Being an address presented by the Executive Secretary, Nigerian Content Development and Monitoring Board, Engr. Ernest Nwapa at an enlightenment Forum on September 29, 2011 in Port Harcourt.

It gives me great pleasure to be here today at this event, one of the series of enlightenment progammes of the Nigerian Content Development and Monitoring Board (NCDMB) to keep oil producing states and communities abreast of opportunities in the oil and gas sector. The enlightenment events are aimed at constructively engaging the oil-bearing states and communities on the fundamentals of the Nigerian Oil and Gas Industry Content (NOGIC) 2010 Act, signed into law on April 22, 2010 by President Goodluck Jonathan.

The antecedents of the NOGIC 2010 Act are still vivid, especially to indigenous oil and gas operators and the oil-bearing communities. The story of the industry hitherto can be surmised as almost foreign, dominated with very little space available to qualified indigenous professionals and businesses. There was certainly less space for the participation of oil-bearing communities.

The former environment was characterized by:

(i)         Excessive importation of goods and services at the expense of local participation resulting in otherwise avoidable impoverishment and alienation of the people. A major contributor to the Niger Delta situation;

(ii)        Performance of the mega-projects of the industry abroad thereby eliminating opportunities to develop human and infrastructural capacity in Nigeria. – Capacity constraints in turn, limit the industry’s ability to perform sufficient work scope in Nigeria when designing, procuring and fabricating facilities, plants and assets or for after-sales support in the operations and maintenance phase;

(iii)       Our estimates that over 150 times more jobs are created in other countries than in Nigeria on the back of Nigerian projects at the expense of national development. Apart from the obvious negative impact of unemployment on the economy, the nation is denied opportunities for industrialisation and technology transfer;

(iv)       In absolute terms, less than 20% of $18bn average annual industry spent was retained in Nigeria.- such prolonged capital flight is a major factor for low economic performance, insignificant impact of the sector on national GDP and poor levels in local infrastructure investment despite heavy government expenditure in the sector.

Although some discretionary allocation of oil blocks were made by the military government to indigenous operators to promote the presence of Nigerian companies in the upstream in 1993, government also took the bold move to break the detrimental mould of low Nigerian upstream participation in 2004 by evoking the latent policy on Marginal Fields to admit Nigerian entrepreneurs. By that action, some 24 discoveries classified as Marginal Fields which had been left unattended for upward of 10 years and above were allocated to 31 indigenous companies under a strict technical and commercial evaluations.

Though the exercise is now often classified as a success, it was obvious that the composite in-country value addition to the oil and gas operations in Nigeria needed to be taken beyond the Marginal Fields to encompass the entire Exploration and Production value chain to meet expectations for significant growth. The establishment of Nigerian Content Division (NCD) by the Nigerian National Petroleum Corporation (NNPC) in 2005 for the first time gave a formal structure to Nigerian Content issues and significantly positioned the policy for more holistic application in the industry. NCD also came up with focused directives and formally established Nigerian content base for every contract in the entire value chain of oil and gas operations. It further became the bridge to link the major operators with indigenous service companies on Nigerian Content issues.

The benefits of the NCD directives on the industry were clearly evident, especially in areas of domiciliation of Front End engineering design (FEED) fabrication and capacity building, especially in the engineering sector. The prescriptions on domiciliation of fabrication works significantly increased project work scope thereby boosting activities in hitherto dormant fabrication yards. Structured certification and training of welders and pupilage through work attachment were part of the significant achievements of the NCD initiatives.

Distinguished ladies and gentlemen, notwithstanding the NCD strides, it also became obvious that the challenges of developing and nurturing Nigerian Content beyond fringe participation required a focused statute. That necessitated the promulgation of the NOGIC Act, 2010 and the prompt assent of the President, Dr. Goodluck Ebele Jonathan to the Act on April 22, 2010.

Specifically, the NOGIC Act gave teeth to the fundamental aspirations of government for strong Nigerian E and P Sector and a virile indigenous service sector. The statute further established the process for Nigerian Content in all segments of the oil and gas value chain by prescribing minimum Nigerian Content benchmarks for the listed activities in contracting process. The Act also established the Nigerian Content Development and Monitoring Board (NCDMD) as the regulating body of Nigerian Content in the oil and gas industry. NCDMB headquarters is located in Yenagoa, Bayelsa State, in line with prescriptions of the law that mandates siting the body within the Niger Delta.

Whereas the headquarters’ office covers operation activities in Rivers and Bayelsa States, NCDMB has also established offices in Owerri to cover Imo and Abia States and in Warri to cover Delta and Edo States. Plans are at advanced stages to also establish offices in Akwa Ibom State, Cross River and Ondo States for complete coverage of all the oil and gas producing states.

Distinguished ladies and gentlemen, without pre-empting other speakers, please allow me to dwell briefly on the operational strategies and some programmes in place by the Board for implementation of the NOGIC Act.

First, we fully understand that successful Nigerian Content policy should be run on the back of projects. We are also aware that ample opportunities had been lost by Nigeria in the past by not leveraging on the multi-billion dollar upstream projects to develop capacity and grow indigenous participation. In line with the stipulations of the Act, therefore, the Board always ensures that no Invitation to Tender (ITT) goes out in the industry without explicit minimum Nigeria Content stipulation and that no tender gets pre-qualified without approved Nigerian Content plan.

Secondly, we understand the roles of competent skills in meaningful local participation, especially given the complex operational environment in the oil and gas industry. Training and curriculum development are required to grow in tandem with the industry needs to keep abreast of opportunities.

The Board has, therefore, set up elaborate programmes to ensure that annual training budgets in the industry are effectively utilized in ways that would add real values to the skills of our teeming youths, especially from the oil and gas communities. The Board has also met with the Oil and Gas Trainers’ Association of Nigeria (OGTAN) to deliberate on how to further enhance the industry training process to move beyond spending to adding the required values, in real terms, to our teeming youths and practitioners in the industry. Oil and gas companies had been put on notice that manpower training would henceforth be a vital index of the Nigerian Content performance.

Thirdly and corollary to the foregoing, the Board is decisively committed to structured attachment policy in the industry, especially for sub-surfacing and engineering graduates to enable young Nigerians gain relevant experience to qualify them for positions in the industry. I was particularly pleased to show case, at the anniversary of the NOGIC 2010 Act held recently in Abuja, some of the university graduates that have successfully passed through the NCDMB attachment training schemes and are gainfully employed in the industry. The future of Nigerian participation in the industry lies in its teeming youths. The Board is committed to ensuring the realisation of Nigeria’s potentials, especially in the oil bearing communities.

Distinguished ladies and gentlemen, past experiences have shown that the best way forward to realising the full potentials of Nigerian oil and gas resources is through peace and sustainable development of the communities. Establishment of the Board is a strong indication by government that it is indeed serious about growing indigenous capacity and improving local participation in the oil and gas industry. By providing that, the Board headquarters should be located in the Niger Delta as the law intends the oil-bearing communities to be the main focus of its activities.

We are here today to tell you about the activities of the Board since inception and also listen to your suggestions, especially on how the state and the oil-bearing communities can be better served. I am sure, we shall leave here mutually fulfilled that we have achieved our objectives.

I thank you for listening.