The Nigerian oil and gas industry has the potential to become a leading exporter of expertise and
services to other African nations. However, this ambition is hindered by several challenges within
the local content policies, according to Dr. Ernest Azudialu-Obiejesi, Chairman of Nestoil Group.
Speaking at the 2024 Nigeria Oil and Gas (NOG) Energy Week in Abuja, Dr. Azudialu-Obiejesi
emphasized the need for reforms in the implementation of these policies to better protect and
promote local companies.
Local Content Policy
The Nigerian Content Development and Monitoring Board (NCDMB) has been instrumental in
generating local capacities, yet enforcement gaps remain. Dr. Azudialu-Obiejesi commended the
board’s efforts but pointed out significant setbacks, particularly in how laws are applied to
safeguard indigenous firms. The current bidding process, which often awards contracts to the
lowest bidders regardless of their capabilities, has led to the increase of underqualified
contractors securing jobs they cannot execute. This not only undermines the growth of local
companies but also impacts the quality and timeliness of project delivery.
Reforming the Bidding Process
A more robust and fair bidding process is essential for the growth of local capacity. Dr. Azudialu-
Obiejesi advocates for a system that prioritizes competence and proven capacity over the lowest
bid. “When bidding for a job in the oil and gas industry, we should compare apples to apples,
ensuring that companies of similar technical capacities compete,” he stated. This approach
would help ensure that contracts are awarded to firms that can deliver projects on time and
within budget, fostering a more competitive and capable local industry.
Exporting Nigerian Expertise
Nigeria’s potential as a net exporter of oil and gas services hinges on addressing these internal
challenges. The African Continental Free Trade Area (AfCFTA) presents an opportunity to break
down barriers inhibiting cross-border business. Dr. Azudialu-Obiejesi emphasized the need for
harmonization and removal of trade obstacles to enable Nigerian companies to export their
capacities effectively. “We should be able to export our capacities, not just have Nigerians work
overseas,” he said, while highlighting Nestoil’s journey from a service company in 1991 to one of
Nigeria’s largest pipeline construction firms, which exemplifies the potential for growth within the
industry. The company has successfully executed major projects for international oil companies
like Shell, Chevron, and Mobil. Beyond pipeline construction, Nestoil has diversified into
dredging, fabrication, and even aviation services, providing helicopter support to various oil and
gas firms in Nigeria. The company also boasts a dry dock facility in Port Harcourt, further
cementing its position as a leader in the industry.
Building and Sustaining Local Capacity
Effective implementation of local content laws is crucial for the sustainable development of the
Nigerian oil and gas sector. This includes not only making laws but ensuring their enforcement
and administration. “If you want your local content to grow or want a transfer of technology, you
must enact and enforce local content laws,” Dr. Azudialu-Obiejesi asserted. The goal is to create
an environment where local companies can thrive, retaining investments and fostering
technological and human resource development within Nigeria.
Commitment from NCDMB
The Executive Secretary of NCDMB, Felix Ogbe, echoed these sentiments, pledging the board’s
dedication to evaluating current policies and guidelines to encourage the development of
indigenous capabilities. He reiterated the board’s commitment to implementing the presidential
policy directive on local content compliance, which aims to grow Nigeria’s economy, ensure cost
competitiveness, and attract further investments.
Conclusion
The call to reform the local content policy and bidding process in Nigeria’s oil and gas sector is
timely and critical. By prioritizing capacity and competence over low bids, and effectively
implementing local content laws, Nigeria can strengthen its local companies, paving the way for
the country to become a significant exporter of oil and gas expertise in Africa. The NOG Energy
Week highlighted the pressing need for these changes, setting the stage for a more competitive
and sturdy Nigerian oil and gas industry.
