Why Local Content Act is partially implemented

TRACKING >>THE Executive Secretary, Nigerian Content Development Monitoring Board (NCDMB), Engr. Simbi Wabote on Tuesday said the Local Content Act cannot be fully comlied with because of the economic realities in the country.

Speaking with reporters in Abuja, he said the Act says that all fabrication must be done in-country and that all the steel materials used in the industry must be sourced locally, he said adherence to the law would kill the industry since the fundamentals are not yet in place for full compliance.

He said there is no functional steel mill in Nigeria, no regular power supply, other logistics are lacking.

He said: “If the board has to comply strictly with the Act that all fabrications must be done in-country and that all the steel used in the industry must be sourced in-country, there might be no project in the country.

Wabote said: “Let’s be honest, if today they ask you to do all the fabrications in-country, you will not have any project; we don’t even have a functional steel mill; logistic is a problem; and power is a huge challenge.

“Our cost of project development will hit the roof because each project has an economic value. If the project cost is more than the economies of investments, will anybody put his money? So, because of our knowledge of the industry, we try to see how we balance the process in a win-win situation in order to continue the exploration.

“Don’t forget that 90 per cent of our foreign exchange is from oil and gas. If you use this as a bible and say this is what the law says, you will kill the industry. So we must apply a greater level of intelligence.”

According to him, in terms of compliance and enforcement, the board has put in place seven companies to assist it in carrying out specific and specialised monitoring and compliance functions in the upstream, midstream and downstream sectors of the industry.

The board, according to him, has deployed chartered accounting firms to carry out forensic audit of NCDF remittances.

He said Section 104 of the Nigerian Content Act says one per cent of the value of contracts awarded in the upstream sector of the oil and gas industry must be remitted to the NCD Fund.

Wabote said the Forensic Audit started in November last year and has shown huge amounts of non-remittances from operating and service companies.

He said: “At the moment, some companies have owned up to their indebtedness and have started addressing their infractions.

“On the other hand, a few companies have remained recalcitrant. We have concluded plans to hand over such companies to the Economic and Financial Crimes Commission (EFCC) for prosecution.

“Our doors are open to companies that want to come up with structured payment plans, but we would not entertain pleas to write off any debt.

“Still on Compliance and Enforcement, NCDMB deployed a new monitoring and evaluation template. The new framework simplifies the processes and procedures for reporting Nigerian Content performance and enhances speed of compliance and quality of data gathering.”

On the technical capability pillar, he said the NCMDB has moved the Nigerian Oil and Gas Park Scheme (NOGAPS) from mere plans on paper to actual construction in two pilot locations – Odukpani in Cross River and Emeyal 1 in Ogbia Local Government of Bayelsa State.

Each of the parks, according to Wabote, will create jobs for 2000 persons when fully operational and spur the manufacturing of critical oil and gas equipment, tools and spare parts close to oil fields.

He said the oil and gas industry depend also on food, stressing that the recent ban on foreign exchange for food importation would be of great benefit to the growth of local content in the NOGAPS.

Wabote said another major achievement under the technical capability pillar, is the provision of equity investment to catalyse the establishment of 5,000barrels per day modular refinery by Waltersmith Refining & Petrochemical Company Limited in Ibigwe, Imo State and the 12,000barrels per day Hydroskimming Modular refinery by Azikel Petroleum Limited at Obunagha, Gbarain, Bayelsa State.

He said Waltersmith refinery is on track for completion in May 2020 while the Azikel Refinery would be completed in 2021.