A Review of the Nigerian Energy Industry

Nigerian Content: Shell, OEMs to inject $62m in three years

10 July 2012, Sweetcrude, Abuja – The Nigerian Content Development and Monitoring Board and Shell Petroleum Development Company on Monday signed an agreement with five original equipment manufacturers who have committed to invest $62m in local components manufacturing in Nigeria within the next three years.

The five companies are part of the 58 manufacturers of oil and gas equipment that have met the technical requirements prescribed by NCDMB in its Equipment Components Manufacturing Initiative and have been issued Nigerian Content Equipment Certificates.

The ECMI is geared at getting manufacturers of oil and gas equipment or their representatives to commit to credible proposals on domiciling local manufacturing of some components of their equipment at the shortest possible time.

Under the ECMI, importation of some vital industry equipment by the manufacturers are only allowed by the Board after the suppliers have committed to domiciliation plans.

Speaking at the event in Port Harcourt, the Executive Secretary of NCDMB, Engr. Ernest Nwapa explained that the investments planned by the five companies is expected to create 250 skilled employed employment for Nigerians.

He listed other benefits will include the transfer of technology know-how, development of manufacturing skills and development of after-market maintenance skills.

Nwapa however, clarified that obtaining the Nigerian Content Equipment Certificates is not a license to win contracts in the industry.

He added that the Board had an in-built mechanism to track investment commitments and domiciliation plans and will apply appropriate sanctions to defaulters.

The Executive Secretary further explained that the Board will in keeping with section 48 of the Nigerian Content Act make recommendations to the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, for a fiscal framework that will impose a higher tax burden for equipment utilized in the industry with less than 50 per cent local content.

This will help address issues of price competitiveness usually associated with locally made goods.

He congratulated the five companies for being the first set of OEMs to register footprints in Nigeria under the Shell-OEM scheme.

In his comments, the Managing Director of Shell Petroleum Company of Nigeria and Chairman of Shell Group in Nigeria, Mr. Mutiu Sumonu explained that his company supported the Equipment Components Manufacturing Initiative because of the multiplier effects it will bring to the Oil and Gas Industry and Nigerian economy.

To ensure the success of the investments, he said SPDC was committed to lead the exercise, offer logistics assistance to the OEMs and maintain large demands for the equipment.

He added that, “Shell has strategically chosen the focus areas to extend support to foreign investors by identifying some of the prime bottlenecks in the business environment, namely electricity, access to land and security, which contribute to over 11 per cent loses in sales and will support, to a certain extent, the increase of activities in country.”

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