Growth of Nigerian oil and gas companies good for the country – NCDMB
Although the divestment trend by foreign firms might create vacuums, scaling up local content has brought about equitable transfer of knowledge.
Divestments of onshore assets by some international operating oil and gas companies (IOCs) and subsequent acquisition by Nigerian firms must not be allowed to impact negatively on the level of compliance with the Nigerian Oil and Gas Industry Content Development (NOGICD) Act and remittance of tax revenues to the Federal Government, stated Engr. Simbi Kesiye Wabote, Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB).
Speaking during the breakfast meeting he had with members of the Guild of Corporate Online Publishers (GOCOP) and editors of newspapers and directors of broadcast stations in Abuja on Tuesday and Wednesday, respectively, the NCDMB helmsman enthused that the planned sale of assets of Nigerian Agip Oil Company Ltd to Oando and Seplat’s planned acquisition of Mobil Producing Unlimited (MPNU) assets would transform Oando and Seplat from midsized players into big-time oil and gas operating companies.
He corrected the impression that the international oil companies were exiting the country because of unfavourable conditions, stating that the foreign firms were carrying out assets rationalisation, whereby they leave the onshore and shallow waters and focus on deep offshore operations, where they retain a competitive advantage and contend with minimal human interferences. He said the ongoing and other planned divestments are big accomplishments for Nigerian Content development, describing them as “bold statements that Nigerian indigenous operating companies have come of age and acquired the technical, managerial, and financial capabilities to play in the big league.”
He said: “We are proud that we have moved from near zero participation in the oil and gas sector to the point that our indigenous operators such as SEPLAT, AITEO, and others are now responsible for 15 percent of our oil production and 60 percent of our domestic gas supply. With the acquisitions, the share of local firms in crude oil production could reach 30 percent or more in a short while.”
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The Local Content boss however warned that the ongoing transactions and future divestments by international oil companies could pose serious challenges to the country in terms of declining Nigerian content compliance and reduction in tax payments to the government from the new owners and operators. He based his position on the Board’s experience and records, which showed that indigenous firms, especially the indigenous operating companies were serial violators of the Nigerian Content Act and other laws.
According to him, “many indigenous companies feel entitled and assume they can get away with non-compliance. Some indigenous firms have also argued that they should be excluded from the implementation of the NOGICD Act since their primary investors are Nigerians.”
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Comparing the attitude of the local firms to their international counterparts, the Executive Secretary stated that “in many instances, international operators try to comply with the Nigerian Content because it is in their DNA to obey laws or they have to show evidence of compliance to their home offices. The IOCs will do everything to comply with the provisions of the NOGICD Act. But the indigenous companies will do everything to circumvent the law.”
He emphasised that the provisions of the Nigerian Content Act cover all entities and all activities connected to the Nigerian oil and gas industry and no firm is exempted from compliance. He explained that the Nigerian economy would not develop without encouraging local content in key industries, catalysing local production of goods and services thereby retaining spend in the country, and conserving foreign exchange.
On indigenous oil companies compliance with local content provisions, the Executive Secretary said the Board would continue to use existing regulations and guidelines as well as the provisions of the NOGICD Act to reign in non-compliant firms. The Board is also partnering with relevant agencies, including the Economic and Financial Crimes Commission (EFCC) and industry stakeholders to ensure that the increasing footprints and stakes of indigenous production companies do not cause a reduction in Nigerian content compliance and remittance of taxes to the Government.
Ayodelé is a Lagos-based journalist and the Content and Editorial Coordinator at Meiza. All around the megacity, I am steering diverse lifestyle magazine audiences with ingenious hacks and insights that spur fast, informed decisions in their busy lives.
