From Chika Amanze-Nwachuku
Despite the security challenges confronting the country, the Federal Government has vowed to continue with the aggressive reforms in the oil and gas sector for the benefit of all Nigerians.
Minister of Petroleum Resources, Mrs. Diezani Alison –Maduekwe, made the declaration while declaring open the Nigerian stand at the kick off of the Offshore Technology Conference (OTC), in Houston, Texas, United States of America.
She said government would continue to give robust support to indigenous operators and service providers in the sector, noting that such cooperation would be needed for investment to thrive.
The Minister noted that the passage of the Nigerian Content Act had opened tremendous frontiers for indigenous participation in the oil and gas sector, and predicted that the country might witness an industrial revolution over the next three years if the indigenous operators and service providers continued with the current pace of capacity building.
She said: “We will continue to give robust support aggressively to our indigenous operators and service providers, while at the same time acknowledging the technological wherewithals and financial expertise and partnership that our multinationals and our foreign partners bring. We will expect that this will continue for a long time to come because there are partners across the board.
“But I must say that since the advent of the Nigerian content act, as every year passes, it is really wonderful to see the tremendous frontiers that our indigenous operators and service providers are making in the oil and gas sector,” she said.
Also speaking, Chairman of the Petroleum Technology Association of Nigeria (PETAN), Mr. Emeka Eneh said the greatest challenge confronting indigenous operators in the Nigerian Oil and Gas Sector was the lack of capital to build the needed infrastructure for capacity development.
He said: “The real challenge of capacity is not the lack of know –how, it is the absence of capital to build the infrastructure that is needed. The Nigerian companies have been playing a losing game. It is simple. Global finance the world over, for a company competing with the Nigerian company located in United States and Europe, they are looking at one or two percent maximum interest on very long term capital, 5 years, 10 years, 20 years capital. Nigerian companies are dealing with 20-25 percent interest on two year capital, so it difficult to compete.
Now the advantage of creating bankable budget with the local content act comes with the Nigerian Content development Fund (NCDF), which if properly managed and linked together is going to create that kind of link to boost the capacity of Nigerian companies. So capacity is a real key issue and funding or capitalisation is real big challenge”.
He said PETAN was jointly working with the Nigerian Conternt Development Management Board (NCDMB) to work out the criteria for the accessibility of the NCDF.
“Right now, we are at pilot stage and there are still a number of companies that are already being lined up to tap into the fund. Ofcourse they are still challenges, challenges of longer term tenures; interest rate to be lower; all these things are being worked out”.
Eneh called for an urgent passage of the Petroleum Industry Bill (PIB), noting that the bill will define the boundaries for investment in the oil industry, and free up the International Oil Companies (IOCs) to invest for the long term in Nigeria.
“The PIB defines the boundaries for investment in the oil industry, very important. You see, how do you Play a game if you don’t know the roles?. The PIB essentially are a set of rules on how people can play the game in Nigeria,( investment side of the business). And think without the PIB, the local content act is kind of one legged race. The PIB is going to free up companies like Shell, ExxonMobil, the IOCs to invest for the long term.
Oil and gas projects are invested over a 10 and 20 years time frame. So if you don’t have the roles over that period of time, you don’t get investment. So we see the PIB as something very crucial. Ofcourse, the PIB needs to be simplified, it needs to be streamlined so everybody understands the roles.
But with the PIB, with local content imbedded in it, will create the kind of stimulus that we see in countries like Japan, or countries like Brazil in a way government policies help to stimulate long term goals. We see that in India also and China,” he added.
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