OIL companies that ignore local contactors and farm out jobs to foreign companies cost Nigerians $400m between 2000 and 2005, the Senate said on Wednesday.
The Chairman, Senate Committee on Petroleum Resources Upstream, Senator Lee Ledogo Maeba, revealed this on Wednesday in Abuja, at a summit on capacity building for Nigerian content development in the oil and gas industry. The committee organised the forum in conjunction with the Petroleum Technology Development Fund.
According to him, �Between 2000 and 2005, there were about $4.8bn worth of contracts in this industry. Out of this, foreign companies did $4.2bn worth of the contracts. Another $600m was supposed to be for Nigerian content.
�We discovered that a lot of foreign companies were registered in Nigeria, most of these jobs were given to those foreign companies who pretend to be Nigerian companies because they were registered in Nigeria and are based here. So they give them another $400m worth of jobs.�
He regretted that since Nigeria started exploiting oil in 1958, it was yet to institute a legal framework to guide local content in the sector, which is currently only about 10 per cent.
The Nigerian National Petroleum Corporation admitted recently that it had missed the 45 per cent local content target for this year and that 70 per cent target for 2010 was, therefore, shaky.
The chairman said the Senate had done considerable work on the Oil Content Bill and would pass it before the end of the year.
He noted that the bill sought to ensure that Nigerian contractors were no longer subservient to their foreign contractors and the oil companies, who hid under the excuse that Nigerians did not have the capacity to deliver on big contracts, to farm out jobs to foreigners.
Acknowledging the subsisting directive by the Federal Government to the operators in oil and gas sector to shore up their local content to 40 per cent, Maeba said the directive was not sustainable because successive ministers of petroleum resources usually reversed it when put under pressure by the operators.
�We need a robust legislation so that Nigerian contractors can take the companies to court if they are not satisfied,� he said.
He disclosed that the committee was working with the Oil Content Division of the Nigerian National Petroleum Corporation to produce a bill that would not be faulted.
Maeba also accused oil companies of withholding payments to Nigerian contractors upon completion of certain contracts so as to hamper their capacity to participate in another round of bidding.
He added that the local content bill would empower banks, insurance companies, logistics and shipping companies as well as transportation firms, and decried a situation where oil and gas companies operating in Nigeria kept all their money in foreign banks.
�They must save some of their money in Nigerian banks so that our banks can use them to grow our economy,� he said.
The Senate President, Chief Ken Nnamani, argued that a situation where an operator must provide all the basic amenities negated the issue of local content.
Nnamani, who was represented by Senator Victor Oyofo, said, �We must overhaul our society so that the practitioners in our sector who want to exercise the policy can rely on what the state can provide and use it to rise up and take advantage of local content.
Otherwise, our people would be held back by their inability to create the extra infrastructure to be able to participate in the oil industry.�
He said the judiciary must also be alive to its responsibilities for local content to work.
According to him, �We are dealing with a sophisticated clientele, so we have to be prepared to take it.
It is not enough to make a log list of what we want to have, we should make a longer list of what we should do to be able to have it.�