NCDMB’s 10-year roadmap to attain 70% local content
Nigeria reached 30 per cent in-country capacity in the oil and gas sector in 2019 from 5 per cent in 2010, recording remarkable progress in engineering and fabrication works, a feat that has mitigated capital flight and job losses to foreigners. As the nation looks to bolster its participation in the industry by 2027, Godfrey AKON reports on the prospects and challenges of NCDMB’s 10-year roadmap to grow the country’s local content.
Since 2017 when the Nigeria Content Development and Monitoring Board, NCDMB, drew a 10-year roadmap to shore up the nation’s in-country capacity in the oil and gas sector to 70 per cent by 2027, the board has struck a 4 per cent outcome.
With nearly 40 per cent mark in view, curious observers witness a seeming slow pace hinged on low manufacturing capacity of indigenous companies, a situation that remains critical to the attainment of the local content objectives of the nation. On one hand, funding gaps and inadequate technical capacity account for part of the setback. However, more investment opportunities by indigenous entrepreneurs in manufacturing of requisite materials and equipment in the industry remain crucial to growing local capacity.
Nigeria has over 37 billion barrels of crude oil reserves and over 180 trillion cubic feet, of gas reserve. The country, in 2010, enacted a law setting up the Nigeria Content Development and Monitoring Board to boost its participation in its own oil and gas activities, a move that is common among countries with such huge hydrocarbon deposits across the world.
A decade after, the country has moved from 5 per cent local content in 2010 to about 30 per cent with an ambitious roadmap to hit the 70 per cent target in 2027. The roadmap as articulated by NCDMB, outlines five strategic pillars including technical capacity development aimed at increasing the number of Nigerians employed in high value-adding activities in the industry, percentage increase of contracts in high value-adding activities awarded to Nigerian Companies as well as quantity of Nigerian made goods and services in the oil and gas industry, number of strategic equipment/ assets owned by Nigerians and number of new in-country developed solutions launched in the Nigerian oil and gas industry.
Pillar 2 focuses on compliance and enforcement, to ensure Nigeria content implementation is enhanced through the mobilization of appropriate tools, policies and frameworks to increase local content level in the oil and gas industry, coverage of local content enforcement and compliance across the entire oil and gas industry.
It further focused strategic pillar 3 on facilitating a commercially viable business environment that encourages increased sector investment such as reduction in aggregate cycle time of the Board’s touch points in the industry contracting process, increase in stakeholder satisfaction index and number of jobs and training opportunities created for Niger Delta.
Pillar four focuses on building effective internal structures in terms of people, skills, processes and systems to support the Board’s operations, while strategic pillar five targets to increase industry contribution to the national GDP and facilitate access of Nigerian-made goods and services to regional markets. Part of the implementation plan is to expand Nigerian oil and gas opportunity fair, NOGOF, to cover identified linkage sectors and establish a West African local Content Council.
So far, according to the Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote, the Board has completed the implementation of 20 short term initiatives as part of the 10-Year Nigerian Content Strategic Roadmap.
Wabote said NCDMB will mark its 10th year anniversary in 2020 and organize a strategy review session to evaluate the remaining eight years of the roadmap and put in place necessary measures to meet the 70 percent Nigerian Content target by the year 2027.
He said 25 initiatives were planned for the first two years of the roadmap and the duration of five items would be extended, adding that the percentage of Nigerian Content implementation had moved from 26 percent to 30 percent in the last two years of the 10-year plan.
Recently, the General Manager, Corporate Communication and Zonal Coordination of NCDMB, Dr Ginah O. Ginah, told journalists at a One-Day Capacity Building Workshop for Media Stakeholders in Abuja, that the country was on course to shore up its manufacturing capacity to reach the 70 per cent benchmark in 8 years.
Ginah disclosed that a $200 million grant had been earmarked by the Bank of Industry to build the capacity of indigenous companies to carry out services in the sector, adding that 70 per cent of the fund has already been accessed and would be retrieved with interest after some time.
He said NCDMB was aiming to raise the fund to $1 billion for targeted capacity building of local industry players to bolster their involvement in the sector.
Speaking on the capacity of Nigerian companies, he said today, about 40 per cent of marine vessels lifting content in the country were owned by Nigerians from just 10 per cent before 2010.
According to him, Nigerian companies were operating in upstream, midstream and downstream subsectors and can now carry out about 60,000 tons of fabrication in-country at internationally approved standards.
“We are now going outside to look for jobs to bring to Nigeria; given this capacity, we are sure of attaining 70% in-country capacity,” he said.
While noting that the capacities built by indigenous companies in the oil and gas sector were also deployed to other sectors, he said however that Nigerian content is not at all cost as it is only justifiable when there is capacity, adding that the country also needs foreign direct investment to grow its indices.
Ginah recalled that local content started as a policy at the Nigeria National Petroleum Corporation, NNPC, but it could not yield visible result as a policy and this led to the enactment of the NCDMB Act of 2010.
He said before this time, the local content capacity was at 5 per cent but rose to 26 per cent in 2017 and currently at 30 per cent.
He further stated that Nigeria lost $280 billion to capital flight and 2 million jobs as a result of low local content, adding that for very litre of petrol sold jobs are lost to foreigners.
While speaking on the Nigerian content 10 years roadmap, targets and milestones, the General Manager Research, Statistics and Development, NCDMB, Mr Abdulmalik Halilu, noted that Nigeria has 37 billion barrels of crude oil reserve, the 10th largest in the world and 2nd largest in Africa.
Halilu described local content as a national development imperative, maintaining that any country with such enormous resources needs to build local technology as one of the in-country drives is to reduce capital flight and increase value chain utilisation.
He said for every dollar spent, the board targets to retain 70 per cent in-country, stressing that the more the country is able to maintain its in-country capacity the more financial institutions would retain funds.