NCDMB accounts for $60 bn FDI, $112 bn value retention

Since you became the Executive Secretary of the Nigerian Content Development and Monitoring Board six years ago, you have been credited with several achievements. Which of these achievements do you consider most strategic? 

I think the most strategic for me, if you look at the software issues, is the development of the 10-Year Strategic Road Map. That to me is very strategic in the sense that taking over as the executive secretary of NCDMB, I needed to know where the organization was. I needed to ask myself, where do I want to take the organization to in the next 10 years?

So, we then had to sit down, got a couple of consultants and evaluated the current state of the organization since it was established from 2010, up until 2016. What has it achieved? Has it achieved its objectives? Thereafter, we had to say, where do we want to be in the next 10 years? Which now gave us a clear roadmap on the things that we needed to do. So, for me, knowing where we are and trying to understand where we want to be, is the most strategic software issue that we’ve been able to achieve.

On the hardware issue, the most strategic has been, completing our head office building, which is a 17-storey floor building, which we did complete on record time, despite the COVID challenge, despite all challenges that we faced. In four and half years time, we were able to complete that project and moved into that building, and currently, we’re using it. So, for me, those were extremely strategic if you want to ask me of the most strategic as it were.

From the period of Local Content policy under the then NNPC to date, there have been targets and deadlines for 70 percent. Where are we today?

When the Local Content law came into being, the industry took an evaluation of where we were and came to the generalisation that we were at just about five per cent in terms of growing local content in the country. And today, we pride ourselves that we are about 47 per cent in terms of the growth of local content from when it was enunciated as a policy, it came as a law and up until date.

In 2016, we found ourselves around 26 per cent in terms of growth, but today, we’re at 47 per cent, which is a significant achievement when you look at the process of local content development, which we always say, is a marathon and not a sprint.

It takes time, it takes perseverance, it takes consistency, and it takes focus to be able to develop local content in the oil and gas industry, which is highly technical intensive. So, when you give all that and you look at where we’re today, after about 12 years of operating the Act, you would agree with me that we have made substantial progress. 

There is a perception out there that the international oil companies (IOCs) do not want to support local content. What has been your experience so far in the past six years, and how have you been getting them to support local content?

I think that will probably not be true in terms of IOCs not wanting to support local content. If there is any organizations that have supported local content, it’s the IOCs. Initially when it came, there was some kind of resistance when it was a policy. They did it on a best endeavour basis as IOCs. Don’t forget, the IOCs are businesses. They are here to maximize profit for their shareholders.

So, when it became law, they had no choice but to comply with the provisions of the law. They had to drop the resistance when it became law in order to support local content development, because they also know that ultimately, local content will bring about cheaper ways of doing business, will link the communities to their businesses and also give them some form of security in doing business in the country.

So, the truth is that the IOCs have been very supportive to the best of their ability. We also know that in implementing the law, you have to use common sense. So, we are very pragmatic in implementing the provisions of the Act, so that we know what is possible and what is not possible. And then, we put a bit of pressure in certain areas in order to stretch them a bit to do what they are doing.

I think where we are having the most challenge is not with the IOCs, is with the indigenous operators, ironically, which again, is a difficult pill to swallow, especially when we did all you did in promoting Local Content for their benefit, and now that it is time for them to actually practise it, you then see all manner of sharp practices.

So that is where we have the greatest challenge, not the IOCs. Like you know, local content is applicable to everybody, whether you are indigenous operator or you are international oil company. So, that is where the challenge is, and of course, we are dealing with those challenges as they come. 

Why is it so?

I think, my interpretation of it is that, initially, they felt local content was not for them because they are local companies; hence we should face the IOCs on that. But that’s not it, because the law is for everybody.

Secondly, they want to maximize their profit as much as possible without taking cognizance of the reason why they exist in the first place. It’s human nature as it were. I think that’s the major reason for that.

NCDMB had been mentoring other African countries on local content implementation, like Togo, Senegal and others. What do you hope to achieve by this?

Part of it is, if you look at the 10-Year Strategic Roadmap I spoke about, it is also regional integration and sectoral linkages as one of the strategic pillars.

Now, if you have developed capacity in-country and there are no opportunities to utilise that capacity you have developed and there is an opportunity within Africa to deploy it, you want to explore that possibility. That’s why today, a lot of Nigerian companies are providing services all across Africa because of that platform that we created to diversify their portfolio.

In addition to that, you also have the Africa Continental Free Trade Agreement, which of course, creates that opportunity for Africa to trade among themselves. Rather than allow countries that have just discovered hydrocarbon to look on to Europe or America to provide them service, there is service next door in Africa.

So, that’s part of our strategy in order to continuously use the capacity that we have developed in-country. 

The Board has set out to achieve a number of goals by 2027. Part of that is creation of 300,000 direct jobs; retention of $13 billion of the estimated $20 billion spend in the oil and gas industry every year, and other lofty goals. What efforts are you making to achieve these lofty goals?

Of course, the effort is very clear. It’s part of the roadmap. Part of the efforts is, if you look at 2016 till now, we have moved from 26 per cent to 47 per cent. It’s clearly in the roadmap and it’s all the effort we put in. If you look at our 10-Year Strategic Roadmap, you have short, medium and long term objectives, which we did set for ourselves. And if you go and take a cursory look at those goals, you will discover that we are very much on track in delivering them.

Example, expanding the manufacturing base in the oil and gas sector, which of course, today, is pushing us to build industrial parks all across the oil producing states. By the grace of God, by first quarter next year, we would commission two of those industrial parks to incubate manufacturing, which is lacking. That is very much ongoing and is very much on track.

The other bit again is to support the pronouncements of government in terms of policy. Now, the main objectives of local content in Nigeria are very clear. One is job creation. Two is retaining in-country value. If you look at Nigeria’s population that is growing exponentially today, we are about 206 million people. How do you create jobs for them? You have to also put a skin in the game. You cannot depend solely on foreign companies to come and create those jobs. You have to also look for opportunity to create those jobs. That’s why you see us today getting into ventures, to catalyze ventures, as an example.

One of such ventures we catalyzed is modular refinery. Today, we have equity investment in Waltersmith Refinery in Ibigwe, Imo State, where we are refining 5000 barrels of crude oil per day. And that refinery, today, has in its direct employment, about 200 people and then, you multiply that with the indirect employment: truck drivers, filling stations and all that. The indirect effect is unimaginable.

So, you have to put a skin in the game. In the same vein, we took equity position in the expansion of Liquefied Petroleum Gas (LPG) Programme as part of government’s intervention, and created a partnership with Butane Energy to distribute LPG stations in 10 northern states of the federation.

Do you know how many jobs that is going to be created? And if you take our social structure in Nigeria, for every one job you create, you affect 10 members of a family because we have a social structure where we take care of our cousins, nephews and the rest of them.

So, when you create one job, you are touching 10 lives. So, imagine 200 jobs and multiply that by 10 and then you talk about the indirect jobs. So, you must strictly use the D that is within NCDMB. It’s the Nigerian Content Development and Monitoring Board. How do you develop content if you don’t look for opportunity to catalyze the establishment of businesses in the country? And that’s exactly what we have done.

NCDMB has successfully organised the Practical Nigerian Content Seminar and the Nigerian oil and Gas Opportunity Fair (NOGOF) for the past couple of years, where huge investment opportunities and ideas are unveiled. How have these investment opportunities translated to projects execution?

A lot of them have come to light. You remember, it was at one of the PNCs that we talked about Train 7. Today, I’m sure you probably attended and you heard us when NLNG came and talked about the potential of Train 7.

Today, Train 7 is a reality. That’s almost a $5 billion project and the project is going on as I speak. It’s about 30 per cent complete and hopefully, in 2026 or so, that project will be completed. That’s one example.

Secondly, in one of the PNCs, we talked about the Ikike project of TotalEnergies. Today, Ikike has been commissioned, producing almost 50,000 barrels of oil per day. It’s a huge project with a lot of Nigerian participation. I think by the end of this month, they are going to celebrate the production of Ikike.

You talk about Bonga North as an example. We talked about it at the PNC. SNEPCo is revving up activities in order for Bonga North to come alive. Most of the pronouncements are gradually being developed.

Don’t forget, the oil and gas business, from when you discover and you focus on producing oil, it takes about five years. It’s a long gestation period to bring production alive. So, most of those pronouncements are being realised today, and it’s very visible for anybody to see.

At a recent oil and gas conference, you announced that the Nigerian Content Intervention Fund has grown to $500 million. How were you able to achieve this, and what is the report of the repayment?

I make bold to say that the Nigerian Content Intervention Fund which is being managed by the Bank of Industry (BOI) is one of the successful loan schemes in this country. We rolled out $350 million which we gave to BOI to manage on our behalf.

Today, all that money has been taken up by various businesses in the country and the pay back has been almost 98 per cent successful at that. This has also helped to a large extent, in cushioning the effect in terms of doing business in the country, because today, the interest rate on the back of that fund is just six per cent, whether you borrow in naira or in dollar.

It has been hugely successful.  And we are doing the same thing with NEXIMBANK that we gave $50 million, with them bringing in their own counterpart funding of $50 million, in order to support working capital as well as women in oil and gas. So, those have been very successful and the testimonies are there to show. 

In terms of what we are doing with NEXIM, it took time for it to kick in. So, all this while, they have been developing the backend because we wanted an online process. We didn’t want people to be swarming banks to apply for those funds.

So, they needed to build their backend to be able to meet clients’ needs. Since they competed that, we now started seeing movements in terms of people accessing those funds and the rest of it . So, it has been hugely successful, and I think it’s also part of the strategic achievements that we have made within the board.

You also invested in several projects such as modular refineries. Which of these projects have started yielding dividends, and are you not worried that you may have your fingers burnt in some of these businesses? 

Today, like I said earlier, Waltersmith Refinery, we took interest in is currently producing, among the only two refineries working in the country. The other one is the one by NDEP.

“As a matter of fact, today, we even built tanks within the Waltersmith Refinery to store products but the demand is so much that we don’t even have products to store. As you are producing, it’s being take away, and return on investment has been very healthy for us, as far as we are concerned.”

As for if I’m worried that I may burn my fingers in any of those projects, as a matter of fact, investments all over the world, if you go and ask capitalists who have invested in various ventures, none of them will tell you that every venture they got into was successful. If you ask people like Elon Musk, who is one of the richest men in the world, if you read his books, he did a lot of investment that did not succeed. But that never stopped him, he kept on knocking at the door. Today, he is one of the wealthiest men in the world.

So, for us in NCDMB, we look for opportunities. If at the end of the day, we are 70 per cent successful, then that is a huge success as far as investment is concerned. If you don’t venture, you don’t gain. You have to be out there to be able to create value.

You remember the story of the biblical talents where money was given to a couple of people. Some of them decided to bury the money while some invested and doubled what was given them as compared with those who buried their own because they were afraid of losing the money when they invest it.

So, for us, it’s to catalyze as much business as we can, and if at the end of the day, we are successful in 70 per cent of it, we pat ourselves on the shoulders because we also do a thorough risk analysis, to say, where is the risk envelope that we are ready to live with because it’s business? 

You have already highlighted some of the investments you are making in some private establishments. Is this part of the NCDMB mandate? 

It’s important to deal with this question so that you guys should be the ones to tell the story. Now, when you look at NCDMB, I think the framers of the law also know that you cannot ask people to do what you cannot do. Hence, they put that development in it. An example is, you ask companies to say, you have to employ Nigerians, because that’s what the law says and then they come to you and say, we are not able to see Nigerians with the skill sets that we need to be able to produce hydrogen. What will you do? Ask them to stop so that you go and build capacity before they continue with the oil and gas production? Of course not.

So, as NCDMB, while you are asking them to employ Nigerians, you must participate in building the capacity of Nigerians, so that when they come back to you to say, we don’t have people, you say, we have trained a lot of people and here is the data, so you have to use them. That’s one.

Secondly, the objective of Local Content, like I said to you, is to create opportunities for employment in Nigeria, giving the growing population of the country. Local Content as it is always said by me in every forum that I find myself is not a one-size-fits-all. What are Local Content requirements for Nigeria will be different from Local Content requirements in Qatar, as an example. Nigeria is more about employment. Qatar, they don’t even have the people to employ.

So, it’s more about establishing industries and factories within their country to bring in people in order that they would generate taxes and the rest of it. These are two different jurisdictions. So, in Nigeria, while you require IOCs to be the ones to initiate projects, the question you ask yourself is, what if they don’t exist? It means you can never exist. Therefore, you have to put a skin in the game in order to utilise the D that has been provided in the Nigerian Content Development and Monitoring Board, because people are going to ask you, what have you developed? 

Take for instance, when we got into Waltersmith. We acted as a catalyst to get that investment going. Today, they have 200 people employed. Multiply that by six, because for every direct employment you provide in any establishment, you have six as the indirect employment that you create out there. So, you must participate in the process. It’s not a question of asking people to do what you have not done. You will demonstrate to them that you have also supported businesses to establish themselves, so we know what we are doing and we want you to do the same with businesses that you do here in the country. So, that is why we get involved. And we are going to continuously get involved in those businesses that are not in competition.

And I think it’s important that I make this distinction in the sense that we don’t get involved in businesses that are in competition, because we are a regulatory agency. The opportunity we provide for businesses that are in competition is to keep funds aside that are managed by Bank of Industry for them to access. We cannot go and take equity in a vessel that is providing service, because if you do that, as a regulatory agency, we will only be approving for that vessel to be utilised in the industry which conflicts with our role. But we only support federal government pronouncements on strategic initiatives in the country.

From five per cent, we are now doing 47 per cent in Local Content. Can you tell us in financial terms, what this law has attracted to the country in terms of investment in dollars?

If I just extrapolate in terms of the yearly spend before now in the industry, it is put at $21 billion year-on-year. So, today, we have clawed back $7 billion of industry spend into the country every year.

A typical example is the Egina project. Egina which is almost $21 billion, majority of the fabrication was done in-country including topside integration, which was never done in Africa. Egina, like you know, is the largest FPSO in the country today – 200,000 barrels of oil per day. That’s huge in terms of its production, and it was integrated here in Nigeria.

So, we have clawed back almost $7 billion. Our aim is to get $14 billion into the country with regards to our 70 per cent by 2027, because the truth is, you cannot achieve 100 per cent Local Content. It’s not possible because you also have to depend on a lot of countries in terms of intellectual property rights, and you cannot manufacture everything.

So, that 30 per cent we are leaving is for what we get outside. What used to happen was that 95 per cent of everything was done outside this country, and we have been pushing the envelope, and now, we have attracted this much in terms of monetary value and in terms of percentage.

From when to when was this $7 billion achieved?

From 2010 to date.

There is need for clarification here. The $7 billion is not the Foreign Direct Investment, it’s different.

What we have done is that we have retained that $7 billion in the country. What Foreign Direct Investment in the oil and gas industry has attracted for that period is almost over $60 billion. I have mentioned Egina, I have mentioned other projects that are ongoing. But the retention is about $7 billion year-on-year in terms of the $21 billion that you spend in the industry. So, it’s important to differentiate these two things. 

In July this year, NCDMB unveiled the Seven Ministerial Regulations to promote Local Content compliance and implementation. How are the oil companies responding to these new regulations?

I think the regulations in themselves are not new in terms of implementing the Local Content Act as it were. The regulations only try to address some of the lacuna that we saw within the NOGICD Act. An example of such lacuna is the process of prosecution.

If you look at the Act itself, it says that, upon conviction, the decision is to cancel the project or to fine the culprit as it were. But when you look at the word, ‘upon conviction’, which means you have to go through the court processes and that will take eternity to get a conviction of any culprit who have breached the provisions of the Act. So what the regulation did was to come up with administrative sanctions as a way of ameliorating that legal process in order to get a conviction.

So most of the regulations are not new. It’s only trying to fine-tune the lacuna that we saw. I think they (oil companies) embraced it because it’s not new to them, and some of the questions they have been asking in the past, which of course, we have answered.

Also in that same July, during the 2022 Nigerian Oil and Gas Conference in Abuja, NCDMB and the National Insurance Commission (NAICOM) also unveiled the Insurance Guidelines for the Nigeria oil and gas sector. What informed this initiative?

If you checked the Local Content Act itself, it pays a lot of premium to insurance of the oil and gas business. But overtime, we have been trying to get the insurance companies on board to take an active role in providing the desired insurance for the sector. But the oil and gas business insurance is also a bit capital intensive.

So, most of the local insurance companies overtime are not able to take on that insurance challenge because of the capital involved.

I will give you an example. The Egina FPSO was built with about $21 billion. Imagine you ask a local firm to insure that for you. If you put all the insurance companies together, they will not be able to insure that. But we then realised that the regulatory agency in the insurance area has been trying to increase the capital base of insurance companies and it has come up a bit.

So we felt it was time to work with them actively to enforce the provisions of the Act when it comes to insurance. Hence those guidelines on how we will go through to actualise insurance, re-insurance, as the case may be.

NNPC is now a limited liability company operating under the Companies and Allied Matters Act (CAMA). How would this new status affect its Local Content practices?

I think, if for anything, it will enhance its local content practices because before now, it was seen as part of government. You cannot see two government entities wrestling on the pages of the newspapers. But now, it’s a private entity and they themselves know that to be able to go out there to borrow money, access funds, you need to be very clean with regards to corporate governance processes. You need to obey the laws of the land and you need to be compliant with the laws that you have in the country and outside this country too, to be able to access funding, which they will do.

So, the onus is on them to realise that, as a private company, you need a bill of clearance from most of the regulatory agencies to be able to access funds, and the onus is also on them to do everything they can to comply with those requirements.

So, it will be better going forward. Like you know, they are trying to get themself together. Having become a limited liability company, there are lots of processes. So, we are also watching, giving them time to get themself together and self regulate because people are out there watching to see how they will operate.