NIGERIA Invest in 2012-13 - Newsdesk Media

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94 OIL, GAS AND MINERALS Local players The Nigerian Content Act aims to create jobs for local workers in the oil and gas industry INvESt IN NIGERIA 2012-13
To encourage the participation of local companies in Nigerian oil and gas the government has set up a minimum local content target of 75 per cent for all contracts undertaken in the industry. Cherry Reynard assesses the progress that has been made in terms of meeting this target Oil has brought wealth to Nigeria, but to date relatively little of this has filtered down to the wider population. Income inequality is still significant and the presence of international oil companies has not produced a commensurate rise in local skills and employment. However, the government is now taking steps to address this imbalance, in particular with its ambitious new legislation on local content. Historically, the oil and gas industry in Nigeria has been dominated by international companies operating under joint venture agreements. For example, a joint venture operated by Shell accounts for around half of Nigeria’s total oil production. These global companies have generally relied on international rather than domestic workers and there have been accusations of discrimination against local labour. This has been both cause and effect. There has been a skills shortage in Nigeria and studies suggest that the country’s educational standards have been falling for some time. A recent research paper from the Department of Educational Administration and Policy Studies, Delta State University, Abraka, Nigeria found that: “Standards in education are falling at all levels as a result of inadequate acquisition of skills due mainly to poor implementation of school curricula.” However, many people have laid some responsibility at the door of the oil and gas companies operating in Nigeria who have been unwilling to train local people and transfer their skills. Importing labour is more expensive and a number of business people in Nigeria have been vocal, according to Chukwuma Henry Okolo, vice-chairman and chief executive of oil servicing company Dorman Long Engineering. He says that the current situation puts the country 10 years behind in the development of technical skills and increases the human resource costs of any project by as much as 100 per cent. The first attempt by the government to tackle the problem came in 2009 as part of the far-reaching Petroleum Industry Bill. One of its five main tenets was encouraging local participation in the oil and gas sector. It required increased ‘local content’ as a condition for the award of oil licences. It OIL, GAS AND MINERALS 95 stated that the federal government should at all times promote the use of domestic companies, workers and services. There were specific as well as general clauses. For example, the bill sought to encourage the development of small fields by local entrepreneurs with low tax rates. It addressed some of the favourable tax deductions that had existed for international companies. It also, controversially, renegotiated some contracts that it said had been awarded improperly, which dented Nigeria’s standing among some international investors. However, perhaps most importantly, it also deregulated the downstream sector, which opened it up to competition and therefore local participation. Legislating for local content The reforms were generally effective, reversing years of declining output in the oil and gas sector and shoring up GDP growth in Nigeria. However, the provisions of the bill were extended by the Nigerian Oil and Gas Industry Content Development Bill, which became the Nigerian Content Act, in April 2010. Unlike previous incarnations of the bill, the 2010 version defined ‘local content’ not by the shareholders owning a company. This was important because this definition had made previous regulations relatively easy to bypass. Instead, local content is defined as “the quantum of composite value added to or created in the Nigerian economy by a systematic development of capacity and capabilities through the deliberate utilisation of Nigerian human, material resources and services in the Nigerian oil and gas industry”. In other words, the Act aims to give those companies with high ‘Nigerian content’ preference over those with lower content. The Act also created the Nigerian Content Development and Monitoring Board (the Board) to execute its provisions, plus the Nigerian Content Consultative Forum, which is intended to be a platform for information-sharing. The Act set out some ambitious targets for the next four years, including 17 individual milestones. It aims to redeploy $20 billion into the Nigerian economy and create 30,000 jobs, largely by encouraging international companies to use domestic ancillary services and employ local labour. The bidding process Criticisms of the Act have tended to focus on the introduction of more administrative hurdles in an already onerous contract award process, and certainly the rules do place additional burdens on companies operating in Nigeria. Specifically, companies must submit a Nigerian Content Plan as part of the bidding process for any licence, permit or interest in the oil INvESt IN NIGERIA 2012-13
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Invest in NIGERIA 2012-13 Published
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Mubadala is an investment and devel
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Invest in NIGERIA 2012-13 Editor La
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Trade Facilitation/Development Init
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Contents Forewords 16 21 The Policy
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44 Promoting free and fair election
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120 Industrial Infrastructure 124 1
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16 FOREWORD Goodluck Ebele Jonathan
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Ahmadu Bello University, Zaria, Nig
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since 1989 Rotary kiln incinerators
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Pushing boundaries An emerging lead
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24 the policy agenda Realising Nige
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Foreign policy and the investment e
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28 the policy agenda prospects of l
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www.nosakgroup.com Corporate Offi c
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32 the policy agenda Democracy and
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Sustainable business, social repons
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36 the policy agenda There is no do
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38 the policy agenda Working to ach
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40 the policy agenda they had sexua
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42 the policy agenda “The improve
Page 44 and 45: 44 the policy agenda Promoting free
Page 46 and 47: 46 the policy agenda The April 2011
Page 48 and 49: 48 the economy and finance Nigeria
Page 50 and 51: Murphy Shipping…………Bridging
Page 52 and 53: 52 the economy and finance has been
Page 54 and 55: Since 1994, Nigeria Inter-Bank Sett
Page 56 and 57: 56 the economy and finance Facts an
Page 58: 58 the economy and finance petroleu
Page 61 and 62: Driving growth through Mobile Money
Page 63 and 64: elevating the country to the upper
Page 65 and 66: Zenith Bank plc Zenith Bank was est
Page 67 and 68: the economy and finance 67 Public r
Page 69 and 70: Improving Nigeria’s electricity n
Page 71 and 72: supply of electricity, though, will
Page 73 and 74: oil, gas and minerals 73 Nigeria’
Page 75 and 76: aBc Human development consultants l
Page 77 and 78: oil, gas and minerals 77 The decisi
Page 79 and 80: Empowering Nigeria Seven Energy Int
Page 81 and 82: Reliable partner in NIGERIA JASCON
Page 83 and 84: Crude oil exports by destination, 2
Page 85 and 86: The leading indigenous suppliers of
Page 87 and 88: DrillPet International Limited (DIL
Page 89 and 90: Step on the gas The Nigerian Gas Ma
Page 91 and 92: The original GMP proposed a gas inf
Page 93: Find out more at www.oriental-er.co
Page 97 and 98: NEITI: the Nigerian Extractive Indu
Page 99 and 100: Cakasa (Nigeria) Company Limited St
Page 101 and 102: The government has ambitious plans
Page 103 and 104: Potential for growth The Nigerian g
Page 105 and 106: Oil and the Niger Delta Nigeria’s
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Page 111 and 112: Despite being rich in natural resou
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Page 119 and 120: www.ilf.com ILF - Engineering Excel
Page 121 and 122: of one gigawatt coal-fired power pl
Page 123 and 124: © 2012 Caterpillar All Rights Rese
Page 125 and 126: The National Economic Development P
Page 127 and 128: Vehicle imports General cargo Conta
Page 130 and 131: Engineering & Construction STEMCO,
Page 132 and 133: 132 INDUSTRIAL INFRASTRUCTURE Suppo
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Page 136 and 137: 136 SOCIAL INFRASTRUCTURE Populatio
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Page 140 and 141: 140 SOCIAL INFRASTRUCTURE the chanc
Page 142 and 143: 142 SOCIAL INFRASTRUCTURE Healthcar
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144 SOCIAL INFRASTRUCTURE Obstetric
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146 agriculture and water Growing t
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Electrical, Mechanical, Civil, Wate
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150 agriculture and water sesame an
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Siat Group Investment Company in Tr
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154 agriculture and water The devel
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156 media, tourism aNd culture A ri
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158 media, tourism aNd culture The
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160 MEDIA, TOURISM AND CULTURE A ci
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162 MEDIA, TOURISM AND CULTURE Top
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164 DIRECTORY Government ministries
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166 DIRECTORY Tel: 236 0521, 236 05
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168 DIRECTORY United States of Amer
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170 Index of advertisers Aero .....
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ffordability - innovation eliabilit
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