Stakeholders in Nigeria’s oil and gas industry have urged the government to guarantee that local content requirements are effectively implemented in order to protect indigenous oil and gas enterprises.
Speaking during a panel session at the 2024 NOG Energy Week in Abuja on Monday, the Chairman, Nestoil Limited, Ernest Azudialu – Obiejesi stated that, while Nigeria has established significant capacity in the sector over the years, rules to protect and nurture local enterprises are still needed, according to Businessday.
According to him, countries, including Nigeria, must enact enforceable laws in the industry, pointing out that a lack of enforcement legislation will leave local enterprises undeveloped while foreign investors return capital to their home countries.
He said, “I want to tell you that if you want your local content or if you want your capacity to grow, you have to enact local content laws that are enforceable. Making law is one thing. The other one is enforcing it, administrating it, and making sure that it works.
*If you do not do that, what you’re going to see is a typical example where investments come to a country, stays, and the country becomes a major producer for 50 years, and the whole money will just be drained out of that country. The locals will not be able to develop.
“Nigeria has built quite a lot of capacities within the country. And one of the areas where we can pride ourselves is in the area of oil and gas. And we know that some of these capacities, we can’t export them, but the ones in the oil and gas, we can export to other countries. And exporting them means we need laws to make sure that those companies that are in Nigeria are already developed.”
He explained that there are hurdles in the sector that are limiting the expansion of local businesses, one of which he identified is the bidding process. According to him, local enterprises are struggling as a result of Nigeria’s inadequate bidding process.
He said, “And there are a lot of people who are briefcase contractors who don’t have capacity, but they will tell you they have connection and because of that, they go and bid for jobs they cannot do. So these things have to be checkmated.
“So that when you are bidding for a job in the oil and gas industry, you compare apples to apples, not apples to oranges. So people of the same technical capacity can bid for a job. And when they are given that job, they’ll be able to do the job timely and within budget,” he said.
Furthermore, Azudialu-Obiejesi stated that overcoming impediments to effective trade among countries is one of the missions of the Africa Continental Free Trade Agreement (AfCFTA), and that removing trade barriers would facilitate skill exports.
“So those are things we are trying to advocate. And by the time Nigeria has entrenched itself with all this capacity, very well as we have done, we can then go to other countries and then start helping them. Start also making money by bringing those experiences to all those countries.
“And that is what the African continental free trade zone is trying to achieve, so that they will break up the barriers, break up all the things that is inhibiting other countries from going to other countries to do business,” he added.
He emphasized that the AfCFTA is guided by protocols, one of which is intended to promote local content in the region.
“The moment you move out of the multilateral and then you are forming the regional, the critical element there is called the rules of origin, because we want to know how many percentage of your local inputs you are having to make up to the final product.
“So AFCFTA is saying you don’t need to go to other third parties. That input you are looking for, you can easily get it within the context of AFCFTA.
Paraventure, you could not get it. Then we have what we call threshold. So there is a percentage or threshold of input that must come within the African states.”
