Thursday, July 7, 2011

‘Ten per cent of oil industry equipment must be sourced locally'

By Bassey Udo

At least 10 per cent of all heavy equipment for use in the Nigerian oil and gas industry must be manufactured and supplied locally, the Nigerian Content Development and Monitoring Board (NCDMB) has said.

NCDMB executive secretary, Ernest Nwapa, said at the Nigerian Gas Association's Learning Solutions event in Lagos that this was in compliance with the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act aimed at promoting industrialisation, job creation, and increased retention of industry spend in the country.

Mr Nwapa said the board is determined to get original equipment manufacturers, machinery parts, components and accessories established in Nigeria, although they would be free to choose which components of their wares to produce in-country.

"The board will enforce this requirement strictly, because the manufacture and supply chain of industry wares have the greatest potential for job creation in the petroleum sector," he said.

According to him, the emphasis of the federal government, with regard to the implementation of the NOGICD Act, is not just geared towards halting capital flight, but primarily to create employment for millions of Nigerians on the back of oil and gas industry operations.

He said the board is working to realise the federal government's mission of creating millions of jobs for Nigerians, assuring that Nigerian Content activities have already generated over 30,000 direct and indirect jobs, while the growth trend is expected to surpass 300,000 within the next four years.

Though he expressed doubts that the Nigerian National Petroleum Corporation (NNPC) and its operating Joint Venture partners can employ more than 50,000 persons at their optimal capacity, Mr Nwapa was sure at least a million Nigerians would be employed if operating companies give local service companies jobs, while their partners and manufacturers are encouraged to set up facilities in Nigeria.

He challenged members of the NGA and other stakeholders to imbibe a mindset of change and reject the importation of virtually all the goods and services used by the industry, pointing out that the practice had not only closed opportunities to develop human and infrastructural capacity, but also impoverished the people as well as stall national economic development.

Patronise local suppliers

He also canvassed the training of indigenes of oil producing communities, to increase their participation in industry activities and give them the platform to practice and secure jobs, adding that the board would insist on the patronage of Nigerian facilities by operators, even if they come with higher initial costs.

Warning Nigerian oil and gas entrepreneurs against renting heavy equipment deployed in the industry to earn commission, the executive secretary urged them to work towards partnering with foreign vendors, with the aim of acquiring equity and ultimately owning such equipment.

On mega projects to be executed in the industry in the next four years estimated to gulp a total of $90 billion, Mr Nwapa advised investors to prepare their plans for building capacity as well as invest in facilities that would help them perform work scopes in such projects as specified in the Nigerian Content Act.

He listed these projects to include the Brass LNG, EGINA and Gas Revolution Projects, pointing out that the country risks losing work scopes in the mega projects estimated at about $45 billion to other economies, unless the current limited capacities by local players are addressed.

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