By Raymond Mordi The signing, recently, of the Nigerian Oil and Gas Industry Content Development Bill into law by President Goodluck Jonathan has been generating a lot of interest among industry stakeholders and other allied professionals. The law, which seeks to promote Nigerian content in the oil industry, has been hailed as capable of creating many jobs among other forms of empowerment for indigenous personnel and operators. This is expected to be achieved by giving exclusive consideration to indigenous oil service companies within the industry, particularly those that demonstrate ownership of equipment, Nigerian personnel and capacity to execute jobs. Essentially, the new local content law mandates all regulatory authorities, operators, contractors, alliance partners and other entities involved in any project, operation activity or transaction in the industry to consider Nigerian content as an important element of their overall project development and management philosophy for project execution. To be sure, local content has been part of a deliberate policy of government to ensure that Nigerians are part and parcel of the oil industry, which has traditionally been an exclusive preserve of foreign nationals. The earlier form of local content was an offshoot of the military era. But it was during the civilian administration of Olusegun Obasanjo that it gained a wider currency, when the monopoly of the major petroleum dealers were broken and indigenous marketing companies were granted greater access in the marketing of petroleum products within the country. Thus, hitherto, local content was limited to marketing of petroleum products and engineering services like fabrications.

However, the new law is much more holistic in the sense that it involves all strata of professionals that are allied to the oil and gas industry in the country. Apart from the fact that every multinational oil company in the country must domicile a minimum of 10 per cent of its annual profit in Nigerian banks, implying that Nigerian banks will have more money to fund investment in the country, Nigerian insurance companies have also been mandated by the law to do all aspect of insurance in the oil and gas industry, unless where in the opinion of the National Insurance Commission, NAICOM, the capacity of the Nigerian insurance company has been exhausted. In accordance with the Local Content Act, President Jonathan said a Nigerian Content Development and Monitoring Board would be established to guide, monitor, co-ordinate and implement the provisions of the new law to pave the way for measurable and continuous growth of Nigerian content in all oil and gas operations. Under the new dispensation, Nigerian companies must do all issue of legal services, and every company doing project in a community must establish its presence in that community, so that people there would not have to travel to Abuja or elsewhere to look for contract for a project within their community. The law also makes provision for management positions for expatriates to protect the interest of investors, but calls for a succession plan for every position that ought to be manned by a Nigerian that is occupied by an expatriate, such that a Nigerian would understudy and take over from the expatriate in four years. The sky`s now the limit for the local entrepreneur who has the capacity and the skill; a

the skill; as there would be nothing restraining him in trying to make his contribution where local content are required in any area. Some of the difficulties the local entrepreneurs must have been having in trying to get involved in the industry would to some extent be reduced by the application of this law. "I see it creating more jobs, as a lot of people would now come into the industry courtesy of the new law; whoever has the capacity to be within the industry would always have a role to play," Oliver Mordi, chief executive officer, Starways Energy, a local oil and gas consultancy outfit, observed. Insurance industry stakeholders particularly are already excited about the prospects of more patronage for their business; as the new law is expected to remove all obstacles hindering the full participation of indigenous underwriting companies in the oil and gas business. Sunday Thomas, former director, Technical Inspectorate, NAICOM, insists that the local content law has the potential to generate over 30,000 jobs in the next five years. For Gus Wiggle, managing director, Linkage Assurance, “The law has given the local companies opportunity to venture into those areas that were reserved for multinational companies before now.� According to the insurance stakeholders, it will help give bite to the Insurance Act 2003 which provides that all property located in Nigeria, whether movable or immovable or any insurance interest or liability in relation thereto, shall be insured with a local insurer who may re-insure such liability or property overseas where Nigerian insurance industry lacks the capacity to retain the risk. But a number of observers have compared it with th

the Indigenisation Decree of 1973, which failed because it amounted to a relegation economic efficiency on the altar of economic nationalism. The decree, which was a product of the cold war era, sought to empower Nigerians through ownership and management of critical firms and sectors of the economy that were previously in the hands of foreigners. In a developing country like Nigeria`s with a growing population, the priority, they say, should have been the attraction of foreign investment, job creation and growth. In other words, the emphasis ought to be on policies that would help to attract and retain investment, and thereby create employment opportunities for the teeming population of Nigerians, rather than the ownership of investment. Alluding to the failure of the 1973 decree, Bisi Ogunjobi, former vice president, Africa Development Bank, and lead partner, McFeley Development Associates, said with regards to the management of multinational companies in Nigeria, local content has taken a back seat in the country today. “Before, companies like the United Africa Company, UAC; Lever Brothers, now Unilever; Cadbury; Nestle and Nigerian Breweries were run by Nigerians. But, today, what is happening? They have been taken over by foreigners,� he told the magazine. Indeed, Ogunjobi is not particularly excited by the new law. As far as he is concerned, the authorities might as well begin to champion local content in areas where it would be easier to achieve, rather than the oil industry, where the issue of capacity might hinder local operators. “Take the hospitality industry for instance, how much local content do we have in a new hotel that is being built? How much

of local content do you have in the furniture, in the decorations and in the kitchen utensils?� he asked rhetorically. He said in his neighbourhood, where a lot of houses are currently springing up, all the artisans, including carpenters, bricklayers, painters and plunders, are all being brought in from the neighbouring countries of Togo, Benin, up to Burkina Faso. “So, where is the local content we are talking about? This is an area that is capable of generating more jobs than the oil industry. This is an area where small-scale businessmen operate. So, I think there are many other areas where we need the local content more urgently than the oil industry,� he insisted. Thus, given the issue of capacity, foreign participation is likely to remain the driving force behind the industry in Nigeria for a long time. This is because it requires not just goodwill to be able to contribute meaningfully to the industry, but a considerable amount of equipment and personnel. Charles Ozesua, president, Nigerian Gas Association, NGA, noted with great concern “the limited domestic capacity for project execution by indigenous contractors and trained manpower in the industry, particularly in the light of the emerging local content bill.� To carry out engineering services offshore, for instance, "you not only need barges, you also need vessels to convey materials, as well as personnel to the point where those services are needed. Thus, it requires an enormous amount of capital to be able to achieve capacity in that regard. So, obviously, there would be limits that the Nigerian who does not have a foreign backing cannot go beyond," Mordi explained, adding that there are no lo

local companies in Nigeria at the moment that can build an oil rig for instance. Against this background, the new legal instrument is good, but not sufficient. To be able to leverage on this window of opportunity, local operators must develop their human capital, through a sound education and training. Besides, availability of improved infrastructure and intensification of research and development, R & D, locally are also key requirements for the implementation of the new law. In a nutshell, local businesses have to become globally competitive to be able to measure up under the new dispensation. As Seun Faluyi, managing director, Global Ocean Engineers Nigeria Limited, an indigenous engineering firm, aptly puts it: "It is now up to us in the industry to take it and make it work now that the policy framework is in place. The monitoring board is an excellent mechanism to give teeth to the law as well and we look forward to this as a new beginning." The cloudy policy environment hanging over Nigeria`s oil and gas industry has been holding the country back in many respects. The new local content law is believed to be part of the reforms currently unfolding in Nigeria`s oil and gas industry. Other aspects of the reform include the quest to deregulate the downstream sector of the industry, to attract investment there and thereby, improve the country`s refining capacity; as well as the Petroleum Industry Bill, PIB, which is currently before the National Assembly. The PIB has generated so much controversy that among stakeholders, particularly from the multinational oil companies operating in the country, who have threatened to withhold further investments in Nigeria until the

bill is passed into law, without the contentious provisions. Thus, some of stakeholders have advised the federal government to fast-track the passage of the bill, and the deregulation of the downstream sub-sector of the industry, to make the industry, and by extension the country, conducive for investment. Mordi: Lauds the passage of the bill Thomas: LCA can generate 30,000 jobs Ogunjobi: Particularly not excited by the new law Faluyi: Sees LCA as a new beginning