Local content policy has helped indigenous firms
By LOUIS IBA
Thursday, May 8 , 2008

Mr. Ernest Azudialu, sits at the helm of affairs of Nestoil Group as President/CEO, providing the leadership that has propelled the company from its inception 13 years ago to the present position of one of the major indigenous oil and gas servicing companies.

In an interview with Daily Sun in Lagos, Azudialu said that for an indigenous firm, it was not an easy feat operating in a sector largely dominated by multinational firms.
He commended the Federal Government local content intitiative – a policy thrust which mandates multinational oil firms and the NNPC to ensure that in all its projects, at least 25 per cent of them were awarded to local firms.

It was the government’s own way of not just checking the huge capital flight that go with the award of contracts to foreign firms, but the policy would also ensure the development of local human expertise.
“The local content policy is a very good policy; it had helped a lot of indigenous firms to grow and has created employment for Nigerians, ” Azudialu said.
But he also faulted the implementation of the policy urging government and regulatory agencies to ensure the strict enforcement of all laws as some multinationals in subtle ways were subverting the local content policy.

He said in the last 13 years Nestoil had invested over N30billion in the acquisition and establishment of assets to allow it participate in the sector. Additional N20billion, he said would be invested in the next five years to grow the company to such a height that it would not just be bidding for contracts in Nigeria, but would move out and compete for projects in the African market.
Excerpts:

On local content
Before the introduction of the laudable local content policy of the Federal Government, Nestiol as a fully indigenous Nigerian entity has been in the forefront of project conception, implementation and delivery in the oil and gas industry. These projects include major civil works, flow station revamp works, pipeline construction works, mechanical works, landfill construction, for several NNPC JV partners. However, as you would imagine, the formulation and implementation of the local content policy, has given us the added impetus to push even harder to prospect for jobs in our area of core competence.

It has indeed enabled us to enhance our capacity both in terms of in countryman power development and equipment procurement. Since the introduction of the policy we have embarked on a aggressive acquisition of the equipment including dredgers, tug boats, swamp boogys, excavators, high tonnage crane, lay barges, we have also acquired an enormous facility comprising of fabrication workshops, an industrial section, an jetty/quay side of our operations.

Of course having been there for quite a while before the policy, is an added advantage as we were not, as it were, starting from the scratch.
It has been challenging, but for us in Nestoil, we believe we are up to the task. We are in a good position to justify the confidence reposed on us by our clients. We are poised to be a flagship in our area of operation and a veritable reference point in developing indigenous resource in the oil and gas industry.

Technical and financial challenges
Indeed. Technical and financial companies such as ours. These difficulties include securing and sustaining the requisite manpower; acquiring the necessary specialized equipment and having the access to the enormous banking facilities necessary to deliver jobs in the oil and gas subsector.
At Nestoil we have faced these challenges headlong, as we realized early on that we could only make an impact if appropriate solutions are found. As I have said earlier, we embarked on massive assets acquisition and large-scale hire of technically competent personnel to services different areas of our operations (both technical and non technical).

These include operators of highly technical and sophisticated equipment, engineers in various areas of specialization, administrative personnel, specialists in Health Safety and Environment matters, experienced hands on project implementation staff.
We have also, over the years developed mutually beneficial relationships with our bankers which given them the confidence necessary to extend substantial banking facilities to us. These facilities has enabled us sustain our operations on a day to day basis, acquire assets and deliver our projects in good time in the most economical manner. These are real problems for which we have over the years endeavoured to find solutions.

I dare say that such complaint about poor technical ability those not apply to accompanies like us as we have hired, developed and retained the manpower over the years. We have also gone through the rigors of technical aspects of bid procedure and come out in flying colours, hence our ability to win major jobs. In the final analysis, our clients are the best judges. For them to continue to give us such projects speaks volume of our technical competence.
In the last 13 years, we have invested over N30billion in assets to be in business and in the nest five years we are planning to commit another N20billion. Our aim is that one day we will be competing for projects in Africa like in Angola etc.

Indigenous firms in fabrication and construction business
The effectiveness of our roles as indigenous companies in the fabrication and construction business is a function of how often these jobs are gotten. Talking from our experience in Nestoil the effect has been very positive s during and after each job. Enormous in-house capacity and competence is developed and retained. The more these fabrication and construction jobs come to us, the more we develop the capacity to handle even bigger works in that terrain. It may be difficult for me to be precise in terms of what the implementation of the local content policy has done.

It has enormously increased the awareness and chances of indigenous companies such as ours to make the desired impact in the sector. So, it is correct to say that the policy has created a conducive environment for indigenous companies to prosper and grow in the fabrication and construction business. Of course there is always room for improvement.
Our target clients are basically the JV partners. As I said earlier the statistics are not readily available in terms of percentage of jobs being received from them.