By Zik Gbemre
When the authorities of the Nigerian Content Development and Monitoring Board (NCDMB) recently stated in a national tabloid that the host communities of oil/gas producing state are benefitting from the Board activities, we could not help but wonder and ask; are the host communities really benefitting from the NCDMB activities as they claim? Are the locals of host communities even aware that such a Board exists and they have benefitted from their activities? Has the NCDMB been able to go round and down into the interiors of host communities to confidently say that they have impacted positively in the lives of host communities locals? These are questions that bugged our minds when we read the claim by the NCDMB.
Truth be told, when the Nigerian Content Development and Monitoring Board (NCDMB) was set-up in 2010 by the Federal Government and the inauguration of its Governing Council that followed, many relevant and concerned stakeholders like us, were under the impression that we would start witnessing strict implementation of the Nigerian Content Act in the oil and gas industry, which the NCDMB was established to do in the first place. But that has not happened, as there are practically little or nothing to suggest that the NCDMB is actually functional as expected.
We were somewhat appalled and surprised late last year when the NCDMB, in a publication stated that it is “in pursuant to its mandate of local capacity development for the Oil and Gas industry that the NCDMB is promoting the Nigerian Oil and Gas Industrial Park Development Consultants (IPDC) to submit a proposal to provide consultancy services for implementation of the NOGIPS”. First thought that came to us on seeing the said publication was that this is yet another ‘elephant project’ in the industry through which enormous funds are wasted and misappropriated in the name of developing and monitoring Nigerian Content. We could not help but wonder if it was the business of the NCDMB to promote, award and build Industrial Parks for the oil and gas industry to stimulate local content development? What value and impact has the NCDMB made since it was established? The stated publication for Request For Proposal (RFP) for industrial park Development Consultancy, as far as we are concerned is practically turning the NCDMB into a money-making venture where consultants are going to be used by those concerned to feed fat.
The NCDMB cannot be talking about host communities’ locals benefiting from their activities when not up to one percent of host communities locals are not given the opportunity to execute the kinds of jobs/contracts referred to in the said publication. Majority of the jobs/contracts readily made available for host communities’ locals to execute are still minor contracts jobs like Grass cutting, some minor aspects of Catering, Surveillance of Flowlines, Wells and Pipelines,, etc. The host communities’ locals are not given the opportunity to engage in technical jobs/contracts. Usually, the bureaucratic bottle necks put in place by NIPEX for instance, are enough “discouraging factors” on host communities’ locals. The criteria given are usually impossible for any host community contractor to meet. Host communities’ locals are still poverty stricken as they are being made to do the least of all jobs. If few individuals are benefitting in any way by the activities of the NCDMB, then they are not working.
The NCDMB cannot be talking about local content when even the helmet and coveralls that was worn by the Minister of Petroleum Resources in the picture of her that was used for the said publication, are all imported. Even President Jonathan whose picture was also used in the said publication was wearing Nigerian locally made attire. The crux of the matter is that the NCDMB has to ‘domesticate’ the Nigerian content practice they preach. Their statutory functions of the NCDMB are more of practicality and not a ‘desk top’ job. The NCDMB keeps priding itself as having increased the components of the industry. But what component exactly have they increased? The NCDMB has not made themselves relevant, hence the Board and their activities are not known by host communities.
We have always emphasized that the purpose and aim of local/domestic content development has to do with empowering the locals of oil and gas bearing communities, in every dimension of their lives through the activities and operations going on in the extractive industry. In doing this, the focus should be to always channel and increase available resources, services and energy towards building/raising the standard of living and economic capacities of the locals, so as to allocate them in different areas where they can develop according to their own pace. Unfortunately, this has not been the case over the years. From what is observable, the issue of local content development in the Niger Delta region and indeed the entire country, has not been given enough push and the adequate attention it deserves by the government and its parastatals and agencies. Obviously, this is part of the attribute that have always contributed to the apprehensive and crises ridden atmosphere in the Niger Delta region.
It is not enough for the government to sign into law, a Nigerian Content Development Act, and set-up a Board with its council to monitor the adherence of the law, and even embarked on an enlightenment campaign to educate Nigerians on how they can benefit from the Act. There has to be concrete steps taken to judiciously “implement” every details of the local content law and equally adherence but have been neglected. We have emphasized and elaborated on some of these other issues neglected, in our past articles on the subject matter.
One of such issues is the fact that the Nigerian local content law should include provisions that will encourage and foster the sourcing and production of locally made materials, equipments and tools used in the oil and gas industry. To this end, we suggested that International Oil Companies (IOCs) should be compelled by the Federal Government to locally source for and go into the production of whatever materials,. Equipment and tools used in the industry. Particularly, personal protective Equipment (PPEs), otherwise known as Safety Materials like coveralls, rain boots/coats, helmets, Safety shoes (e.g Redwings) etc; which unfortunately, are still being ‘imported’ and used today by all the staff/workforce of frontline IOCs operating in the country. This IOC-driven manufacturing/production venture should include the production of industrial pipes used for drilling of oil and gas wells and those used for the transportation of crude oil, condensate and natural gas from Wells/Flow Station/Gas plants, to export through Terminals or refineries as the case may be.
In other words, IOCs; as the frontiers in the industry should be compelled to go into the area’s of domestic manufacturing and production of all their basic tools, materials and equipment used in their oil and gas operations in the country. With this development, the objective of the NCDMB to establish industrial parks close to the oil field clusters to stimulate In-Country Component Manufacturing by Original Equipment Manufacturers (OEMs) or their local partners will not come into play or necessary. This will not only ensure the “transfer of technology,” it will also make IOCs to be more involved in other sectors of the Nigerian economy other than the extractive industry. Just as it is observed in China, where crude oil was discovered two years before it was discovered in Nigeria. But China is currently generating alot of benefits to this large population by ensuring that the bulk of the materials, tools and equipment used in the extractive industry are produced locally. Nigeria, with a population of over 160 million, can equally be made to do same.
It is the place of the NCDMB to ‘oil’ the business in the extractive industry by ensuring that IOCs and domestic Oil companies abide by and implement local content policies to the latter. IOCs ought to be sourcing for raw materials at home and use same to manufacture their tools, materials and equipment used for the extractive business. The truth is that we cannot be talking about local content development when most of the basic items used in the oil and gas industry are still being imported by the IOCs. Besides, it is high time that we start taking bold steps that will encourage scientific and technology transfer to Nigeria. All of which will bring industrialization.
Apart from the fact that the importation of these industrial materials and expatriate services encourage “capital flight,” it practically stagnates the country’s industrial growth content. The only money that is ploughed back into the Niger Delta during these operations in the oil and gas industry are confined to “wages and salaries” of indigenous skilled staff and that of unskilled labour/workers that cannot be imported, or the payment of contracts/services rendered. With this sort of arrangement, in what way can the issue of local content be developed significantly? Without a doubt, the establishment of such micro and mega factories and manufacturing companies in Nigeria will greatly provide enough employment opportunities for the countless idle youths on our streets. We believe the IOCs need to be more involved in the growth process of Nigeria’s economy other than focus solely on exploration and production of oil and gas for export. Even in this area, we have suggested that the local content law should have provisions that will make it mandatory for IOCs to refine at least, 50 percent of what they gather as natural gas and produce as crude oil.
Though ,the local content law had made provisions to compel IOCs operating in the country to establish refineries that will refine petroleum products, however, we believe the prescribed 1000 barrel stream per day is too small. Hence the suggestion above. When half of the crude products they produce are refined in the country, the finished product will be more than enough for export purposes and to service domestic demands. And ultimately, Nigeria will become less – dependant on imported refined petroleum products in due time. Besides, its about time we stop exporting crude oil and natural gas at a cheaper price and import the refined products at a higher cost. This is counter – productive to the nations’ economy.
We have also emphasized that it is instructive for the Nigerian content Act to contain provisions for the relocation of all corporate/ operational offices of government and privately – owned oil and gas related companies/ establishments/ parastatals/ subsidiaries to the relevant states in the Niger Delta region. This should also include that of the IOCs and their subsidiaries.
The present location of these Head offices in the industry in far away Abuja and Lagos, does not portray the encouragement of local content. The National Petroleum Investment and Management Service (NAPIMS), which is a subsidiary of the NNPC that acts as the business regulatory agency in the oil and gas industry, ought to have operational offices in the South – South , rather than remain in Abuja and Lagos. It is counter – productive for them to remain and operate from Abuja and Lagos. Just like former President Olusegun Obasanjo relocated the Nigerian Ports Authority head office from Abuja to Lagos , where it will function better, so also should oil gas – related head offices be relocated to the respective states where they are producing South – South in cities like Warri, Port–Harcourt, Yenegoa and Eket.
For instance, the Nigerian Petroleum Development (NPDC) as a subsidiary of the NNPC recently took over Shell (SPDC) oil and gas assets/ facilities in Delta State. But up till the moment of this write up, there is no head office of the NPDC in Delta State, apart from the one in Benin, Edo State. NPDC is still running the divested oil and gas assets from its Benin Office, when it should have relocated, to fully operate in Delta State. Another good example is that of SNEPCO, whose head/operational office is supposed to be in Delta State because it takes a chopper just 20 minutes to fly from Warri, Delta State, to Shell Bonga field plat form. While it takes one hour and 30minutes to fly to the same location from Lagos. Yet, SNEPCO’s head/operational office is still based in Lagos. With this, how can they effectively monitor their operational activities in their locations?
Another aspect is on the need for relevant government officials to consider it necessary in instructing NAPIMS to review its long over – due pegged limit for minor contracts ceiling at below N10 million. We find it out of place, that for over a decade now, NAPIMS has refused to review the pegged limit for minor contracts ceiling, considering the present state of the Nigerian economy compared to over fifteen years ago. This is obviously unrealistic and unreasonable and, it does not in any way justify local content development. Like earlier suggested, NAPIMS should be made to increase the overdue standard for minor contracts ceiling to at least N35 million. Stakeholders must understand that community contractors constitute a greater number when compared to big time / major contractors in the oil and gas industry. This makes them ‘good employers of labour,’ hence they should be encouraged and assisted to adjust comfortably with the high standard of living and doing minor contracting business in the country.
One other area that is of interest to us is that of human capital development. The Niger Delta Development Commission (NDDC) boss once said that the commission under his watch has been given priority to developing the capacities of the people of the region to enable them benefit from both the oil and gas, and the agricultural sectors. On why it took the commission almost ten years to come to terms with the indispensability of human capital development, the NDDC helmsman explained that previous administrators had to focus on infrastructure so as to pacify the people who wanted to see things done.
But even with the renewed focus on human capital development by the NDDC, it appears the whole thing is one-sided, as one ethnic group is obviously gaining/benefiting more than others. It is only a particular ethnic group of the Niger region that is benefiting from NDDC’s human capital development programme. The Niger Delta region comprises of so many ethnic groups. Hence, NDDC human capital development programmes should be made to spread and cut across every ethnic groups in the Niger Delta region, especially core oil and gas producing states like Delta, Rivers, Bayelsa and Akwa Ibom State. Also, benefitting from NDDC human Capital development programme should not be based on one’s connection or in the government. It should be based on merit and to any of the core Niger Deltan that is qualified.
The above raised points are some of the major issues the NCDMB and its Board, ought to have taken as priorities in seeking to address them. When the NCDMB was set-up, we urged the President and the Minister of Petroleum Resources, to move the operations and head office of the Board from Abuja to the core Niger Delta region. But that was heeded to. It is appalling that up till this moment, Minor contracts still remains below N10 million, despite the fact that this is the aspect of contracts that benefit the locals the most. One would have thought by now, that the NCDMB would have compelled NAPIMS to raise the Minor Contract Ceiling in the oil and gas industry, to N35 million at least, especially if they really want the locals of the Niger Delta region to benefit more from the industry. The question now is; what is the NCDMB all about? Are they there just to create jobs and opportunities for a few at the expense of the Niger Delta Locals that are in the majority?
The bottom line is that the NCDMB is still a ‘publicity propaganda’ body that is far from the reality. The NCDMB seriously need to sit-up and be more proactive and practical in the discharge of their statutory obligations as regards Nigerian/local content adherence in the oil and gas industry. There is no point, for the continuous existence of the NCDMB if its activities cannot be felt by the locals, whose resources are not only, daily extracted, but the environmental economic impacts left behind have made life more miserable for the host communities. There is need for things to be done the right way, starting with the above issues raised being addressed. There are far pressing issues that need to be addressed than engaged in for instance, the stated industrial parks development-which is surely another channel to waste public funds. We ask that the appropriate attention should be given by the relevant authorities.
Zik Gbemre, JP
National Coordinator
