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Nigerian Content in the Oil & Gas Industry: a 6-Year Score Card

Nigerian Content Act

A Guest Feature Article, by Akeem Babatunde (Govt. Relations Analyst)

In the Nigerian oil and gas industry, it used to be standard practice that international corporations reaped the benefits of doing business in Nigeria without any specific plan or visible attempt to empower local citizens to obtain the skills to succeed them after leaving. This had a direct impact on indigenous individuals and businesses in the oil and gas service market, who were not given a fair consideration in the award of oil and gas related contracts due to the perceived superior technical expertise and experience of foreign workers or companies.

As a result of the activities of organizations such as the Petroleum Technology Association of Nigeria (PETAN), as well as other indigenous establishments, the then president of Nigeria Goodluck Jonathan gave his nod of approval to the Nigerian Oil and Gas Industry Content Development Act of 2010, which is also known as the “Nigerian Content Act”.

The law encourages local content development through enhanced job creation and the deepening of indigenous human and technical expertise, and it applies to all operations or transactions carried out in or connected with the Nigerian Oil & Gas Industry.

The Act seeks to increase the involvement of Nigerian industries and local citizens in the upstream and downstream sectors of the Nigerian oil and gas industry by providing exclusive consideration for Nigerian indigenous service companies who demonstrate ownership of equipment, as well as Nigerian personnel and capacity in the execution of jobs in the Industry.

Following the signing of the Nigerian Content Act into law, the Nigerian Content Development and Monitoring Board (NCDMB) was established with the responsibility for implementing and enforcing the Act.

The question which we have to ask at this point is; what has the Nigerian Content Act achieved so far? Is it meeting the objectives for which is was established?

What Has the Nigerian Content Act Achieved So Far?

In the years following the establishment of the Nigerian Content Act, Nigeria has seen tremendous positive changes with regards to participation of indigenous companies in oil and gas industry operations.

In a publication by Proshare Nigeria (a financial news and analysis service), it was noted that there has been a marked increase in the number of Nigerian owned maritime vessels conducting business in the oil and gas industry. The publication also stated that “out of 1,232 vessels captured by the data of the Nigerian Content Development and Monitoring Board (NCDMB) for Q3 2014, 89.2% were in category A (i.e. either built in Nigeria or owned by Nigerians)”.

According to the NCDMB, as at 2012, two years after the Nigerian Oil and Gas Industry Content Development Act had been created, over 30,862 jobs had been created. The NCDMB also indicated that as at 2015, the percentage of Nigerian Content in the oil and gas industry had increased from below 5% (prior to 2010), to 35%.

The Nigerian Content Act has helped the government and Nigerians to redirect the flight of industry spend to foreign countries in the form of personnel, materials, equipment, fabrication and engineering designs, it has encouraged international partnerships, increased local and international investments, increased job opportunities, and also increased local technological development.

We expect to see sustained improvements in Nigerian content over the coming years.

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