Local Content Policy as Accelerator of Nigeria’s Oil and Gas Sector
Hitherto fraught with barriers and sheer opacity for local players, Nigeria’s local content policy for over a decade has opened a new vista for indigenous oil and gas companies, as illustrated by Lee Engineering Group and Allied Companies Limited, writes
Est ab lishe din 2010 by the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, the Nigerian Content Development and Monitoring Board (NCDMB) is vested with the mandate to make procedures that will guide, monitor, coordinate, and implement the provisions of the NOGICD Act signed into law on April 22, 2010.
It is instructive to point out that the foundation for NCDMB was laid in 2001 when former President Olusegun Obasanjo inaugurated the Presidential Committee on Local Content in the Oil and Gas Industry. He mandated the Nigerian National Petroleum Corporation (NNPC) to drive the policy and set certain targets.
In its eͿorts to implement the policy, the national oil company set up the Nigerian Content Division within its system and issued some Nigerian content directives to industry stakeholders. Since there was no force of law behind the Nigerian content directives, operators of the industry found it convenient to comply on a best endeavour basis.
This situation provided the Ministry of Petroleum Resources, NNPC, and other industry stakeholders with the impetus to work closely with the National Assembly to develop the NOGICD bill. During the succeeding administration of the late President Umaru Yar ’Adua and Goodluck Jonathan, the National Assembly passed the bill. Jonathan signed the bill into law, giving birth to the NCDMB.
Dr Ernest Nwapa, a former staͿ of the Nigerian Content Division of NNPC, served as the pioneer executive secretary from April 2010 to May l 2015. Denzel Kentebe succeeded him. In September 2016, Simbi Kesiye Wabote was appointed as the third substantive executive secretary of the board.
The key focus of the NOGICD Act includes integrating oil-producing communities into the oil and gas value chain, fostering institutional collaboration, and maximising the participation of Nigerians in oil and gas activities.
In addition to that, it links the oil and gas sector to other sectors of the economy, maximises utilisation of Nigerian resources and assets, and attracts investments to the Nigerian oil and gas sector (service providers, equipment suppliers, etc.).
The NOGICD Act became a game-changer for local oil and gas players who had hitherto fed on crumbs of the fat Àngers of International Oil Companies. Prior to the local content policy take-oͿ, a few intrepid and industrious Nigerian entrepreneurs had begun moves to give Nigeria and its citizens a level-playing Àeld to operate in the sector. One of the drivers of the policy is Dr Leemon Ikpea.
Futuristic in approach and level-headed in temperament, Dr Ikpea, Chief Executive Ocer of Lee Engineering & Construction Company Limited, knows — like the back of his hand — about the positive impact of local content policy on the nation’s oil and gas industry, the vital role played by the NCDMB in deepening local companies participating in the industry and strengthening their capacity.
“With the advent of the local content policy, Nigerian companies have been strengthened to play important roles in the industry,” explained Ikpea. “It is a thing of joy and pride to let you know that local content discussion started in my oce in my Warri oce back in the days in the early 1990s. We started this discussion.”
In the absence of the policy, local players waited on multinationals who got the job directly from the IOCs. The local players were doing the jobs, but the multinationals were the ones getting the fat paychecks. However, with the establishment of the local content policy given teeth by law, operating as local companies in the oil and gas industry became a diͿerent ball game. Local companies got a platform to excel. The CEO
of Lee Engineering knows better.
“Our hands have been strengthened. We are working directly with the IOCs,” he noted. “The local content agency of the federal government. The people working in the Nigerian Content Development& Monitoring Board are hard working, wonderful people. They love Nigerians. This is no mere platitude. The crop of Nigerians working at the agency have the core interest of Nigeria and Nigerians at heart.”
There have been various calls that the N CD MB should develop and stay independent, bereft of political interference. Industry experts say that one way that can be achieved is by avoiding disruption in the tenure of its executive secretary. They want the federal government to give those working at the agency enough time to strengthen the board’s structure. “I will suggest a tenure of a minimum of 10 years for the agency’s executive secretary. With that, I am conÀdent Nigeria can experience a boom in the industry,” Ikpea revealed.
So far, the board ensures that local players in the industry receive adequate training and encourage local players to establish fabrication workshops — Lee Engineering is a beneÀciary.
The fabrication’s plant is about 85 per cent completed and will manufacture industrial gases and domestic gases, including gas cylinders saving the country billions of naira in foreign exchange. When the factory in Warri, Delta state, is completed, industry watchers believe that it will positively impact the economy as it will create a larger market for suppliers and vendors. The plant will also be designed to accommodate demands from other African countries. Lee Engineering includes in its marshall plan the building of capacity.
Giving the local content policy legal backing is perhaps the most signiÀcant development witnessed in the industry. Nigeria is one of the largest and oldest oil producers in Africa. The oil and gas sector is one of the most critical sectors in the country’s economy, accounting for more than 90 per cent of its exports and 80 per cent of the federal government’s revenue. It is the ninth-largest in terms of global gas reserves with over 200 Tcf.
As of 2019, Nigeria had the largest oil and gas reserves in Africa, with around 37 billion barrels of oil and 5.4 trillion cubic meters (bcm) of gas. With a production of 2.11 million barrels per day in 2019, which is approximately 25 per cent of the total output in Africa, Nigeria continues to dominate Africa’s oil production.
Amidst some uncertainties and challenges, Lee Engineering has witnessed phenomenal growth over the years, demonstrating to other local players how they should conduct oil and gas businesses. The company’s head honcho admits his organisation’s excelling principles are based on so-called old-fashioned principles: godliness, hard work, honesty, and integrity.
“The least product of hard work is dignity,” said Ikpea. “The satisfaction that you work for what you earn. Closely related to that is integrity. One must have integrity. You must be known not just for being hard-working, but you must let integrity permeate every process of your hard work, your operations.” For him and Lee Engineering, integrity is the key, in addition to the company’s technical know-how.
Harping on the enduring quality, he added, “For us, integrity is not a concept. It is who we are. With integrity, every business partner, client, supplier, or vendor looks for you because they trust you. Who will do business with you if you are not trusted? Integrity is our watchword. We run an honest business.
“We have honest and hard-working staͿ. We are not honest and hard-working some of the time. We are honest and hard-working all the time. The company is transparent. For almost 30 years that we have been in business, there is no stain on our name. Our dedicated staͿ have ensured that. I have used my exemplary life of honesty, hard work, integrity, and transparency to demonstrate to them how invaluable those values are. They share the dream of the company and run with it.”
As a vibrant local player in a global and dynamic industry, Lee Engineering has stepped up to the plate acquiring marginal Àelds. By the time the company starts production, it will not need to import many resources into the country because it will use equipment manufactured in its fabrication plant, which is cost-eͿective. Ikpea will bring to bear his 14 years of experience in the construction industry. Lee Engineering and Construction Company Limited, as a leading indigenous EPCOM (engineering, procurement, construction, operation, and maintenance) company in Nigeria, has achieved several milestones and received numerous commendations, awards, and certiÀcates from both local and international organisations and agencies.
It has made signiÀcant contributions to its host communities in terms of HSE policy and higher quality outcomes of projects that oͿer clients the best value for money, boasting a 100 per cent safety record in 30 years.
Starting oͿ in 1990, the organisation admits its Àrst nine years were riddled with losses, about $3 million. “We lost a lot,” confessed the CEO. “That was tough for us. Over time, we recovered fully.And, as we recovered, we began to diversify our business.” Today, the organisation deals in retail, tourism, aviation, and manufacturing, including exploration and production. One of its major ongoing projects is the gas project, domestic gas, and gas to supply the LNG Train Seven. It also has a gas project in Imo. It is a gas transmission facility. Lee’s manufacturing and fabrication workshop will undertake small and massive fabrications of new vessels and spools for process facilities, especially within the oil and gas sector. The fabrication workshop, measuring 2,515sqm, is complete with blasting/painting bays and state-of-the-art equipment. It will also engage in the maintenance of existing equipment for clients for optimal performance.
The company — Lee Engineering Group and Allied Companies Limited — has at least 2,000 employees. The group comprises Lee Engineering, Tribet Ltd (travels and tours), TribetAviation, Tribet PuriÀed Waters, and Lee Oasis.
Ikpea’s organisation does more than creating wealth and value. As the CEO of the group, he sees to it personally that the less privileged are empowered. He considers philanthropy a “gift from God,” resulting in establishing a foundation, Agbonjagwe Leemon Ikpea Foundation (ALIF), in 2012. The foundation has trained students, and the majority said to be orphans. As of 2019, the foundation has cared for many young children and produced 119 graduates, including medical doctors, nurses, architects, nurses, accountants, quantity surveyors, medical laboratory scientists, lawyers, and other specialists — right from secondary schools. These are the ones in universities. Some started from secondary schools.
Adding to that, the foundation trains people in skills acquisition, including welding, fabrication, engineering, etc. Among other things, the company executed an electriÀcation project in Okpokunoe in Delta, completed a rural water project for Ewatto in Edo, provided speed boats Odidi and Kantu in the coastal area of Delta. For all Nigerian youths with the passion and persistence to work and earn an honest living, Ikpea said, “I will say, ‘Pause, ponder and take pride in hard work, honesty, and patience.’ Nigeria is a vast country and highly blessed.
“Nigeria is blessed with a lot of natural resources. To fully harness these material resources, the nation’s leaders will have to seek ways to bring out the best in the people. We stand to gain as a nation beyond description as long as we manage all the resources well.”