NNPC and Development of Local Content Capabilities

Kabir Mohammed         

The Nigerian Oil and Gas Industry Content Development Act of 2010 mandates oil and gas companies operating in Nigeria to prioritise the use of locally sourced goods, services and manpower to increase Nigerian participation in the industry through the development of local capacity and create jobs in the country.

In a nutshell, the Act seeks to promote Nigerian workforce, local procurement and technology transfer. The sole goal of the Act is to maximize economic benefits for the country by ensuring that a larger share of the oil and gas industry revenue stays within the country through local investment and employment opportunities. Government established the Nigeria Local Content Development and Monitoring Board (NCDMB) to monitor compliance and where necessary enforce penalties for non-adherence.

For clarity, the Act does not seek to exclude foreigners from participating in the Nigerian oil and gas industry, it, however, makes it mandatory for foreign companies seeking to carry out operations in the upstream sector to involve Nigerian(s) in the formation of the company. NNPC under the current leadership is fully committed to the realisation of the objectives for which the law was enacted.

Mele Kyari identifies local content as critical for development in the oil and gas sector and the country’s economic growth. His strong advocacy is in sync with the Presidential Directive on Local Content Compliance Requirements 2024 issued as an Executive Order by the current administration.

The order seeks to enhance local participation in the oil and gas industry by ensuring strict adherence to Nigerian compliance requirements in contracts and projects.

Based on Mele Kyari’s firm belief in the inherent possibilities and gains of the Act if fully implemented, he aligned NNPC with the Nigerian Content Development and Monitoring Board (NCDMB) convinced that this adoption will grow indigenous participation in the sector’s value chain, enhance job creation, value creation and development of in-country capacities.

Kyari’s obsession with growing the local content in the oil and gas sector is well known and stem from his conviction that local content should not be seen as lip service given the huge volume involved in contracting Engineering Procurement and Construction (EPC) in Exploration Production for which a significant value is lost to the country. As a result of his commitment to arrest this drift, NNPC under his leadership continues to introduce strategic initiatives aimed at enhancing the capabilities of local firms and creating a sustainable energy future.

Under his guidance, NNPC threw its weight behind the Nigerian Content Intervention Fund (NCIF) to support local content development; the company also supported the development of the Nigerian Oil and Gas Parks Scheme (NOGaPS) to stimulate local manufacturing. He has guided the restructuring of the NNPC Exploration and

Production Ltd (NEPL) and the positioning of the NNPC Engineering and Technical Company LTD (NETCO) as a full-fledged engineering company. As a result of the concerted efforts and unwavering commitment of the current leadership of NNPCL, the local content in the country’s oil and gas sector has witnessed exponential surge, soaring from 26 per cent in 2017 to 54 per cent in 2022. In his current position, Kyari has continued to canvass for the prioritisation of local content as key element of national development strategy for the growth of the energy sector.

His considered position is that all the operators in the energy sector should, as a matter of policy, be directed to make local content a key policy in their operations. The Kyari doctrine is anchored on his belief that we have a shared responsibility to empower local firms and drive innovation to ensure a robust oil and gas sector that meets both local and global demands.

The race to unlock Nigeria’s abundant energy resources has intensified with fresh injection of strategic policy and regulatory frameworks. The Tinubu administration has established a dedicated Energy Office within the Presidency.

The office is saddled with the responsibility of designing and implementing reforms to position Nigeria as a leading global investment destination. Under Kyari’sleadership, NNPC continues to play a critical role in Nigeria’s local content drive in enforcing NOGICD Act by monitoring compliance. The company as current leadership demands, actively supports the development of local capabilities by facilitating training programmes for Nigerian personnel within its workforce. This has enabled them to acquire requisite skills needed for technical roles within the industry.

The establishment of Nigerian Content Division within its structure underscores its unwavering commitment to the promotion and entrenchment of local content in the oil and gas sector.

Pursuant to this commitment, NNPC has continued to issue directives to industry stakeholders to comply with the letter and spirit of the Act. Kyari has forged a close working relationship with the Nigerian Content Development and Monitoring Board (NCDMB) to enforce compliance. On policy enforcement, NNPC is actively enforcing the NOGICD Act to ensure that players within the industry meet local content targets regarding procurement, manpower development and technology transfer.

The current management of NNPC led by Mele Kyari has been unwavering in forging strong partnerships with indigenous companies. Over the years, Kyari’sstrong advocacy has seen the support of NNPC for local content suppliers in pipeline coating, fabrication and maintenance projects. The transformation of the company into a commercially driven entity has opened up new opportunities to further deepen and expand existing partnerships in the area of gas infrastructure pivotal for the country’s ongoing quest for energy transition.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), one of the subsidiaries of NNPC has continued to play a significant role in streamlining regulatory compliance processes. The organisation is providing a clear framework for standards and best practices. The measures in place have ensured that local players operate with greater confidence. The emphasis on creating a level playing field for indigenous players has enhanced the ability of indigenous companies to play in upstream projects especially pipeline protection, coating and fabrication.

The Nigerian Local Content Act in the oil and gas sector has been beneficial to local companies and has allowed them to secure contracts; it has also fostered a mutually beneficial relationship between international and local companies. The local content in the oil and gas sector stood at 54 per cent as of 2022; going by projections by the Nigerian Content Development and Monitoring Board (NCDMB), this figure will rise to 70 percent by 2027.

The achievement of this lofty objective will require enduring partnership among critical stakeholders in the oil and gas sector. NNPC is fully committed to the promotion of local content in the energy sector and has been exemplary in leading the charge. With the pace of the existing collaboration and the determination of the current administration, there are strong indications that the objective(s) for which the Act was given birth to will be achieved in not too distant time.

Mohammed contributed this comment from Surulere, Lagos