gas.

In this regard, we partnered with investors to set up LPG Composite cylinders, a gas Processing Plant, a Gas Gathering hub, LPG Storage, and Loading Terminal Facilities. We are also partnering with investors to establish gas processing plants, an Inland LPG terminal and Smart Gas/Smoke Detector Alarm devices, and a Base Oil Production plant.

Construction and commissioning of NCDMB 17-Storey Headquarters with 1000-seater conference auditorium and multi-level car park in Yenagoa, Bayelsa State.

The project was executed in five years, using an indigenous contractor, and was commissioned by President Muhammadu Buhari in August 2020. We partnered with Eni Companies in Nigeria to construct a 10MW gas-fired power plant to provide electricity to the facility. The power plant currently supplies electricity to the Nigerian Content Tower and key offices of the Bayelsa State Government and will also supply power to the Nigerian Oil and Gas Industrial Park in Emeyal, Bayelsa State.

Overall, across Africa, we have positioned NCDMB as the preeminent regulator of local content and a great model to sister African nations, embodying Nigeria’s position as the leading oil and gas producer in the continent.

We recorded these accomplishments thanks to the wholesome support of the Minister of State for Petroleum, Chief Timipre Sylva, who serves as the chairman of the Board’s Governing Council and the overarching leadership of the President.

As the clamour for energy transition and migration to renewable energy sources increases in the developed world, NCDMB has prepared strategically by investing in several gas-themed projects. This is in line with the Federal Government’s position that gas will be Nigeria’s transition fuel.

This informed our investments in gas projects, even though we are resolute in our belief that oil will remain a dominant force in the years to come because the new energy forms lack the characteristics to displace fossil fuels completely, rather they would only become part of the existing energy mix.

We are happy that we have lived up to the Board’s vision, which is to be the catalyst for the industrialization of the Nigerian Oil and Gas Industry and its linkage sectors, and we look forward to closer collaboration with industry stakeholders to deepen local content in our economy.

As we move into NCDMB’s 13th year of existence and the seventh year of its present management, I have distilled some lessons from my personal reflections on my tenure so far. One of them is that it takes a “village” of team members and partners to nurture the ideas and achieve the milestones we have within the period under reference.

I’m grateful to my colleagues at different levels for their contributions. The second lesson is that public service rules have positive aspects, including clear timelines which are often ignored; with the right mindset and structures, they can become an asset rather than obstacles on the path of execution.

Finally, like any other worthy cause, the ongoing transformation of NCDMB and the significant positive outcomes achieved have involved huge personal sacrifices for many of us in terms of less family time, travel, and many hours working on projects, long after the official hours. It has taken a toll on my golf too. But given what we have been able to achieve and the positive prospects of achieving, even more, it has been more than worth it.

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