85% of oil industry contracts awarded to Nigerians-Nwapa

*UK-Nigerian partners to invest US$500m

26 May 2012, Sweetcrude, Abuja – The proportion of contracts awarded to Nigerian companies in the oil and gas industry has risen to between 70 and 85 per cent, the Executive Secretary, Nigerian Content Development and Monitoring Board, Ernest Nwapa has said.

Nwapa made the disclosure at the Nigeria-UK Oil and Gas Supply Chain programme in Lagos recently, lauding the increase, but noting that it is a partial percentage value of Nigerian Content achieved by the industry.

He explained that although there has been a marked increase in contracts awarded to Nigerian companies, the industry still had a long way to go towards recording substantial percentages of real Nigerian Content.

The Executive Secretary maintained that real Nigerian Content value is based on the proportion of contract sums spent within the Nigerian economy especially on Nigerian made goods of services rendered with Nigerian owned assets and equipment.

According to him, the real Nigerian Content value hovers between 12 per cent and 18 per cent at this point, up from 3 to 5 percent recorded two years ago.

He identified a major weakness of the local supply chain in Nigeria as the absence of manufacturing activity and stated that for such a mature industry, a supply chain without local manufacturing is like a house without solid foundation.

Nwapa explained that the predominant message captured in the Nigerian Content Act is development of local capacity and Nigerians must be determined to pursue this goal in their quest for partnerships.

He stressed that without developing local manufacturing of components used by the industry, there would be no further Nigerian Content growth and creation of employment opportunities would be stunted.

The Executive Secretary said the Board conceived the Equipment Components Manufacturing Initiative, which seeks to get local representatives of Original Equipment Manufacturers (OEMs) in Nigeria to partner with such OEMs to set up manufacturing facilities in Nigeria.

The Board had now made it mandatory that any equipment that will be supplied for use henceforth in the Nigerian oil and gas industry, certain components must be manufactured locally.

Nwapa said the initiative is already yielding positive results with significant number of applications by OEM representatives to domicile equipment component manufacturing in Nigeria.

Benefits of this initiative for the Nigerian economy will include technology transfer, productive employment and elevation of manufacturing base, he said.

The Executive Secretary further explained that the industry had achieved between 85-90 percent Nigerian Content in engineering, adding that fabrication tonnage is over 50 per cent, with thousands of jobs created.

He also reported that Nigerian investors had started owning hi-tech assets and efforts were on course to move some foreign held assets into Nigerian hands.

Commending Shell Nigeria for organizing the UKTI event with the British High Commission in Nigeria, Nwapa noted that Shell is playing a key role in the Board’s effort to develop new pipe mills in the country.

While speaking, the Deputy British High Commissioner to Nigeria, Peter West said that over 40 new alliances formed by British and Nigerian companies are expected to expend over $500m in the Nigerian oil and gas industry within the next five years.

West said the partnerships, some of which will undertake specialist local manufacture, technology cooperation for deepwater production and gas utilisation have the potential to create new investment, business opportunities and high value employment for skilled Nigerian talents.

He underscored the importance of the Nigeria UK Supply Chain events, stressing that they bring Nigerian and UK companies together to form sustainable, long term partnerships which will contribute to the competitive delivery of Nigeria’s oil and gas projects.

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