The participation of local firms in the Nigerian oil and gas industry have fallen significantly as the slump in global crude oil prices left many of them without contracts.
The sharp drop in prices has forced oil companies, including the big ones, to cut capital expenditure budgets, lay off employees and suspend some projects.Despite the falling crude oil prices, which have affected patronage of indigenous oil companies, West Africa Venture (WAV) has achieved 100 per cent local content policy in its operations, the company told The Guardian.
The Local Content Act, directly affects operating companies, contractors, sub-contractors and service providers, seeks to increase indigenous participation in the oil and gas industry by prescribing minimum thresholds for the use of local services and materials to promote the employment of Nigerian staff in the industry.
Specifically, business activities at WAV facilities in Warri and Port Harcourt have reduced drastically in the last six months as IOCs, which are their major customers are counting loses from low oil prices.
The Executive Director of West African Ventures Limited, Alhaji Ibrahim Sambo, confirmed that patronage of the company’s services have been low since the fall of crude oil prices.
He said that the company has been able to achieve 100 per cent local content by ensuring that Nigerian occupied key positions and now making use of local content.Sambo said during a facility tour of the WAV in Port Harcourt by members of the House of Representatives on Local Content, that many of the company’s vessels have been idle due to low patronage from the IOCs.
According to him, the company’s fabrication yard and other departments have not been utilising its installed capacity as activities in the oil and gas sector continue to deteriorate. He said the company had to embark on three redundancy exercises in the last quarter to manage cost in order to meet up with dwindling revenue.
He was however optimistic about huge patronage from some government parastatals and other organisations in respect of flying boats services, border patrol and the likes, following the legislative backing to assist the company and other local companies in terms of patronage, having realized that facilities available were under – utilised.
Sambo listed other challenges to include importation of boats by some companies and paucity of funds. “We are praying that the sector will pick up very soon,” he said.
Speaking after the facility tour, the Chairman, House of Representatives Committee on Local Content, Emmanuel Ekon said that the committee decided to have a physical examination and assessment of facilities put in place by WAV and other indigenous companies so as to avoid supporting indigenous contractors otherwise known as flight by night contractors acting as commission agent for foreign companies in Nigeria.
“We believe that companies such as WAV with huge investment within the country and employer of over 5,000 Nigerians should be encouraged so that the investors can do more. That way, we will reduce capital flight (money that is going out of this country significantly),” he noted.
Ekon argued that the patronage of indigenous companies with capacity would boost revenue earnings of the economy, save more money and create more employment opportunities by encouraging investors that have shown credibility and super quality in its business.
Source: The Guardiantopics from