Quest For Value Creation In Nigeria’s Oil, Gas Sector
Last weekend, the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, performed the ground-breaking of the second Nigerian Oil and Gas Park being developed by the Nigerian Content Development and Monitoring Board (NCDMB). FESTUS OKOROMADU writes on timeliness of the initiatives as stakeholders demand a shift of the focus of the Nigerian domestic oil and gas sector from rent-seeking and rent-sharing to value-creation. One of the key highlights of the 11th International Conference of the Nigerian Association for Energy Economics (NAEE) was the emphasis placed on addressing the value chain optimisation strategy for the upstream, midstream and downstream sector of the nation’s petroleum industry. While stakeholders opinion may vary as to how this can be achieved, one cannot by agree with the president of the association, Prof. Wumi Iledare, when he said, “Moving away from renter mentality and rent-sharing, can contribute much more to the nation’s gross domestic product (GDP) than just pursuing federally-collected government revenue strategy that has hitherto encumbered our economy.” He described the story of Nigeria as a nation living in abject energy poverty, amidst abundant energy resources and questioned how a nation with significant abundant resources can be so paradoxically undeveloped and dependent on crude oil exports for its survival. It was obvious therefore that evolving a robust downstream sector would give room to infrastructure and human capacity development as well as economic growth. The NCDMB Value Creation Scheme A few days after the conference, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu on Friday same week performed the ground-breaking of the Nigerian Oil and Gas Park being developed by the Nigerian Content Development and Monitoring Board (NCDMB) at Emeyal-1, Ogbia local government area of Bayelsa State. The project , the second in the series of five earmarked for the Niger Delta region commenced barely a month after a similar ceremony on the construction of the Nigerian Oil and Gas Park at Odukpani, Cross River State. Speaking at the ceremony, Kachikwu said the initiative drives home the point that the park would bring about localisation of indigenous companies, where fabrication, pipe milling, procurement hubs and oil and gas related technologies would flourish. The minister however noted that government was committed to extending the project to other regions. “We will work with the board and provide everything that is needed for the projects. After the development of the five pilot parks in the Niger Delta states, we will extend this very innovative idea to other parts of Nigeria where oil has either been found or is being explored,” he stated. Meanwhile, the executive secretary, NCDMB. Engr. Simbi Wabote , had earlier credited his predecessors for initiating the Nigerian Oil and Gas Park Scheme (NOGAPS). The NOGAPS initiative dates back to 2015 when Engr. Ernest Nwapa was the executive secretary of the board. Nwapa had explained that the board embarked on the development of the parks in a bid to promote manufacturing of oil and gas components and provide opportunities for research and development. He listed other benefits to include bringing local content practice closer to the grassroots and integrating oil and gas based entrepreneurs into manufacturing as well as supporting the growth of small and medium enterprises (SMEs) through mentoring by international Original Equipment Manufacturers (OEMs) and other multinationals. Nwapa maintained that the parks would form part of NCDMB’s landmark achievements. “I want to be able to point at some monuments and say that apart from insisting that the industry grow and do the right thing, create jobs and value in Nigeria, we have also as an agency of government created this pipe mill, this oil and gas park and changed the way things are done in the industry,” he said. Although Nwapa did not achieve his aim before exiting, he certainly must be glad of the latest developments in the agency. More so, when his successor do not only acknowledge his role but further described the ground-breaking as great step towards achieving one of the board’s key mandates, which is “to develop capacity of local supply chain for effective and efficient service delivery without compromising oil and gas industry standards.’’ He however, noted that it “fits nicely into our 10-year strategy roadmap aimed at raising in-country value retention in the oil and gas industry from the current levels to 70 per cent.” In order to ensure the success of the NOGAPS, sites according to Wabote were planned to be close to existing power plants while provisions were also made to generate captive power in a bid to address the electricity challenge that face most Nigerian manufacturers and businesses. Details of the park projects shows that each park occupies a total land mass of about 25 hectares which would comprise various warehouses, manufacturing shop floors and factories, training centre, hostels, administrative block, mini estate, security posts, fire station, including truck parking and holding areas. The park would generate about 2000 jobs when they begins full operation and create a regional low-cost manufacturing hub that would produce equipment components and spare parts to be utilised in the nation’s oil and gas industry. As expected, the state governments and traditional rulers of the host communities have expressed support for the actualisation of the projects. In his remarks, the governor of Bayelsa State, Henry Seriake Dickson, represented by the Secretary to the State Government, Mr. Kemela Okara , commended NCDMB for siting one of the oil and gas parks in the state. He acknowledged that NCDMB had been a veritable partner of the state government and had contributed to the growth and development of Bayelsans. Similarly, the deputy governor of Cross River State, Professor Ivara Esu, congratulated the board on the commencement of the project and promised that the state government would monitor and support the execution of the park located at Odukpani. While the NCDMB appears to be working in line with the NAEE’s call to redirect the nation’s energy resources to create value for the domestic industry, the same cannot be said of other parastatals within the ministry. This perhaps is one of the reasons why the civil society community has continued to call on President Mohammadu Buhari to assent to the petroleum industry governance bill (PIGB) which is currently before him. It is generally believed that the bill would help in the drive towards enhancing the value-creation drive in the oil and gas sector.