‘Nigerian Content will Create Homegrown Technology’ – Halilu
Malam Abdulmalik Halilu is the General Manager, Research, Statistics and Development of the Nigerian Content Development and Monitoring Board (NCDMB). As one of the top management of the Nigerian Content Board, he is deeply involved in policy formulation in the organization, Halilu is described by his colleagues as indefatigable, visionary and down-to-earth. In this exclusive interview with VALUECHAIN’s EDDY OCHIGBO, Halilu speaks on the 10-year Roadmap for the Local Content in Nigeria, the Nigerian Oil and Gas Industry, and the challenges ahead. Excerpts:
Your job as the General Manager, Research, Statistics and Development is not only challenging but strategic. How are you coping, and what is your assessment of the impact of the Nigerian Content Act on the Oil and Gas Industry?
Let’s first of all get to know what we mean by the Nigerian Content Act before we talk about the impact. Nigerian Content Act simply means that activities in the oil and gas industry in plain language, should be carried out by Nigerians. For that to happen, skilled labour and infrastructure have to be developed. So for us, the success of local content is the ability for us to develop that capacity in the country. Don’t forget that before the local content, most of the services were done abroad. For every dollar contract awarded, you are exporting Nigerian jobs, which leads to capital flight. You don’t develop your local technology. So the paradigm shift that local content created, was the ability to understand its essence and ensure that we domicile our activities in the country and develop capacity to enable us to achieve that. The other impact we have seen, is the change management process that has happened with the major oil companies and their ability to include local content as one of their contracting philosophies. If you check the advertisements now, you will see a dedicated section for local content. So for us to achieve that, it means we must provide a platform where capacities that exist in Nigeria have the opportunity to be utilized, vis-a-vis major projects; so that is another success story of local content. Then let’s look at our ability to redefine the research and development culture. Today, what we have is that most of the oil companies that did their research and development abroad, are currently investing in centers of excellence for research. And you know there’s a nexus between research and local production. And once we are able to create that enabling environment for research and development, then things will happen. We would begin to do what is called home-grown technology.
Seplat’s initial successful public offering few years ago, was an eloquent testimony of the impact Nigerian Content and showed that local companies are growing and competing favorably in the international arena. However, not too many Nigerian indigenous companies have gone public. Why?
There used to be a time when people were worried that major oil companies were divesting from Nigeria and a lot of people thought that that would be the end. So if Shell tries to relinquish its ownership we are doomed. Before now the contribution of the indigenous producers to overall daily production was a marginal 3% but today we’ve achieved 10%. And the aspiration is to take it to 30%. Am sure you are aware that the Department of Petroleum Resources (DPR), is currently breaking new grounds. Again, that’s a deliberate effort on the part of government to increase the contributions of indigenous producers to daily production. So the likes of Seplat have been alive to not only increasing capacity, but looking beyond that. When you have marginal field, it means that for many years you’ve not been able to produce like say 10,000 barrels per day (bpd). Now, you hand it over to Nigerians and they put their acts together to get very credible partners. Today they are doing even more than expected. So that is the kind of growth trajectory that we have seen and in terms of the domestic gas obligation, the domestic producers have been contributing reasonably well. So you can see that they have actually put their acts together. And they are making us proud in terms of increasing production capacity.
What about the issue of going public. Why is that not pronounced?
Going public is a business decision actually. Note that Seplat at a point was listed on the London Stock Exchange or so. So what happens is that is purely a business decision that you need to take and it is driven by an expansion plan. So if you feel that you have the resources to operate within your sphere of funding, why not. Also, if you feel that you need to get more partners, then it’s also okay. These are business decisions that are really not in our control. But what is important is that the growth trajectory is being seen and also the fact that there a lot of interventions by government to deliberately handover fields to indigenous producers as the case may be. We would definitely get there.
There is a target of six months by the Board to complete a contracting circle in the industry from an average of two years that it used to be. How far has that gone?
First, let me give the statistics. When we started this discussion around reducing contracting circle, it was between 36 and 48 months. From advertisements to technical information. So the industry sat down and said okay, if we continue on this path we are adding to business development cost and makes cost of producing a barrel in Nigeria very high. So we needed to look at how we can manage the contracting circle. We now defined the key points to see where we are not efficient. So we discovered that things like multiple entities, different layers of approval and the alarming number of contractors attending bids. When you have more than three hundred applications; and you have to evaluate everyone, this definitely takes a long time. Also the internal efficiencies with the IOCs, which incidentally took more time. So we explored the possibilities of shortening the length of time in the entire gamut. We began to do our technical evaluation within 15 or 30 days. We would approve Nigerian Content plan within 30 days and so on and so forth. We aggregated the timeline and we said look, all the entire timeline should not take us more than a hundred days. Then we took a step further to sign Service Level agreements with Oil Producing Trade Stations (OPTS). And these measures are working. So it illustrates the fact that with determination and deliberate policy driven by sincerity of purpose we’ve been able to reduce the contracting circle considerably. And let me tell you what would happen going forward. The Nigerian Petroleum Exchange (NIPEX) is the platform that we use to advertise contracts and response. There is currently a plan around how we can integrate with the Nigerian Oil and Gas industry for joint qualification system. With these unfolding engagements, we are certain that we would further reduce the contracting circle. We are doing this baseline census project where we are trying to get the entire industry’s capacity in fabrication, engineering well-drilling and services, shipping and logistics. We are going to determine capacity and then we would do categorization so that when are big, EPC projects you can probably restrict it to only tier one. That reduces the number. And once you are able to reduce the number, it means faster processing time. So that is the kind of effort we are making to create the ecosystem for seamless review of contracts, synergy among industries, to ensure that contracts approvals are done judiciously.
One of the frustrations in time past was the Board’s inability to make companies access the Nigerian Content Development Fund. Has the situation changed? How many Nigerian companies have been able to access the Fund?
Very well. The situation has changed. When we started, we had what we called the Nigerian Content Fund, during the NNPC days, which was based on unfunded guarantee. So when we transitioned to NCDMB, we tried to use that model such that we guarantee, but we wouldn’t fund it. We expected the banks holding our funds to provide funds knowing fully well that we have funds deposits. But that didn’t work because the banks are more comfortable to use their funding portfolio because they believe that since they are taking the risk, why would they use our model. So we had to retrace our steps to say why don’t we fund the transactions, since we’ve built our reserve base. So for the first three years of the Nigerian Content Development Fund, we didn’t touch it. So we decided to create a funding model called the Nigerian Content Intervention Fund. Now what we realized was that because we are development institution, it is not possible to expect the commercial banks driven by profits to think in the same direction with us. So that was when we decided that these are not the kind of banks that would support us. Let’s go to Bank of Industry that has similar development initiatives like us. So we approached the Bank of Industry and it worked. We created the Nigerian Content Intervention Fund of 200 million dollars for asset acquisition, contract financing manufacturing and other developmental interventions. And by last year, almost 90% of the fund had been taken because we simplified the interest to 8% and diversified the portfolio and simplified the process. So it was very attractive. And because of its success we reviewed it upwards to 350 million dollars. And there was also the counterpart funding obligation. When we started this journey, our plan was to build the portfolio to about one billion dollars. And the Executive Secretary, Engineer Simbi Wabote is fully committed to the plan. Again, the Fund has created a window for women’s participation in the industry as those who are qualified can access up to 20 million dollars as long as they fulfill the conditions.
What has the Board done so far to ensure that capacities and openings in the industry are not taken over by expatriates?
The issue of expatriate quota management is not to drive them away. We are determined to ensure that they are only engaged in areas where there is no indigenous capacity. So the expatriate quota management system that has been created allows us to approve expatriate quota where there are glaring skills gaps. When we approve and recommend to the Ministry of Interior, there is a succession plan for every quota; there are two understudies that need to work with the expatriates with a view of taking it over. Now there is also the employment commitment which means that a dollar value of your service is going to a foreigner; how would you create jobs for Nigerians is key. So expatriates normally make employment commitments. So you can see that we are extracting so much for just a quota that we grant. What we have done also is to automate the process, so that we have more visibility in terms of the kind of expatriate quotas granted. We have biometric data capture that helps to track and monitor. When we go for monitoring, we ask for your expatriate quota card and in that way we reduce the number of illegal expatriates working in Nigeria. And we have a very robust coordination procedure with the Ministry of Interior such that they can easily refer to us and vis versa. And I say without fear of contradiction that in 2017 when had over 1000 expatriates, today we have far less than that. The number has reduced to about 700.
Records show that the Board approved the rebuilding of North-East region with the training of Internally Displaced Persons (IDPs) in Borno, Yobe and Adamawa states. What informed such decision, since these states are not the Niger Delta, neither are they oil-producing states?
That’s a very good question. Again, it underscores the fact that local content is not about Niger Delta and that’s why we call it Nigerian Content. It’s about the entire country. And the most impacted areas of the insurgency are those areas that you mentioned. We are a very listening and caring sector. In 2018, the entire industry came together and took a decision to support Mr President to help rebuild the Northeast. So for us in NCDMB, we tie our Intervention to our mandate. For instance, human capital development and that’s why you see the 107 IDPs being trained in construction skills, ICT, and waste-to-wealth. It was a very emotional moment for us. When we started, we didn’t realize how we are changing the lives of people until the graduation ceremony. Most of them told us very disturbing stories of how they didn’t believe that an organization from Bayelsa would change their lives. So what we have done is to deploy our end to end process whereby we train them, we take them through an apprentice phase, we give them starter-packs; and then as we speak, we are even patronizing some of their products. Apart from that we have similar capacity development project currently going on in Bauchi. We are also patronizing those that went through the carpentry skills acquisition. So in our own little way anytime we have an opportunity to do that we do it without hesitation. With determination and sincerity of purpose.
In a similar situation you are also training 1000 youths in Kano on phone hardware repairs and software installation and entrepreneurship development. Can you throw more light on the ongoing programme?
What we try to do is not to repeat our Interventions all over the states. In Benue for instance, we are empowering miners through the provision of equipment to mechanize their process, because mechanization would enhance production,, and productivity. It also increases efficiency and there is reliability in delivery. We are also building ICT centers in secondary schools in the north because we have encouraged the young ones to start thinking of technology. We are also building LPG storage, and by the time the AKK project is delivered, you’ll have storage facilities and thus definitely deepening gas usage and industrialization. Am sure you know that with gas, you have access to power and you are also able to increase manufacturing, especially the factories that have shut down. We believe that the project is a step in the right direction.
The achievements and interventions of the NCDMB have encouraged the clamour for the extension of the Nigerian Content Act to other critical sectors like power, construction and ICT. What’s your take on that?
The clamour is good. Even before now, I recall that when ICT Sector wanted to develop local content we were actively engaged, around 2013, under the then Minister of Telecommunications. What we did was to bring our experience to bear to ensure that we create a local content framework for the ICT. We did same for the power sector. And already there is that collaboration. Now what has happened is because of the success of the local content of the oil sector, there are Presidential Executive orders for expansion of local content to other Industries. So what the legislators are trying to do is to legislate on it to make it sustainable.
What are challenges facing the industry?
Some of the challenges confronting the industry include, as we go into deep offshore operations, the kind of manpower that you need is not easy to come by. So there are skill gaps. You have to give expatriate quota for people to operate successfully. That’s a challenge but what’s important is that you should deploy your gap analysis to identify those gaps and position your training programmes along closing the gaps and ensure the establishment of centers of excellence for training in Nigeria, so that people can go in and out for professional development from one layer to the other. Also, we have infrastructure deficit. We are all aware that the cost of logistics in the country is significant; the cost of power is high. So how do we reduce that cost so that we can create a competitive environment. There is also the issue of standards. Local content does not encourage compromising standards. Globally acceptable standards must be adhered to. So we need to collaborate with the Standards Organization of Nigeria (SON) to make sure that those standards are in place. And of course, there’s policy inconsistency. We must come together to harmonize all the requirements. So the issue of challenges would be there. What is important is that deliberate steps must taken to acknowledge that they exist and put mitigation plans towards addressing them.
On a lighter note, I can see that your job is rather challenging. Is it all work no play? How do you relax and spend your leisure?
Maybe if my wife were here, she would have jumped at this question. (Laugher). She keeps telling me that am working too hard and often when we are having conversation I would be sending messages and co-ordinating activities regarding the job. The phone gives you the urge to meet up with deliverables. But I try hard to balance it, especially with my kids. But why the work is exciting is the motivation that you are creating positive changes in the society; working hard to touch people’s lives. This is very important to me.
