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| Executive Secretary, Nigerian Content Development Monitoring Board, Simbi Wabote |
The decline in the global
oil price has significant impact on the activities of most oil producing
nations. In Nigeria, the Executive Secretary, Nigerian Content Development
Monitoring Board, Simbi Wabote, blames the low level of Nigerian content on the
dearth of new projects coming on stream as a result of the crisis. He spoke
with PREMIUM TIMES’ BASSEY UDO in Yenagoa. Excerpts:
PT: Your introductory
remarks focused virtually on your successes in the last 100 days. What about
your failures?
Wabote: I also mentioned
some of the key frustrations and failures since I assumed office. I spoke about
how people have not been able to access the Nigerian Content Development Fund
meant for capacity development in the oil and gas industry. Since the establishment
of the fund six years ago, significant progress should have been recorded with
its use.
Before
my appointment, when I was on the other side of the industry, I used to wonder
what was happening that people were unable to access the fund.
Regrettably,
I like to report that only three Nigerian vendors have been able to access the
fund so far. For me, not being able to put that fund to use is a failure.
Second,
not being able to check the use of the fund is also a failure on our part. That
is why we are trying to take stock, by conducting a baseline study on Nigerian
content implementation; to know where we are today in the implementation of the
Act in the past six years.
Sincerely,
we have not been able to implement the Act in its totality in line with the intent
of those who wrote the law.
We
will press pause to review how far we have been able to implement the Act; know
where we made progress; identify the gaps and where we need to up the game.
I
believe until we do that, we cannot beat our chest and say these are areas we
have really succeeded. As soon as we finish that process, Nigerians would be
adequately informed.
But
we must recall that when I was appointed, there was a crash in crude oil prices
since 2014. Prices only began to recover gradually from November 2016.
Within
the period of slump, there has been very little industry activities, as
operators and government were finding it difficult to fund new projects, while
existing contracts were being renegotiated downwards.
Without
ongoing and new projects, there hardly can be talk about Nigerian content.
PT: The contracting cycle
of two years on the average has been a huge issue. How long does it take
currently to complete a contracting cycle in the industry?
Wabote: I can tell you
without mincing words that has reduced to a large extent from where the
industry was when this management came on board. This was one of the issues the
Minister of State for Petroleum Resources, Ibe Kachikwu, took on bullishly, to
see how that process could be reduced.
Are
we where we want to be at the moment? No! But a lot of progress has been made.
For sure, we have seen some of the contracts move just within one year cycle.
But
the minister had set a target of six months. I think all agencies in the
industry associated with that process are working very hard to see that we
achieve that.
Don’t
forget these things cannot happen overnight. They will take time. But the most
important thing is the focus and drive to ensure they happen.
PT: How many Nigerian
companies would you say have been products of Nigerian content in the last 100
days?
Wabote: Since assumption
of office, I have been going round the country to commission one project or the
other.
For
instance, in December 2016, we were in Onne Oil and Gas Processing Free Zone to
commission the Solewant Pipe Coating Plant.
Around
the same period, we were in the Lekki Free Trade Zone to commission a
multi-million-dollar state of the art steel pipe mill facility by Yulong.
A
fortnight ago, I was at the Nigerian Machine Tools, Oshogbo, to look at the
facilities set up there to manufacture bolts, studs, flanges in the oil and gas
industry.
Now,
most Nigerian oil and gas companies are elated, because most of the contracts
that hitherto go to multinationals are now given to Nigerian companies.
In
fact, most of the international oil companies are trying to compile the number
of contracts they have given Nigerian companies in the past 100 days.
Indeed,
there are successes here and there in terms of companies benefiting from the
policy.
PT: The limited number of
Nigerian companies as products of the policy may be consequent upon lack of
training and capacity building. What is the relationship between NCDMB, Oil and
Gas Trainers Association of Nigeria, OGTAN, and other independent training
service providers in the oil and gas sector?
Wabote: We have a very
good relationship with OGTAN. I thought NCDMB, OGTAN and other training organizations
have done tremendously well in terms of human capacity development. Part of the
challenge we currently have is not the number of Nigerians we train, but the
jobs those we train would eventually go into.
That
is why we are working hard to see that projects come on stream. The truth is
that if there is no project, there is no local content.
We
have to encourage projects to come on stream, so that all those Nigerians we
have trained currently roaming the streets will get what to do. I am beginning
to see light at the end of the tunnel. I believe industry activities will pick
up in the next couple of years, and most of those we have trained will have
opportunity to practice the training they acquired from NCDMB.
I
must reiterate OGTAN and NCDMB are working hand in hand. OGTAN is even one of
the organizations mentioned in the Act. So, we do not have any choice than to
continue to work with it, to increase capacity development for our people for
the present and the future.
PT: You said one of the
key failures of the Board was its inability to get companies to access the
Nigerian Content Development Fund. What is really the issue with the Fund? Why
is it so difficult to access it?
Wabote: I have said it
before. Last year we had in the fund about $600 million. It should have been
more. That is why I also spoke about forensic audit, to see who is holding our
money somewhere, so that they should bring it out for us to make up the numbers
in our purse.
But,
let me emphasize, it is not true that no operator has accessed the fund so far.
I
can mention those that have benefitted from this fund. They include Lagos Deep
Offshore Logistics, LADOL, Starz and Vandrezzer. Is that enough? Of course not!
That’s where my frustration comes.
I
sincerely believe we must use this fund to support the oil and gas industry to
grow. In terms of how the banks are leveraged to make funds available to local
companies, particularly in the oil and gas industry, you may be right. That has
remained a big challenge.
If
we have this fund, why can’t we put it to use to support the industry and the
contractors and stakeholders who actually contribute to that fund?
That’s
why we are working hard to see that in the shortest possible time we bring
transparency to the fund implementation.
Because
the fund is not free or a charity fund, if people borrow money, they should be
able to pay back so that others can benefit from it. It is not exclusively for
one group of individuals.
So,
we must make sure we put everything right, such that once the fund is given
out, the NCDMB would be able to work with whoever the money was given to ensure
it would be paid back.
We
are trying to work out a transparent process, to ensure there is a clear line
of sight as to when the money would be paid back by the fund borrowers. That is
why it is taking a bit of time.
But
be rest assured that very soon, Nigerians would not be asking questions about
the fund, but how many people have benefitted from it.
PT: What’s the update on
the plan to develop the Nigerian Oil and Gas Parks Scheme, NOGAPS?
Wabote: We have been
talking about industrial parks for the past couple of years. My responsibility
is to ensure we accelerate its implementation and make it happen. We want to
take it from the drawing board to reality.
So,
it is not a secret scheme. Publicity has been carried out locally and
internationally. Even the Minister of State for Petroleum Resources has also
spoken about the scheme in most of his addresses.
The
whole idea behind it is to create sites and services such that manufacturers
and service providers in the oil and gas industry will be able to establish
themselves within that park environment and also create steady power supply for
them using the gas infrastructure that we have.
That
way, it would bring down their cost of doing business and enable them to
compete in the oil and gas industry.
PT: Monitoring the
international oil companies’ implementation of the Act is key to the success of
the policy. How many defaulters have so far been identified and sanctioned?
Wabote: It will be
difficult to say here the companies that have defaulted in the implementation
of the Nigerian Content Act. But, are there defaulters? Yes! What are the
numbers? I am sorry I cannot give you the numbers.
PT: Why is that
difficult?
Wabote: If you read
through the Act itself, there is a mechanism for doing so. That is why there
are so many cases in court. People often default or run foul of the law.
So,
in an Act like that, yes there will be defaulters out of ignorance or total
disregard for the rule of law itself. The monitoring units of the NCDMB are
well equal to the task.
We
have gotten defaulters. We are taking them through the process and ensure that
they comply as well as penalties for non-compliance. It is an ongoing exercise.
Even Nigerian companies that you would think will comply with the Act are also
defaulting.
PT: The question is: why
are you not sanctioning such defaulters?
Wabote: We are going after
them. I will not begin to list defaulters here. But, just to answer your
question. Are there defaulters? Yes. Are we doing anything about them? Of
course, we are following up on them.
PT: How many expatriates
are still doing jobs Nigerians can do in the oil and gas industry? Why?
Wabote: Let me make
something clear here. The whole idea about Nigerian content in the oil and gas
industry is not about indigenization.
The
intent is not to say everybody should go back to their country and allow Nigerians
to provide the services themselves. These foreign companies bring investments
into the country. They have a right to protect their investment.
But
the point about Nigerian content is that where one has capacities existing
in-country, the NCDMB will not approve for one to bring in experts. The Board
rigorously monitors that. Where the expertise does not exist, the Board ensures
there are Nigerians to understudy the experts, such that when they leave a
Nigerian could replace them.
Most
of the companies, particularly the IOCs and service providers, who adhere to
this policy, ensure every expatriate quota application they submit, the Board
demands to see a succession plan of that positon that will be filled by a
Nigerian in the next four years, because most expatriate applications last for
four years.
I
am a product of an IOC. I was out of Nigeria for six years. In the foreign
country, I gave them my expertise, such that I will increase my competence and
expertise in what I do. If the law was to say no foreigner was wanted into
their country, they would have shut the door against me.
Most
Nigerians are out there in various countries enhancing their capacities and
also giving their expertise. In some of those companies, there are exchange
programmes, where Nigerians are sent out and foreigners are brought in to
understand the peculiar challenges in the Nigerian environment.
Every
country’s conditions vary, depending on their reservoir characteristics,
security challenges and operational focus on either oil or gas.
Just
to be clear, the Board is very prudent and committed to ensuring that
capacities existing in Nigeria are not taken up by expatriates. But our
intention is not to say that there will not be any expatriate in our oil and
gas operations. The whole idea is to add value to Nigeria’s oil and gas
industry.
PT: How is the Board
ensuring that the IOCs maintain the level of Nigerian content in the high
profile projects that they handle in the industry?
Wabote: We are currently
holding discussions with all the operators in the oil and gas industry –Shell,
ExxonMobil, Chevron, Agip, to ensure that major projects coming in the next
couple of years will meet or surpass what Total was able to do in the Egina
project, in terms of local content in compliance with the Act.
PT: What is the level of
Nigerian content in the oil and gas industry today?
Wabote: When we started
with the 23 directives as far back as seven to eight years ago before the law
was eventually passed, when the measurement was taken, Nigerian content was
only three per cent.
The
focus then was more of revenue generation, as opposed to in-country value
addition. Monies were collected based on taxes.
Today,
Nigerian content is around 28 per cent. Is it where we want to be? Of course,
no. We are working hard to increase that.
That
is why I said we have to take stock to see where we are today in terms of the
implementation of the law, identify the gaps and go after them, to help the
Board increase the Nigerian content in our oil and gas industry.
Nigerian
content is not the same thing as awarding contracts to Nigerian companies. If
this is drilled down, as to the actual value of the Nigerian content, in terms
of the equipment, kits, we will not get anywhere, because those Nigerian
companies have to buy those products and services in-country to encourage
manufacturing and job creation.
PT: How does the Board
measure its staff productivity, viz-a-viz its mandate?
Wabote: One of the things
we set out to do as a Board was to ensure that we build in our staff capacity
and competence and bring, if not at par with what obtains in the oil and gas
industry, at least within a minimum in the level of training and capacity
development in the industry.
We
have set out clear targets for every department and directorate within the
NCDMB. There is a clear dashboard on what needs to be achieved and key
performance indicators to measure performance.
At the end of the year, everyone will see clearly where they have performed and they have not. This never existed before. We want to focus squarely on that to ensure staff are accountable to people and be productive. Our staff are all energized to deliver value to the NCDMB.
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