A Review of the Nigerian Energy Industry

Can we update the NOGICD Act and pass the PIB simultaeously

04 March 2012, Sweetcrude, Lagos – The delayed passage of the PIB has a grievous impact on the psyche of all players in the Nigerian Oil and Gas industry. The passage of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, almost two years ago, heralded a gust of activities, plans and pronouncements most of which can not be actualised without the appropriate projects. With Fiscal Terms set to change with the PIB, most investors have shied away from Nigeria and turned their Foreign Direct Investment to more stable and predictable countries such as Ghana and Angola.

As we begin to look at clause 102, that states: “subject to the approval of the Minister, the Board shall conduct a review of the Schedule to this Act at such intervals as it may determine but not later than every two years with a view to ensuring a measurable and continuous growth in Nigerian content in all projects, operations, activities and transactions in the Nigerian Oil and gas industry for onward transmission to the National assembly”

This implies that we should expect some positive changes that would not only correct the gaps in the schedule but also correct the anomalies in the letter of the Act by the time that the Ministers amendment has passed through the legislature. Indeed these are exciting times for the Oil and Gas industry. We should as a minimum expect:
1. The schedule to capture: man-hour, tonnage, volume, area, liters, length, numbers, usage, contract, numbers as secondary to spend. All the independent units of measurement save spend must be secondary to and tracked alongside spend. Spend must be maintained as the primary yard stick for measuring Nigerian Content as “in-country” spend is critical to value addition. All other units can be slashed and measures as secondary values for historical and analytical references.
2. Harmonisation of the line items in the schedules of the Act with that on the NIPEX portal and the DPR activity categorization is critical for performance tracking in license re-issue and vendor development.
3. Inclusion of areas that critical to the general wellbeing of Nigeria and Nigerians Products Transportation, Marketing and Trading is necessary.

A good question that we should be asking ourselves is when would Nigeria begin to trade finished products in its own spot market? Neither has Nigeria so much as exported barrels of finished products nor traded crude on the spot market for the maximum value and return on investment possible?

The Act must go beyond first consideration to auditing the usefulness of first consideration. What have been achieved by those that were awarded blocks in the past to alleviate poverty and create jobs through effective and efficient optimisation of our natural and human resources?. We would like to see more of Iinvestment opportunities and asset ownership (factories, industries, machines, equipments etc.), marine vessels, Rail, waterway that are privately owned with the ownership tied to the execution and successful completion of Oil and Gas projects and contracts. The need to track spend, “in-country” investment, visible assets etc can not be over-emphasised in the implementation of Nigerian Content.

The long awaited PIB must provide tax incentives and fiscal terms that would encourage expenditure on infrastructure (Fabrication Yard, roads, bridges, water, electricity, residential estate, schools, hospital), Education and employment of youths, linkages to critical sectors of the economy such as IPP (Gas utilization), Downstream (Refining, Petrochemical, Chemical, fertilizer), LNG, LPG. We need to tie Schedule of the Act to the development of the iron & steel (Ajaokuta & Aladja) industries in Nigeria or we have not started expanding the envelope of growth and development for the application of any strategic thrust. We are yet to determine the role that would be left for Nigeria and Nigerians to play in the scheme of things in the Gulf of Guinea? Would it be too late for Nigeria to own the biggest Shipping yard and Dry Dock in the Gulf of Guinea by the time the PIB is passed into law?

If we fail to plan, we plan to fail. I enjoin us to rethink our Petroleum Industry vision, mission, goals and targets so that in passing the PIB and updating the NOGICD Act before 22nd April 2012, we strengthen what we have, Nigeria and Nigerians by ensuring that we have a win-win economically favorable atmosphere for business growth and collaboration for all stake holders especially nationals. . We must have plans with a well defined destination in mind so that we are not swayed or tossed to and fro by the whims and caprices of others.

About the Author
Dr. Ibilola Amao is the Principal Consultant with Lonadek Oil and Gas Consultants, a firm of technical consultants with their core competence in the area of human capital and vendor development. For more information or to reach Dr. Amao you can email her at lolaamao@lonadek.com or visit www.lonadek.com

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  • Yeah, I heard about this. I was hoping to write a ssmbiusion until I noticed it was only open to Nigerian nationals. Whilst I understand this clause, it is a crying shame. As your blog and many others have shown, there is interest in Nigeria from across the globe. It would be impossible to imagine a country not in touch with a Nigerian in some form, given that they make up 1 of every 4 africans!Anyway, it seems the BCC World Service is focusing on Nigeria tomorrow. This may be of interest to you and your readers.As for the competition, I may just submit an entry and let them bin it straight off. If I’m lucky it may actually get read – lol.