How Local Content Act Boosts Indigenous Capacity In Marine, Oil And Gas Sectors | Independent Newspapers Nigeria

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The maritime sector received a boost recently as a newly indigenous vessel was unveiled. A newly acquired vessel, a wholly indigenous was acquired to service the oil and gas industry in Nigeria. The vessel, described as a symbol of progress for both sectors is a fully owned Nigerian vessel given its position as one of the few in an industry dominated by foreigners.

Prior to the passing into law of the Nigerian Oil and Gas Industry Content Development of Act 2010, popularly known as the Nigerian Content Act, the service segment of the Nigerian maritime and oil industries were mostly dominated by the International Oil Companies (IOCs) and other foreign owned companies.

At that time, the shipping arm of the oil and gas industry, which is the maritime segment of the oil and gas business, was most affected. In the segment, vessels including anchor handlers, tug boats, crude carriers as well as crew and passenger boats were mostly owned by foreign shipping companies. 

This, pundits blamed, on lack of enabling legal framework to encourage international oil majors to engage Nigerian owned and flagged vessels in the execution of their offshore contracts. They also attributed the foreign domination of Nigeria’s shipping business to lack of capacity by Nigerian ship owners to acquire standard vessels that could compete with foreign owned and flagged vessels.

Lack of affordable funding for vessel acquisition has been one of the biggest challenges facing the nation’s shipping businesses. This was owing to the inability of the Nigerian banking industry to develop a framework for financing ship acquisition, which has long gestation period.   

As a result, credit facilities received from Nigerian commercial banks by indigenous ship owners to fund vessel acquisition, usually comes with repayment interest that are in double digit and as high as over 20 percent. This makes it difficult for Nigerian indigenous shipping firms to compete with their counterparts that operate with offshore loans with single digit repayment option.      

A survey conducted in 2008 revealed that though, Nigeria’s oil and gas industry accounted for 90 percent of nation’s revenue, the sector contributed less than 38 percent of Gross Domestic Product (GDP).

This was due to lack of local participation in the oil and gas industry, and this resulted in the repatriation of large portion of the $10 billion estimated average industry spending per annum, into foreign banks that are based offshore.

Also, the situation resulted to capital flight as jobs such as lucrative seafaring, welding and engineering jobs created by oil servicing firms, were mostly dominated by expatriates and foreign seafarers while Nigerian trained workforce, were left with next to nothing, therefore creating adverse effects on the labour force and economy as a whole.

With the enactment of the Nigerian Oil and Gas Industry Content Development Act 2010, which was signed into law in 22 April 2010, indigenous Nigerian companies such as NigerStar 7, started making inroad into Nigerian maritime, as well as oil and gas industries by breaking the jinx of foreign dominance in the sector.

Aimed at increasing indigenous participation in the oil and gas industry by prescribing minimum thresholds for the use of local services, materials and skills in order to promote the transfer of technology and skill to Nigerians, the Local Content Act, has enabled local firms to build capacity that would enable them to start competing with their foreign counterparts.

The enactment of the Local Content Act in 2010, industry watchers say, was very timely because it has remained incredibly important. Here, the actualisation of the objectives of the act was made possible through the inauguration of the Nigerian Content Development and Monitoring Board (NCDMB), which also enabled the government to enforce the provisions of the laws.

Local Content Act has also encouraged Nigerians like the owners of NigerStar7 to invest their money in-country into building infrastructure, asset and human capital development that would them to compete in oil servicing business.

NigerStar 7, a frontline player in the service section of the oil and gas industry, is a Nigerian company that brings together the engineering, installation and project management expertise of Subsea 7, the global seabed-to-surface company in Nigeria, with the fabrication capacity and capability of Nigerdock, a subsidiary of Nigeria’s Jagal Group.

Based in Lagos, NigerStar 7 is dedicated to serving Nigeria’s offshore oil and gas industry by enabling the execution of the largest and most complex EPIC deep-water projects.

Recently, the company officially renamed and launched its newly acquired vessel, NigerStar7 Adaba, to boost capability in the maritime segment of the oil and gas industry.

Described as the most powerful Nigerian flagged DP2 Anchor Handler (140mT bollard pull) and owned by a Nigerian company to operate in Nigerian waters, NigerStar7 Adaba has a 52-passenger-on-board accommodation capacity, 460m² deck space, and an Electronic Fuel Monitoring System.

NigerStar 7 Adaba is the first of its kind to explore Nigerian waters and has been hailed as a major complement to the Local Content policy of the federal government.

As an experienced and efficient oil servicing firm, NigerStar 7 has strong workforce comprising of experienced staff; it also has two fabrication yards in Lagos and Warri, with capacity to handle Nigeria’s largest offshore projects and the support of Subsea 7’s offshore construction fleet, one of the largest in the industry.

NigerStar 7 is committed to the Nigerian oil industry by helping industry players to develop new jobs and skills in-country.

“Our mission is to serve Nigeria’s offshore oil and gas industry by executing the largest and most complex EPIC deep-water projects, and with this new addition to our fleet, we are closer to our goal as we become the only Nigerian Tier 1 EPCI contractor with a number of modern assets  that are 100 percent owned and positioned in Nigeria,” Yann Cottart, Chief Executive Officer of NigerStar 7, said at the renaming ceremony of newly acquired NigerStar7 Adaba vessel, held recently at Nigerdock Shipyard in Lagos.

According to NigerStar 7 CEO, the investment in the acquisition of the new vessel enables NigerStar7 as a Local Content provider in Nigeria, to create employment opportunities for marine personnel, onshore team and contractors as well as suppliers, who provide support services to the vessel.

Meanwhile, Simbi Wabote, Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), who extolled the partnership between NigerStar7 and Nigerdock Shipyard, called for more collaboration among industry players, to enable Nigerian owned companies to deliver on the goal of growing local content in the maritime, oil and gas industry.

“We must commend NigerStar 7 for its renewed commitment to local content practice and the noticeable repositioning it has undertaken to project the value proposition it offers as an oil and gas service provider of high repute,” Wabote stated.

Wabote, who applauded NigerStar 7 for its commitment to Nigeria, called on other companies to emulate the example of the company in making visible investment in the Nigerian economy.

In accordance with NigerStar7’s commitment to the Nigerian Oil and Gas Industry Content Development Act of 2010, the personnel on NigerStar7 Adaba, including its captain are Nigerians. Here, the crew has a robust understanding of the peculiarities of the Nigerian environment and are set on delivery of quality service to clients.

Olapeju Adenuga, the vessel’s god-mother, who doubles as the legal counsel to NigerStar 7, said that the name of the vessel, originates from its new habitat in Nigeria.

Adaba, she explained, emanates from the native Yoruba language of the western people of Nigeria and refers to the bird called ‘Dove’. “The dove is symbolic as an embodiment of hope, reliability, guidance and loyalty. The sturdy bird also characterises the strong build of our vessel.”

Research shows that Local Content is critical to the development of Nigeria’s economy. It is absolutely critical, and industry close watchers believed that Nigerian owned companies need to follow the NigerStar7 example to work collaboratively to create capacity and generate businesses that would provide sustainable jobs and wealth for Nigerians.

More importantly, people need to understand that Local Content should include the whole of Nigeria. It is about creating jobs and opportunities across the country and it has also been described as the only way Nigeria can be able to overcome the resource curse and get into an era of positive growth, which would help tackle poverty and inequality in Nigeria.

Akinwumi Dada , a maritime analyst, wrote from Lagos

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