The relaxation of the full enforcement of the Nigerian Oil and Gas Industry Content Development Act of 2010 following the signing of three executive orders by President Bola Tinubu in February 2024 to streamline local content compliance requirements in the oil and gas sector, especially on new investments in the deepwater, is hurting local operators, and fuelling job losses as indigenous manpower and facilities are being sidelined in favour of foreign yards, Ejiofor Alike writes
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ne of the three executive orders – Presidential Directive on Local Content Compliance Requirements, 2024 – signed by President Bola Tinubu on February 28, 2024, was intended to streamline the local content compliance requirements in oil and gas projects, especially in deepwater.
The other two presidential directives – Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order, 2024, and the Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines, 2024 – introduced tax incentives, and reduced contracting costs and timelines.
Unfortunately, the Presidential Directive on Local Content Compliance Requirements relaxed the full enforcement of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010 and practically gave the International Oil Companies (IOCs) a freehand to import materials from abroad even when there is sufficient in-country capacity.
Under the guise of addressing practical challenges such as insufficient in-country capacity, the presidential directive stripped the Nigerian Content Development and Monitoring Board (NCDMB) of the power to sanction IOCs or strong Nigerian independent companies that flout the NOGICD Act by importing coated pipes and other materials.
The NOGICD Act mandates operators in the Nigerian oil and gas industry to utilise indigenous manpower and local facilities to execute a certain scope of oil and gas projects for which there is indigenous capacity.
The Act seeks to curb capital flight and ensure that a large chunk of the yearly expenditure in oil and gas is retained in the Nigerian economy.
Its enforcement had encouraged indigenous players to make huge investments in building local capacity and capability.
But in a desperate move to accede to the demand of the IOCs, the presidential directive failed to address the key concerns of the indigenous providers of services and facilities.
For instance, in violation of the NOGICD Act, the directive did not prohibit IOCs or influential local players from importing coated pipes, thereby encouraging capital flight.
THISDAY gathered that this has left local pipeline coating companies vulnerable, with many facing the risk of permanent closure.
The resulting job losses and decline in local investments will potentially weaken the Nigerian economy and hurt the Gross Domestic Product (GDP) of the country.
According to some of the indigenous players who gathered at the just concluded Sub-Saharan Africa International Petroleum Exhibition and Conference (SAIPEC) hosted by the Petroleum Technology Association of Nigeria (PETAN) in Lagos, the failure to enforce the NOGICD Act is jeopardising millions of dollars in local investments and also triggering widespread job losses,
THISDAY gathered that indigenous pipe coating companies that have developed the capacity to deliver globally competitive jobs are increasingly being sidelined in favour of foreign firms.
The NOGICD Act prohibits the operators from importing materials that are produced in Nigeria unless the in-country capacity is insufficient to meet the industry demand.
However, the presidential directive has relaxed the implementation of the Act.
This has left pipeline coating companies and other indigenous providers of materials and services struggling to survive, with many on the brink of collapse.
While the NCDMB, the agency responsible for enforcing the NOGICD Act, has been accused of approving contracts that bypass local companies in favour of foreign firms, particularly in high-value projects, a source close to the agency told THISDAY that the presidential executive order tied the hands of the agency.
This trend has resulted in significant job losses and a decline in local investments.
Speaking on the issue, a member of PETAN, who preferred to remain anonymous stated that the non-enforcement of the Nigerian Content Act started before Tinubu came to power, citing the ongoing Ajaokuta-Kaduna-Kano (AKK) gas pipeline project.
According to him, local pipe coating companies pursued the project up to the Bureau of Public Enterprises (BPE) but were told that the China Engineering and Construction Corporation (CECC) had won the bid as part of Nigeria’s loan agreements with China.
“We were told that the project was given to China Engineering as a way to compensate China for the loans Nigeria took. In such a case, what do you do? You can’t go to court because if you do, they will frustrate your company,” he said.
It was learnt that sidelining local firms has led to the loss of thousands of jobs in the pipe coating industry, with many skilled workers left unemployed.
This has further exacerbated the challenges faced by indigenous companies.
Another member of PETAN, who spoke to THISDAY also accused the federal government of granting importation licenses to local firms to bring in coated pipes, to the detriment of Nigerian pipeline coating companies.
“The federal government gave notable local firms the license to import these coated pipes; so, what are we talking about?” he queried.
He noted that while the NOGICD Act was designed to boost local capacity and industrial development, foreign firms and some portfolio local investors have continued to fabricate and coat pipes outside Nigeria, undermining the Nigerian Content law’s intent.
“If it’s only the NOGICD Act that’s not being followed, then there’s no problem. But the truth is that the government does not respect its laws. If it did, we wouldn’t be where we are today as a country,” he added.
Beyond the government’s culpability and regulatory failures, industry players point to significant infrastructural and economic constraints that hinder local firms’ competitiveness.
Some of the indigenous players acknowledged that it is often cheaper to fabricate and import coated pipes than to produce them in Nigeria due to high energy costs, poor infrastructure, and security risks.
“Energy remains a major challenge. Manufacturers rely on diesel to power their plants, and the rising cost of diesel makes local production expensive. Transportation is another issue, as terrible road conditions make it difficult to move coated pipes across the country. Even transporting by sea is risky due to insecurity in Nigerian waterways,” one of the local operators explained.
According to him, these challenges have forced many local companies to downsize their operations, leading to further job losses.
The inability to compete with foreign firms has also discouraged new investments in the sector, stifling growth and innovation.
Nigeria is home to several pipeline coating firms with the technical expertise and infrastructure to handle major projects both onshore and offshore.
Solewant Nigeria Limited, Iron Products Industries, Harrybeat International Services Limited, Pipe Coaters Nigeria Limited, and Monarch Alloys Limited are some of the major companies that have executed globally competitive projects.
THISDAY, however, gathered these firms are being sidelined in favour of foreign firms due to non-enforcement of the NOGICD Act.
To protect the local companies in the face of the presidential directive, some of the industry stakeholders have urged the government to take decisive action to enforce the NOGICD Act.
They emphasise that beyond regulatory compliance, the government must address underlying issues such as high energy costs, poor infrastructure, and insecurity.
For Nigerian Content to succeed, the federal government must create an enabling environment by making energy affordable and readily available.
There is also a need for greater transparency and accountability in contract approvals, while the NCDMB and other agencies must ensure compliance with Nigerian Content laws.
With the oil and gas sector remaining a cornerstone of Nigeria’s economy, failure to address these challenges could lead to massive job losses and the collapse of local businesses in the oil and gas sector.
There is need for an urgent review of contract approvals and stronger government commitment to ensuring that Nigerian firms receive a fair share of the oil and gas industry’s multi-billion-dollar investments.
Indigenous oil and gas service providers, under the umbrella of PETAN, had demanded that contracts worth $1.5 billion be awarded to local firms from Shell’s $5 billion Bonga North Project as a further proof of the country’s seriousness in promoting local content in the industry.
Chairman of PETAN, Mr. Wole Ogunsanya, made the demand last Tuesday in Lagos, during his welcome address at the opening ceremony of SAIPEC 2025.
Ogunsanya said the $1.5 billion represented just 25 per cent of the cost of the Bonga North project.
