The joint expenditures reinforce the centrality of Nigeria in the oil industry's future and the willingness of the country to pay the high price demanded of a major player in the industry.
Here is the Vanguard story:
FG, partners to spend $42bn on oil, gas
By Hector Igbikiowubo & John Ighodaro
Posted to the Web: Monday, April 18, 2005
LAGOS -- The Federal Government and its upstream oil industry partners have concluded arrangements to spend $42 billion (about N5.628 trillion) on oil and gas development between 2005 and 2009 as part of efforts to improve the country’s revenue profile.
Meanwhile, former Nigeria’s Permanent Representative at the United Nations, Dr. Maitama Sule, has called on multinational oil companies operating in the Niger Delta to ensure that they cushion the effects of devastation of the environment through oil exploration. Dr. Sule made the remark when he paid a courtesy call on Governor Peter Odili of Rivers State.
In the arrangement between the Federal Government and its partners to shore-up oil revenue, it was discovered that fabrication, construction and engineering account for 50 per cent of the total expenditure planned for the period.
Giving the breakdown in Lagos at the inauguration of the industry sub-committees of the Nigerian Content Consultative Forum, Mr. Joseph Akande, Group General Manager in charge of Local Content at the Nigerian National Petroleum Corporation (NNPC), said the country had a low level of national content.
The breakdown showed that engineering will take up $4.2 billion or 10 per cent, construction $10.6 billion which translates to 25 per cent, while procurement will gulp $27.5 per cent or 65 per cent. Fabrication is also expected to gulp another $10.6 billion, while manufactured items will gulp $16.9 billion or 40 per cent of the entire sum.
Mr. Akande said despite the huge investments of the Federal Government in the oil and gas sector which has an average expenditure of $8 billion, gross domestic product (GDP) growth was almost non-existent, while Nigerian content remained low because work was carried out abroad. Consequently, the country’s manufacturing value added contribution to GDP remained below eight per cent from 1968 to 1998.
“Over the years, competency levels among Nigerian companies and professionals have dropped and linkage industries that should flourish with the quantum of investments in the oil industry have not emerged from the activities.”
The current contracting strategy involving issuing ITTs to international EPIC contractors who bid for the contracts either solely or in consortium with some local companies also showed that the quantum of work which ends up being allocated to the local companies is limited due to the perceived low capability of such companies.
It was disclosed that given this scenario, the bulk of the work ends up being done by the EPIC contractors or their affiliates overseas and this creates more jobs abroad for foreign nationals. He said government had intervened by developing a Nigerian content policy with set targets for Nigerian content in the industry as a vehicle for increasing value addition, capacity building and competency development in the country.
In line with this, the Federal Government insists that a minimum targets of 45 per cent Nigerian content be achieved by the end of 2006 and another 70 per cent by 2010. Government has also directed that all Front End Engineering Design (FEED) and detailed engineering for all projects are to be domiciled in Nigeria by end 2005.
All fixed off-shore and on-shore facilities are also to be fabricated in-country to maximise utilisation of local fabrication yards henceforth. Fabrication of all piles, anchors, buoys, jackets, bridges, flare booms and similar structures are to be done in Nigeria.Maitama Sule speaks on N/Delta
However, Alhaji Maitama Sule has noted that the people of the Niger Delta have suffered untold hardship as a result of oil exploration which has caused the degradation of the ecosystem and called for fairness and justice from the Nigerian nation in dealing with the people of the Niger Delta.Dr Sule who is chairman of the Nigerian Universities Commission (NUC), said he had been in the forefront arguing for oil multinationals to perform their social and moral obligations to the oil producing communitiesto enhance development and create conductive environment for business. The NUC chairman traced his contract with Rivers State to his tenure as Minister of Mines when hecommissioned the first refinery in Port Harcourt and described the state as the centre of oil and gasbusiness in Nigeria.
Describing the people of Rivers State as hospitable, loyal and good allies of their Northern brothers, Dr.Sule said his visit to the state was a home coming for him, stressing that his relationship with people like the late elder statesman, Chief Harold Dappa-Biriye, enabled him to have great respect for Rivers people.
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