From Uche Usim, Abuja
Simbi Kesiye Wabote, the Executive Secretary/Chief Executive Officer of the Nigerian Content Development Monitoring Board (NCDMB) is a man bubbling with ideas but challenged by paucity of funds, tough operating environment and other institutional factors that frustrate efficiency in the public sector.
However, the oil and gas professional with over two decades of cognate experience in engineering, supply chain, stakeholder management, local business development (Local Content) and general management is determined to deepen local participation in the nation’s oil and gas sector regardless of the numerous challenges facing his office.
A former staff of Shell, Wabote is also an old player in international, multinational and national business environment and has wide experience in local and international partnership development strategy, cross-functional team management and the alignment of global supply chains with local supply chains.
He said Nigeria has achieved a lot since the coming of his agency in 2010, but revealed that its target remains to attain 100 per cent local fabrication of modular refineries.
Only recently, the NCDMB boss spoke on a wide range of issues at the Memorandum of Understanding (MoU) signing ceremony between his agency and the Bank of Industry (BoI) on the implementation of $200 million Nigerian Content Intervention Fund (NCIF).
Excerpts:
$200 million MoU with BoI
It is a very important milestone in the history of NCDMB because it marks the crystallisation of our efforts and plans to address the persistent funding challenge that has stifled the capacity and growth of our local service providers and other indigenous players in the Nigerian oil and gas industry. The desire to have an intervention fund for the oil and gas industry like we have for other sectors of the economy such as agriculture, aviation, maritime, and others, has been on for a long time. It is gratifying that this has finally happened.
It is not common to find major players in the oil and gas industry and beyond gathered in the same room in support of Nigerian Content. Let me highlight the activities and achievements of NCDMB in the last seven years of its existence. Then I will focus on our 10-year vision and strategic initiatives to achieve the vision. Lastly, I will talk about the challenges we face and what we are doing to address the challenges.
The Nigeria Oil and Gas Industry Content Development (NOGICD) Act was signed into law in 2010. Before then, all fabrication, engineering, and procurement were done abroad resulting in estimated capital flight of about $380 billion in 50 years. Estimated job lost opportunities was in the region of two million. The narratives then was that nothing could be done in-country. The level of Nigerian Content was far less than 5 per cent as the focus was mainly on oil revenue.
Over time, these were found to be detrimental to the economy thus leading to government efforts to stem the tide. To give legal backing to the directives and provide an all-encompassing framework for the development of Nigerian Content, the NOGICD Act was enacted in 2010.
Under the Act, the board’s mandates can be broadly classified into two: First is to develop capacity of local supply chain for effective and efficient service delivery to the oil and gas industry, without compromising standards, and secondly, to implement and enforce the provisions of the NOGICD Act 2010.
The journey so far
Since the inception of NCDMB, we have been consistent in promoting the development and enforcement of local content implementation in the oil and gas industry leading to some key achievements and I will like to mention some of them.
Before the Act, we had annual spend of $20 billion with little or nothing retained in-country. Today, I can confidently say that we spend $5 billion in-country every year. Before 2010, we targeted four pipe mills; today, we have two world-class pipe mills and five impressive pipe coating yards.
Before 2010, only 3 per cent of marine vessels were Nigerian owned; today, Nigerians control and own 36 per cent of vessels used in the oil and gas industry. We had no active dry-dock facilities. The few we had were abandoned and left to rot away. Today, we have four active dry docking facilities for vessels – one each in Port Harcourt and Onne and two in Lagos. Over 35,000 jobs have been created on the back of implementation of the Act.
In fabrication, today, Nigeria can handle fabrication capacity of more than 60,000 tonnes. I personally went round to see these fabrication yards. Based on my findings, I can boldly say there is nothing we cannot fabricate in Nigeria.
In manufacturing, we have grown capacities such that all cables required in the oil and gas sector are all manufactured in Nigeria. Same for bolts, nuts and flanges fully certified to the required oil and gas industry standards for onshore and offshore projects.
Assembly of offshore Christmas trees in-country never existed before. But these facilities are now available in-country in Onne (near Port Harcourt) and Calabar. We have developed a new infrastructure for integration of Floating Production Storage and Offloading (FPSO) on the back of Egina Project. The facility will be used for integration of Egina FPSO, which has production capacity of 200,000bbl/day and holding capacity for 2.3 million barrels of oil. This is a first in this country.
With all these impressive achievements, we have moved the in-country value retention from less than five per cent before the Act to the current 26 per cent level. We are indeed proud of this achievement, our goal is to progress to 70 per cent in-country value retention within the next 10 years. I have used the word progress advisedly because I’m conscious of the fact that local content drive is not a sprint but a marathon in which pace and consistency are paramount to success. But we are not done yet. Like I said, our vision is to achieve 70 per cent in-country value retention within the next 10 years.
Similarly, our target is to retain $14 billion out of the $20 billion yearly spend, create 300,000 direct jobs, covering upstream, midstream, and downstream areas of our industry with linkages to key sectors of our economy. To achieve this target, we have developed a 10-year strategic blueprint and let me highlight some specific strategic initiatives we are pursuing.
In the upstream sector, one of our key initiatives is to actively promote and support indigenous companies venturing into deepwater offshore projects and operations as our indigenous operators settle and perfect the management of onshore and shallow water fields. We also target 100 per cent domestication of FPSO integration capability with the regional captive market in view. We will support the establishment of two additional pipe mills with at least one of them capable of producing Longitudinal-Submerged Arc-Welded (LSAW) pipelines.
In the mid-stream sector, our main strategic initiative is collaboration with investors or business organisations such as Nigeria Liquefied Natural Gas (NLNG) to establish a dry dock facility in the Niger Delta region to cater for the maintenance of big vessels, including LNG carriers.
We have also keyed into the drive by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, to put a stop to importation of petroleum products. For us in NCDMB, our strategic initiative is to achieve 100 per cent local fabrication of modular refineries. We have commenced discussions with OEMs (Original Equipment Manufacturers) and local fabricators to make this a reality. We have set aside areas in our Nigerian Oil and Gas Parks Scheme for practical training on operation, maintenance and running modular refineries as a sustainable business model and for fabrication of the units.
Still on the downstream sector, I was at the Dangote Oil Refineries project site in Lekki, Lagos State, last week. This mega project needs all the support it can get to make it succeed – both in the ongoing project execution phase and in the subsequent operational phase. We have agreed to provide list of Nigerian companies with capacities for patronage by Dangote Oil Refinery in the development of the project to meet cost and schedule timelines. Similarly, a compendium of ancillary businesses required to sustain operation of the refinery will be developed for interested entrepreneurs so that the 650,000 barrels/day refining promise can be met.
Gas project
On gas, we are pursuing the local LPG cylinder manufacturing initiative in full alignment with Federal Government’s agenda on domestic gas utilisation. We plan to close the 20 million gap in LPG cylinders availability in the country by partnering in the establishment of LPG cylinders manufacturing and other required infrastructure.
Other initiatives include support for CNG utilisation as fuel for cars and power generators. About 80 million Nigerian homes and businesses own generators and it is estimated that about N5 trillion is used to fuel the generators yearly. A fuel switch of just 10 per cent from liquid into gas for power generators can give you an idea of the size of the investment opportunity in CNG utilisation.
Challenges
We have challenges that we face as we aspire to deepen the practice of local content in the country. We are, however, not throwing up our hands in despair. Let me briefly highlight some of these challenges and what we are doing about them within the ambit of our mandate. The challenges include power, inter-agency collaboration, contracts approval cycle and funding.