Making the $200m Nigerian Content Intervention Fund work

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It was clear that Nigeria would have to take action one day to take control of her oil and gas industry. This came in the form of a decisive action in April 2010 with the establishment of the Nigerian Content Development and Monitoring Board (NCDMB) with an Act to govern the board. The sole objective is to drive the process of handing back the Oil and Gas industry to Nigerians because the country was almost a laughing stock in the international community for gross impotency in this sector. The Act provided for specific quotas, tasks and employments that must be reserved for Nigerians. More importantly, it mandated the Board to grow the ownership and control of the oil/gas industry to as high as 70 per cent within specific period of time.

The Board has grappled with this mandate and the tasks within in the past eight years but most of the successes seem to have dwelt on the early hanging fruits such as getting jobs for Nigerians and reserving some categories of contracts for Nigerians. It is the opinion of a cross section of experts and stakeholders that eight years on, since the signing into law of the Nigerian Content Development and Monitoring Board (NDCMB) Act, the Board has essentially been able to meet up with the mandate, the dream, and the aspirations that heralded its establishment.

Every Executive Secretary that has headed the Board has tried to bring his character and training to bear on the way the NCDMB tried to deliver on its mandate under his tenure. It is in this light that closer attention is being paid to the strategies and leadership style as well as the creative programmes being adopted by the Engr Simbi Wabote-led Board. Wabote is regarded as a tested engineer in the oil and gas industry who was the first person to head the then newly created Nigerian Content Division in Shell Nigeria. The tested engineer in the past one year that he has steered the Board is seen to be pursuing strategies that would stimulate local manufacturing and fabrication culture to meet the provisions of the law setting up the Board.

This is believed to be the only way the second part of the mandate of the Board, helping Nigerians to acquire higher capacities to play in the oil/gas industry, could ever be realized. It is only when Nigerians can fabricate and manufacture most of the equipment deployable in the industry and acquire sensitive skills and competences to lead operations that they can bid for real jobs that would hand higher quotas to them.

This is why the new determination of the Board to promote local manufacturing and to create bigger access to funds seems to attract serious attention from the industry and from the watchers of the industry. A very significant step is the robust research and development culture. 

The most outstanding strategy is the recent establishment of a $200m intervention fund for Nigerian oil and gas service providers that are contributors to the Nigeria Content Development Fund. The intervention fund has all-in single digit interest rate of eight per cent for loans extended to Nigeria Oil and Gas service-providers and all in single digit interest rate of five per cent for loans extended to community contractors.

The Executive Secretary has made it clear that the intervention fund is targeted at deepening local content participation in the Oil and Gas industry in the country. It is lamentable that prior to the enactment of the Act, out of the about $20 billion, which the Industry spends in its annual activities, less than three per cent remained in the country while the rest was taken out. It is still sad that the retention factor has only increased to five per cent. The Board is right to aspire to grab at least $14Bn out of the $20Bn that is available every year.

The fund is highly critical, seeing that the major impediment for Nigerians in the oil/gas industry is the high cost of financing projects put at between 15 and 26 per cent. Now, working in partnership with the Bank of Industry (BoI), the Board has secured a financing environment that would not be above eight per cent, and much cheaper for community contractors.

It is therefore very important not only to commend these bold and strategic initiatives but to appeal to all stakeholders to for once treat the rules governing the fund with utmost respect. There must not be insider-abuses that wrecked the financial institution some years back. Those going after these loans must be seen to have proven track records in what they do to add value in the industry and to win quotas to Nigerians. There must be measurable milestones and transparent updates on what has been achieved in this sensitive regard. There is need to have official inventory of local content capabilities and this must be reviewed every quarter. There is need to have needs-assessment report in the industry so that it would be clear what gap needed to be closed. There is need to publish annual reviews of these gaps. Above all, local inventors must have the highest confidence of the Board that no one would be blocked from gaining attention and that what can be fabricated in-country would for no reason be imported just to favour anybody. The rules of assessing inventions and fabrications must be clear and be seen to be followed at all times so that those who did not meet up would know it was not due to favouritsm.

Meanwhile, the Board deserves huge cooperation from all stakeholders especially the Government to enable them guide and guard this sensitive journey to an oil/gas industry operated by Nigerians for Nigerians.