While signing the Nigerian Oil and Gas Industry Content Development Bill, otherwise called the Local Content Bill into law last week in Abuja, Acting Presidnet, Dr Goodluck Jonathan expressed optimism that the new law will “address the compelling need for us as a nation to have indigenous participation in the oil industry”
Apparently elated, he had declared that: “Henceforth, there shall be exclusive consideration to Nigerian indigenous service companies which demonstrate ownership of equipment, Nigerian personnel and capacity to execute jobs in the Nigerian oil and gas industry”,
Under the Local content policy, the Federal Government had hoped that by 2006, the local content of the petroleum industry in Nigeria shall be about 45 per cent and by 2010, a target of about 70 per cent would have been attained. In monetary terms, it is expected that over US$4 billion worth of oil contracts will be handled by indigenous oil companies in Nigeria within the relevant period.
The draft bill that was first presented to the national Assembly described local content as “the quantum of composite value added to, or created in, the Nigerian economy through a deliberate utilization of Nigerian human and material resources and services in the Upstream Sector of the Nigerian Petroleum Industry which includes all activities connected with the exploration, development, exploitation, transportation and sale of Nigeria Crude Oil and Gas Resources, without compromising quality, health, safety and environmental standards.”
The Act among other notable objectives provided that Nigerian independent operators shall be given first consideration in the award of oil blocks; oil field licences, oil lifting licences and in all projects for which contract is to be awarded in the Nigerian oil and gas industry.
It also stipulated that in the bidding for any licence, permit or interest and before carrying out any project in the Nigerian oil and gas industry, an operator shall submit a Nigerian content plan demonstrating compliance with the Nigerian content requirements of the Bill.
It is against this well-thought-out law that the nation’s oil and gas, as well as shipping sector was agog last week shortly after the Acting President assented to the Bill.
Coincidentally, later that day that Jonathan signed the Bill, Indigenous Shipowners Association of Nigeria (ISAN) hosted three dignitaries; one of whom was the new Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Alhaji Ladan Shehu.
Apparently, the ISAN initiative is meant to once again, acquaint the new NNPC helmsman about the challenges that indigenous shipowners have been facing in their desire to take more advantage of the Cabotage law which, like the Local Content Law, was conceived to help Nigerians to be more actively engaged in the coast wise movement of cargoes; in this case, petroleum products.
The fact is that the Cabotage Act has largely been exploited by the multinationals that often hide under controversial waiver clause to circumvent the law as indigenous operators groan and accuse the NNPC and its subsidiary the PPMC of undue preference for foreign flags.
The PPMC, on its part have always had reasons to justify its actions, but all that may soon be over as the duo of Cabotage Act and the Local Content Act are expected to provide a new lease of life for ship owners.
Now is the time for ISAN members and other Nigerians who are involved in the affreightment of petroleum products within the Nigerian territorial waters to demonstrate their competence and this can start by acquiring ships that can lift products.
This is where the Nigerian Maritime Administration and Safety Agency (NIMASA) is expected to come in by facilitating and guaranteeing facilities from financial institutions; especially outside the country.
We are aware that NIMASA has commenced negotiations with some Asian financial institutions on behalf of ISAN members, we are however not conversant with what has become of the Cabotage Vessel Financing Fund (CVFF).
We are also aware that ISAN has been ‘mouthing’ it that it has a Federal Government approval to float a N72.5 billion (or about $500,000,000) national shipping line. The group had also said recently that the shipping line will come on stream before the end of 2010. It has also told whoever care to listen that the proposed shipping line will boast of Very Large Crude Carriers (VLCCs) as well as smaller ships of about 50,000 metric tons capacity. They will carry crude and refined products of about 1.5 metric tons as well as other bi-lateral goods.
So we urge that NIMASA should also assist Nigerian shipowners; especially ISAN to take advantage of the Local Content Act which from all intents and purpose is equally designed to assist indigenous participation in the affreightment of cargoes in the oil and gas sector .
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