…100% implementation of Content Act might stop oil production
..Why we gave few waivers on Egina project
Nigerian Content achievement recorded on the Total Upstream Egina deepwater project exceeded 50 percent, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote said on Wednesday.
He stated this in Abuja at the ongoing Public Hearing organised by the Senate Ad-Hoc Committee investigating the $16 billion Egina Project.
He said the Board set out to achieve 60 percent Nigerian Content on the project but realized over 50 percent, which he described as commendable because the execution of Egina set new benchmarks and domiciled new capacities and facilities in-country, one of which is the FPSO integration facility at the SHI-MCI yard located at the LADOL Free Zone, Lagos.
Speaking further, the Executive Secretary clarified that crude oil production which is the main stay of the Nigerian economy might be shut down if the NCDMB were to enforce full implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act. He stressed that some targets set in the Act were aspirational and not attainable at the moment because of limitations in capacity and technology.
He cited an example with Section 53 of the NOGICD Act which mandates that all fabrication and welding activities must be carried out in Nigeria, yet there are yet no dock yards in-country where the hull of big vessels such as the Egina FPSO can be fabricated from scratch.
According to Wabote, “If we are to implement the Nigerian Content Law 100 percent, we will have to stop oil production in Nigeria, develop non-existing capacity, then start production again. The Board enforces the law with pragmatism. Ninety-five percent of our construction in the oil industry is steel, yet we do not have a steel mill in Nigeria. The oil and gas industry depends on sectoral linkages to deliver on some items. Moreso, Local Content is a marathon race and not a sprint.”
On why the Board granted some waivers for the importation of certain equipment used on the Egina project, Wabote explained that some equipment used in the oil and gas industry were proprietary, like the Christmas Tree, while some raw materials were not available in Nigeria. “In such instances, the operator or contractor would request the Board for permission to import. When we give such waivers, we also mandate the companies to execute Capacity Development Initiatives (CDI) to close the capacity gaps,” he said.
He explained that before a vendor would receive a waiver to procure items from abroad, it must show evidence that it is fully established in-country, employs Nigerians, and has made investments.
He admitted that a number of contractors contravened the Nigerian Content Act during the execution of the Egina project, noting that such vendors were by sanctioned by the Board.
The NCDMB boss also canvassed for the amendment of Section 68 of Nigerian Content the Act which provides that contractors that violate the Act could only be punished after conviction in the law court.
He also sought the support of the National Assembly to compel government owned oil and gas companies patronise facilities that have established capacities in-country.