*Nigerian Content Act in spotlight as April 2013 compliance deadline draws closer

Nigeria is planning to set up its own pipeline industry to boost domestic employment and also to enhance GDP, according to the Executive Secretary and CEO of the Nigerian Content Development and Monitoring Board (NCDMB) Ernest Nwapa.

Nwapa told the global publishing, research and consultancy firm Oxford Business Group (OBG) that boosting pipe-mill capacity was one of the NCDMB’s priorities in its efforts to increase the oil and gas industry’s contribution to economic growth.

The Board is also spearheading the country’s bid to bring more of the local population into the industry and build domestic capacity in line with the terms of the Nigerian Content Act (NCA), which became law in 2010.

“Nigeria’s 5000-km pipeline network is largely dilapidated and in need of renewal over the coming five years. On top of that, the Gas Master Plan will create demand for another 2000 km of pipeline,” said Nwapa. “We are actively encouraging the expansion of existing pipe-mill capacity as well as attracting Greenfield investments.”


Nwapa also said he believed the time was ripe for Nigeria to build its own dry dock, given the recent increase in the country’s fleet, coupled with growing demand around the world for shipyard space.


“Vessel ownership is increasingly in Nigerian hands, both through Nigeria Liquefied Natural Gas’s fleet and the Vessel Replacement Strategy, providing the critical base for the establishment of local assembly, maintenance and repair activities,” he said. “It would also feed into the global demand for dry-dock space, which suffers from frequent shortages.”


The full interview with Nwapa will appear in The Report: Nigeria 2012, the Group’s forthcoming guide on the country’s economic activity and investment opportunities. The third-anniversary report will include a focus on the impact of local content across Nigerian industries, including oil and gas, IT, manufacturing and power, together with a detailed, sector-by-sector guide for foreign investors.


In addition, it will feature a wide range of interviews with the most prominent political, economic and business leaders, including the UK Minister of State for Trade and Investment and former Group Chairman of HSBC Holdings Lord Green, the General Electric Vice Chairman and President and CEO of Global Growth Operations John Rice, and the Central Bank Governor Lamido Sanusi.


Nwapa said he was confident the Board had achieved its first task of convincing the population that Nigeria was serious about local content, allowing it to move on to the next challenge of building capacity.


“We quickly realised the issue did not lie in the quality of the legislation, but in the will to implement it,” he said. “We have made good progress on our initial three-year goals. Moreover, we have been successful at changing the mindset of people on local content.”


With the April 2013-deadline for compliance drawing closer, Nwapa said the Board’s efforts to bring original equipment manufacturers into the country were already achieving success. He also acknowledged that the NCDMB planned to adopt a realistic approach when considering penalties for companies failing to meet targets and timelines in the first evaluation round.


Nigeria will not be able to localise the entire supply chain within three years or, in various cases, within any given timeframe,” he said. “The NCA is not set up to defeat the theory of comparative advantage or to defy the principles of free trade. When the date comes, we will evaluate how far we have progressed and the contributions of individual players.”


The Report: Nigeria 2012 will mark the culmination of more than eight months of on-the-ground research by a team of analysts from the Group. It will provide information on opportunities for foreign direct investment into the country’s economy and will act as a guide to the many facets of the country including its macroeconomics, infrastructure, banking and sectoral developments. The Report: Nigeria 2012 will be available in print form or online.