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Local Content law has not achieved desired objective in Nigeria – Pedro Egbe 



Ayobami Adedinni

The founding Chairman, Petroleum Technology Association of Nigeria, (PETAN), Engr. Pedro Egbe speaks on the nation’s local content drive, challenges in the sector and sundry issues.

Q. With your level of experience in the Oil/Gas industry, on what scale would you rate the involvement of the indigenous companies in the service sector years after the Nigerian Content Law?

A . Well, if I tell you that they have done very well, I would be deceiving myself.

The Nigerian content law was very specific but unfortunately, we did not anchor it on the players who really drive the process.

Now it is being driven by government which is natural that government should be part of it.

But this is a law that should be driven by business because it is the business that looks at the profit margin. What they expect to make, that is what drives the businessman, an entrepreneur, to fight for a cause.

If it is driven by the public sector, the whole thing is just a routine. The routine being that they want to have compliance, they want to have things done this way because it is the best practice. While that may be okay, the business interest must be in front, because it is the business that increases the capacity.

It is the business that employs people, it is the business that grows the economy and if the business is going to go cap in hand begging for initiative they already have to be approved by the government and the government looks at that and considers all the variables in the world before they can make the decision.

Then if there is no decision, nothing happens. These are industries driven by multinational and international oil companies. These people have built their lives around this industry, they have made a lot of money and they have also use this money to develop their country to provide local content for their people.

So if you are going to now deal with the real issue of providing local content and developing economy for your people, it means that you have to a little bit move away from the perception of the multinational companies and the IOCs, so as to draw that line between we that are indigenous players who have ultimate responsibility for our people and then others, who are players that have been there for years and not much has changed.

This creates the problem, and until that demarcation is there clearly, then we are not going move further.

Q. The National Assembly is looking at the review in Nigerian Content Act because of what you rightly said that Nigeria is losing money due to poor implementation to either IOCs, do you see the possibility of review being the solution?

A. The only thing I believe is that if there is a review, when the review that tries to please the whole world and Nigeria quest for revenue.

This review has been the order of the day for the government. So if we are going to tilt the balance, then you need to have a regulatory framework that can go back again and look at what Nigeria actually needs.

For instance, if you are going to embark on Energy Crude Oil project, it is an audacious plan. That project will not be driven by IOCs; it will not be driven by multinationals. It will be driven by NCMDB; they might have interest to bring multinationals to support them in technology and other areas but they have to negotiate those terms as business and the government has to leave that responsibility to the business institution to do that negotiation.

Q. Now IOCs are not talking about Nigerian content anymore but African content by indigenous companies, what is your take on that?

A. It is the deceit. I know the IOCs that does that because the people in public services and government don’t know the difference between what they are looking for and what they should be.

If it is to speak, you know they speak very well and everything makes the headlines but the truth is, charity begins at home, we have no business where we are today in terms of growth, economy and development. We just have to build.

But it is good to tell the truth. Once the truth is being told for the society that these are the agents of change; the businessmen. The businessmen will drive Nigerian content not the government.

The Nigerian content people carried $200million  and kept with the Bank of Industry. That is a typical flawed example of a government trying to drive  Nigerian content. BoI will disburse this fund according to its law. There is already a law for Nigerian content.

I met BoI many years ago to discuss on how they could fund my project, they told me that by law they have to build factories but they must give me the equipment and materials to buy from so and so factories from a particular country and they would open credit to that company directly and I look at them said, no, I want to build factory here. If I’m going to build factory in Nigeria, I have to design the factory, look at the raw materials for myself, and look for the equipment that can manufacture locally here. But if the law says, show me where I can buy then it means BoI is wasting my time.

Q. So, BoI doesn’t encourage capacity building?

They don’t even understand that because what we did before was buy the factory from overseas where all the design, material procurement and construction will be done and delivered to Nigeria and Nigerians will later do Assembles and hookup.

We need to design, we need to manufacture here. Just like Virginia, everything has gone to North Korea. It’s not by magic, you must take responsibility and utilize your best brains to cause change in your society. Your best brains should be the brilliant ones, first class graduates. They must be challenged.
Q. When the government gave that money to BoI, even the incumbent PETAN Chairman was there to sign. As the past chairman, would you have signed the documents?

A. If I was there, I wouldn’t have signed the documents. I’m not blaming my new chairman; he did what he had to do under certain circumstances. But the truth is that they gave us a limit of $10million dollars, $5million dollars. That is BoI’s level with what sets the law for them. The Oil/Gas industry is big; our projects come in millions of dollars.

The Oil/Gas industry is where we spend $100 million just like that. We can spend $200 million on a project. So the BoI’s concept is not the same with the model of the Oil/Gas industry.

Q. Where should the funds have gone to?

A. I don’t care where it is. But the truth is; when we created that law, it was expected that NCMDB must take risk. The risk of saying that we have a law, these people have brought their money and it is my one per cent that is going in there.

Since, we have this money, we have to encourage XYZ companies to create massive employment, massive development, we see them like that this year and the next year they appear the same.

So they take the risk and inject the funds into companies they prequalified as being good companies that can manage resources and create life for our people.

Q. So, the money from BoI, is it shared commercialized?

A  Commercial banks will eventually disburse the BoI funds and they would also bring their terms and those terms are not different from what we have in the past with them. Nobody is there to take risk to say look I spent this $100million on this company, I put my life at stake and say if this guy does not deliver, I can go to jail. If people are ready to make this decision in life, our society will move forward.

Q. What is your company doing now?

A. We are still doing what we used to do. Although we are working on developing our technologies, we are working on developing structures that would allow us latch into this big body while working directly in the energy corridor.

Q. (cuts in)…with the oil price coming up?

Q . It has nothing to do with the oil price. Even, if the oil price is zero.

The most important thing is just planning and knowing where your country and companies are going. There you can now make do with whatever revenue available. Like I said in my presentation, money is completely not the factor because the money you need to develop the corridor and do all these things I’m telling you now is predetermined system that the country must budget for.

For the major infrastructures, you also need to appreciate the fact that the money must be from international committee. So when you develop your framework, financial modeling and business model, then you may now know how you are going to pay back.

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