Three years after President Goodluck Jonathan signed the Nigerian Content bill into law to ensure domestic domiciliation of activities in the oil and gas industry, the legislation has increased the Nigerian Content in the area of manufacturing of equipment used in the industry to only seven per cent.
This is coming as the Chairman of the Oil Producers’ Trade Section (OPTS) of the Lagos State Chamber of Commerce and Industry (LCCI), Mr. Mark Ward, stated that the proposed terms in the Petroleum Industry Bill (PIB) would result to a drop in Nigeria’s crude oil production by 500,000 barrels per day.
Speaking yesterday, at a conference organised in Lagos by the National Association of Energy Correspondents (NAEC), the Executive Secretary of the Nigerian Content Development Board (NCDMB), Mr. Ernest Nwapa, said the seven per cent achievement was not good for the oil and gas industry.
Nwapa, however, noted that much progress had been made as many companies were already establishing pipe mills in the country for local manufacturing of pipes for the oil and gas industry.
He assured the operators that the administration of President Jonathan was determined to use the Nigerian Content law to transform the country’s economy.
The NCDMB scribe disclosed that about $200 million had been paid into the Nigerian Content Fund.
He also stated that the Nigerian Content law provide that the country’s crude oil should be transported with Nigerian vessels but noted that no Nigerian vessel is currently involved in crude oil transportation.
Nwapa also said his board had made progress in this area as many Nigerians were approaching the board with equity arrangements with reputable international tanker owners.
“Apart from the economic benefits, a sovereign country is supposed to transport its own crude. But with the encouragement and support of the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, the country would be celebrating Nigerian crude oil tankers carrying Nigerian crude oil in the next few years,” he said.
Also speaking at the event, Ward, who is also the Managing Director of Mobil Producing Nigeria (MPN), said the proposed terms in the PIB would lead to drastic drop in crude oil production in Nigeria by 500,000 barrels per day, representing about 24 per cent.
He said with the proposed increase in tax from 30 per cent to 80 per cent, the reform bill would make future investment uneconomic.
Ward said with the PIB’s provision for payment to be made to the Nigerian Content Fund; Niger Delta Development Commission (NDDC); Education Tax and several others, the country would not attract the needed capital to boost activities in the oil and gas industry.
He also stated that the PIB gave a lot of powers to the industry regulator, saying this would ultimately lead to bias in dispute resolutions.
Information from This Day was used in this report.