‘Why Nigeria cannot implement local content 100%’
Crude oil production may be affected if the Nigerian Content Development and Monitoring Board (NCDMB), were to enforce full implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
The Executive Secretary, NCDMB, Simbi Wabote, at the Public Hearing organised by the Senate Ad-Hoc Committee investigating the $16billion Egina project, said some targets set in the Act were inspirational, 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 not enough 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 per cent, we will have to stop oil production in Nigeria, develop non-existing capacity, and then start production again. The Board enforces the law with pragmatism. Ninety-five per cent 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. More so, Local Content is a marathon race and not a sprint.”
He said the Board set out to achieve 60 per cent Nigerian Content on the project, but realised over 50 per cent, 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.
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 added.
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