Experts advocate implementation of local content law in Nigeria’s oil sector

Experts in the oil and gas industry are calling on the Nigerian government to ensure the effective implementation of local content law to protect indigenous companies in the sector.

The stakeholders made the call while speaking during a panel session titled ‘Exportation of Local Capacity: Maximising Regional Opportunities’ at the ongoing 2024 Nigeria Oil and Gas (NOG) Energy Week in Abuja on Monday.

Speaking during the panel session, Ernest Azudialu-Obiejesi, Chairman of Nestoil Limited, said countries, including Nigeria, need to enact enforceable laws. He said the lack of enforcement leaves local companies undeveloped while foreign investors repatriate investments to their countries.

“I want to tell you that if you want your local content or if you want your capacity to grow, you have to enact local content laws that are enforceable. Making law is one thing. The other one is enforcing it, administering it, and making sure that it works.

“If you do not do that, what you are going to see is a typical example where investments come to a country, stay, and the country becomes a major producer for 50 years, and the whole money will just be drained out of that country. The locals will not be able to develop,” Mr Azudialu-Obiejesi said.

He said Nigeria has built quite a lot of capacities within the country and one of the areas where the country can be proud of itself is in the oil and gas sector.

“We know that some of these capacities, we can’t export them, but the ones in the oil and gas, we can export to other countries. And exporting them means we need laws to make sure that those companies that are in Nigeria are already developed,” he said.

He noted that there are setbacks in the sector, affecting the growth of local companies.

One of the setbacks, according to him, is the bidding process, noting that the local companies are not doing well due to the poor bidding process in Nigeria.

“And there are a lot of people who are briefcase contractors who don’t have capacity, but they will tell you they have connections and because of that, they go and bid for jobs they cannot do. So these things have to be checked so that when you are bidding for a job in the oil and gas industry, you compare apples to apples, not apples to oranges.

“So people of the same technical capacity can bid for a job. And when they are given that job, they will be able to do the job timely and within budget,” he added.

According to him, addressing the barriers to effective trade among countries is part of the mandates of the Africa Continental Free Trade Agreement (AfCFTA).

“Those are things we are trying to advocate. And by the time Nigeria has entrenched itself with all this capacity, very well as we have done, we can then go to other countries and then start helping them. Start making money by bringing those experiences to all those countries.

“And that is what the African continental free trade zone is trying to achieve so that they will break up the barriers, break up all the things that are inhibiting other countries from going to other countries to do business,” he noted.

Also speaking, the Executive Secretary, National Action Committee on AfCFTA, Olusegun Awolowo, urged indigenous companies to leverage on AfCFTA to strengthen available capacities in the sector.

He added that AfCFTA is guided by protocols which are aimed at promoting local content within the region.

In his remarks, Abdulmalik Halilu, director of Monitoring and Evaluation at the Nigerian Content Development & Monitoring Board (NCDMB), said the board has continued to ensure that the necessary procedures are in place to accelerate approvals for contracts to be awarded to qualified Nigerians.

He reiterated the board’s commitment to giving Nigerian companies, regardless of their type, first consideration while ensuring that local content is not compromised based on standards.

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“So we have pushed the discussion around standardisation by making sure that the Nigerian content equipment certificate that you need to obtain for you to be able to participate in the industry has elements of certification, be it ISO certification, process certification, and so on. To enable us to ensure that all these companies operate in global standards, and that is why you can see that they are able to operate in countries like India, US and so on.

“Finally, all of us as Nigerian investors must have faith in the law. We have been very lucky, today we have a president that also supports local content and that is why there is a push with the enabling executive orders. Beyond that, we also have enabling business efforts by the government to ensure that all regulators, not just NCDMB, ensure that they make life easy in terms of business enablement.

“So all these point to the fact that we must build capacity before talking about exporting capacity, and that is why we are having this discussion,” he said.