By Louis Ibah
MANAGING Director/CEO, Engineering Automation Technology Limited (EATECH), Mr. Emmanuel Okon is sad that international oil and gas companies (IOCs) operating in Nigeria are stifling attempts by indigenous service firms to take full advantage of the Local Content Law in the country.
In 2010, the Nigeria government had signed into law the Nigerian Content Development Act (popularly called local content law). The law made it mandatory for the use of indigenous oil service firms and personnel in all projects executed in the country in a bid to halt capital flight, boost indigenous manpower and capabilities of local firms.
Okon, whose company is involved in engineering designs and fabrication projects for international oil firms told Sunday Sun that the essence of the law has been sabotaged by some of the international oil firms in Nigeria. “When the government signed the Nigerian Content Bill into law, the talk all over the place was that the Nigerian firms won’t have the capacity to take advantage of the law,” said Okon.
“But it didn’t take long for us (local firms) to prove that we had the capacity and the expertise. Now this is what is happening these days: you now find a situation where the foreign firms are the ones that are afraid of the competencies of the local firms, I can confirm that to you. And they are working against local companies,” he added.
Okon also spoke on why he floated his company, the challenges posed by adulterated fuel and how government can boost the productivity of local firms in the oil and gas industry. Excerpts:
What is happening to the local content law?
I am an ardent supporter of the local content law in the oil and gas sector. In fact, I am one of those Nigerians that strongly advocated that more Nigerians should be empowered to tap effectively or participate in greater numbers in the business of the oil and gas industry. That idea of an industry that is dominated by foreign firms, foreign personnel, foreign banks, foreign underwriters, and foreign contractors had a lot of demerits. The capital flight alone that is associated with it does more harm to the economy than you could ever imagine. I am against an industry that is left in the hands of foreigners. So you can understand how excited I was when the Nigerian Content Bill became a law. I knew we had a good policy in place. I knew we would soon have that level of Nigerian human expertise we never had before in the history of the industry because more local firms would now have access to more jobs. But when the whole implementation started, it soon became evident that in all sincerity, we needed to remember that some people (the foreign firms) originally owned this industry; they owned the technology, they owned the capital, and they also owned the bulk of the human expertise. In fact, you won’t in any way be incorrect if you say they owned everything in an industry we just woke up and said we want to localize.
Now, you ask yourself the question, if you were them (the foreigners) doing business in Nigeria’s oil and gas industry for over 50 years and enjoying a monopoly of almost everything and suddenly the country wakes up and talks about local content law and that they want to be partakers, they want to be major stakeholders, and they want an increase in local personnel and technology, and of what goes in and comes out of the business, let us be honest with ourselves, it will not be so easy to just let go like that without some form of resistance. That is where we are right now. The greatest challenge that local firms like ours is now battling is the resistance from the founders or the original owners of the industry in the country. They are resisting the policy that seeks to make it mandatory for local Nigerian companies and manpower to have a more stakes in oil and gas contracts or projects done in the country. Nigerians are very smart, highly skilled, and committed whenever you give them the opportunity to work. And their fear (the foreign firms) is that we are doing excellently well in those projects that we have so far been allowed to do. You can ask other local firms bidding for projects in the industry and they will also share their experiences with you.
Are you talking from experience?
The history of Engineering Automation Technology Limited is one that revolves around a drive to boost Nigerian content in the oil and gas industry. In 2007, we had to set up this company as a 100 per cent Nigerian company to bid for engineering, procurement, construction, installation, and maintenance services projects in the oil and gas industry. It was one way of also creating jobs and developing human capital of locals in some of these technical aspects of the jobs in the industry. And we have been very remarkable in the realization of our initial vision of not just providing engineering service, but achieving it by way of giving out technical leadership and capacity building through what I call a continual improvement approach. I told you earlier how excited I was with the passage of the Nigerian content act into law. Indeed, we have doing well, representing the Nigerian content well in all the projects that we have done in the industry so far. You know the foreign multinationals are the ones that give out most of these projects to the local firms. But the tide is beginning to change. I told you earlier, they are beginning to be scared of some of us. Now, let me also tell you that I have a case that I have reported to the Department of Petroleum Resources (DPR) and the Nigerian Content Development and Monitoring Board where a particular foreign operator in this country woke up overnight and without any just care opr no cause at all excluded our company from a list that is capable of talking pout us out of a business.
And we have asked this foreign company, we have asked their middle management staff, their top management staff, what have we done wrong? what is the criteria for getting us out of the list? We have asked this question for the past two months, but we have not gotten any answer. Rather, this particular foreign firm, they have gone ahead writing letters to their major contractors not to allow us render any further services in an ongoing contract which we have signed. It is subtle way of easing a local firm out of business. And this is the kind of thing you find happening now in the industry. This foreign operator knows that we are doing very well and that if they don’t do type of thing that they are doing they will not be able to bring us down at the rate at which we are going. What they did was to issue a list and exclude our name from it – simple. So that is the challenge that we are now facing. They wake up and they strike you out. The foreign operators are working against local companies. The Nigerian content law has come to stay and they cannot win the war they are waging against local firms because we have vowed to fight them within the confines of the law and of best practices.
Why do people adulterate products?
When people adulterate products, it is not as if it cannot be detected, but the problem is that some of the laid down procedures to check adulteration is simply not followed. The importers, the filling station owners, the other operators don’t pass through the right process. The procedure, if you go through DPR guidelines, is that you will discover that these products should be tested at the point of entry at which they are brought into the country; it should also be tested before they leave that point to be loaded into the trucks; should be tested after loading to ensure that it is still of the right specification and not adulterated. But what you don’t control is what happens when the trucks leave the depot. If the petrol station owner wants to adulterate then the people at the depots cannot help. So I think it is at this point that the regulators have to do more work. But if all the procedures are followed I think that the issue of adulteration would be eliminated in the country. The facilities or technology that we are bringing in can detect adulteration by 100 per cent. I must also not fail to state this that as part of the Campaign introducing high-end products and cutting edge technologies, we have concluded arrangement to introduce superior alternative to “flash point” test for refined petroleum products. I am therefore appealing to the DPR to grant approval for us to demonstrate this technology in a private presentation before unveiling to the general public. The benefits of this alternative method include but not limited to; Front-end elimination of impurities and improved fuel quality. Engine Efficiency Improvement, Mitigation of health risks to human and environment.
Not that Nigerians or the industry know nothing about these equipments. But the associated problem is in the maintenance once they get spoilt. We have a lot of such issues where when equipment is spoilt, you find out that the owners will usually keep it in laboratories and make them look like objects in museum.
But that ought not to be so. Whatever the case, in the oil and gas industry where it cost a lot to invest in equipment, people should be able to have the guarantee of commissioning and of repairs as well as after sales support, maintenance and calibration. But what usually happens is that if people have a problem with an equipment, they will look for money to take it back abroad for maintenance. There is nowhere to do the after sale services in Nigeria. They have to send it back to Europe; doing that entails passing through the Customs, having it air freighted, and looking for the foreign exchange (forex) to get through with all these remains a huge challenge these days. In our own line, we have stepped in to fix all these in the country. We have trained our people to repair and maintain and you cannot take this knowledge away from them. We are dropping capital flight and helping to develop in-country capacity. No matter the level of technology, no matter the sophistication, they will still be manned by human being. It is important that the local firms in the industry continue to invest in manpower development because this is the key for a future vibrant oil and gas industry in Nigeria .
What efforts are being made to stem sales of adulterated fuel?
Recently, we have partnered with two United Kingdom based firms (Cygnus Instruments Limited and Stanhope-Seta Limited) to launch into the Nigerian market new technologies that will assist in detecting poor quality fuels and lubricants in Nigeria’s oil, gas, motoring and aviation sectors. We had to bring in this sophisticated technologies into Nigeria because we realize that at a time like this when the cost of fuel had gone up following the full deregulation of the downstream sector, it was important consumers paid for the right quality of fuel they purchased at retail outlets. Let us take the aviation sector where all of us know that there is no parking space in the air and that no matter the quality and the integrity of the aircraft engine, any impurity in the aircraft fuel is capable of bringing it down and killing the entire crew and passengers. It is in order to avert that type of risk, that we have decided to bring in the technology that can tell you, look this fuel is bad, it is not of the right quality, it has a high level of impurity, and it can destroy the aircraft. When people adulterate, it is not as if it cannot be detected, but we don’t pass through the right process, and we don’t have the right equipment.
The UK companies have the technology for the testing of the integrity of aviation fuels, lubricating oils, crude and heavy fuel oils, and motor fuels to ensure that there is no compromise that can lead to human casualties. And the technologies can also mitigate and manage corrosion. We also sealed a deal with the UK firms that allowed for the training of many Nigerians in the repair, service, and maintenance of these equipment. If you bring in the equipment and they are not well serviced, calibrated and maintained, it will even give you wrong results. So we have also worked with the original equipment manufacturers to gain the same competence as they do. We have also gotten the authorization and approval as in-country authorized service centre for these products. And what that implies is that Nigerians don’t need to send the equipment back to the manufacturer the UK for services, maintenance, repairs and revalidation and calibration. Any of the upstream or downstream oil firm, or the airlines can call us and we validate or maintain any of the equipment whenever they get spoilt. We are also boosting human capacity by training these Nigerians. We are dropping capital flight and helping to develop in-country capacity. That means we are saving a lot of foreign exchange for the country and I believe you know the challenge of sourcing for forex these days in the country. The objective is to mitigate or completely eliminate compromise in terms of corrosion or the quality of fuel or lubricants used in the tank farms, depots, cars, trucks, and aircraft, in this sensitive industry. Our partnerships and collaborations have been carefully packaged to achieve more than 50 per cent market penetration in the next two years. But in order to jumpstart this laudable but ambitious pursuit, two service centres for the Original Equipment Manufacturers (OEMs) are already operational in Port Harcourt.
Previously, companies that bought any of these products and brought them into the country usually had difficulties repairing them once they got spoilt. They usually kept the spoilt machine in their laboratories and make them look like objects in museum.
What we have done now is that those who buy the equipment now have the guarantee of commissioning and of repairs as well as after sales support, maintenance and calibration.
What is the future of the industry?
The destiny or the future of the oil and gas industry lies with Nigerians. We own the country, we know the inherent challenges, we feel the pains the most, and we alone can really say with all honesty, “this is how to solve these problems.” But we must work extra hard to get all these challenges behind us and build an industry that is befitting of our status. Now people always ask this question “when will we really start manufacturing some of the equipment that we are using in the industry.” Well, the best answer to that question of getting these equipment manufactured in Nigeria is that you have to start from somewhere. Great thanks to the local content law. I told you that some local firms are doing a lot in the industry. Now, in our own case we have taken the first step, and that is that we can assemble most of the equipment and also service them. You know in life, you don’t just come into existence and then start running as a child. As a new born child, you start first by learning how to crawl, then you start the process of standing up, and then the next stage is the courage to take the first step of learning how to walk. After learning and mastering how to walk, you can now talk about running. In Nigeria, the stage we are now is the crawling stage. All our personnel have been to the factories where these equipment are manufactured in the UK, and they have passed through all the trainings in the assembly stages at these foreign factories .