ONLY A MEASURED TARGETED PROGRAMME WILL MAKE LOCAL CONTENT INITIATIVE ACHIEVABLE .....Ajumogobia

Mr.Odein Henry Ajumogobia is the Honorable Minster of Petroleum resources, a gentleman by every inch of the word. A corporate Lawyer who has managed through a dint of hardwork to get to the top of his career. He became a Senior Advocate of Nigeria (SAN) in 2003 and has also served as a one time Attorney-general under the Peter Odili Administration in Rivers State. In this Exclusive interview with Dredging and Exploration, Odein Ajumogobia opened up on a lot of issues affecting the petroleum industry, but with special focus on the Nigerian Content initiative of the federal Government. Why is there a delay in the passage of the bill, what really is Nigerian Content and why does government seem to be dilly-dallying on the issue, is it rue that the IOC's are actually frustrating governments effort at bring the passage of the bill to pass. All these and much more are the questions the Honourable Minister gracefully answered in this page-turning interview.

Excerpts:

Can you tell us a little about yourself
My name is Odein Henry Ajumogobia, and I come from Rivers state, my father is from Abonema and my mother is from Buguma, two islands in the Niger-Delta which is now famous for the level of deprivation which we've suffered for the past decades since Nigeria has been a country. I grew up in Lagos. however, as my father was teaching at Kings college at that time and rose to the post of the acting Principal of the college, my mother was also a teacher at queens college, so this would give you a little bit about my background, I grew up in a very disciplined home, my father left teaching to go into administrative education and later became Nigeria's permanent. My primary education was in Lagos, secretary in the ministry of education. While secondary education took me to east Africa, in Nairobi, Kenya to be precise. I came back at a time my father was a diplomat in east Africa, and he insisted that I come back home for my university education, so I went to the university of Lagos where I graduated in 1978 and went to law school in 1979 and started legal practice in the law firm of Fred Egbe and company in Lagos, and then in 1983 I started part of my own in practicing with Mr Chris Okeke who was quite supportive when I left for public service, and the firm became very successful and grew to become one of the largest firms in commercial practice Nationwide. From there, I was invited by the former governor of Rivers state, Dr. Peter Odili, who had been like an older brother, to join his government as the attorney-general, and accepted the offer which was quite a challenging experience. And after that experience and while planning to go back to my practice I was also nominated as a Minister of the Federal Republic which saw me going through the rigorous screening process at the Senate after which I emerged as the Minister of Energy in charge of Petroleum.

So what was the first challenge you had confronting you in your new assignment as the Minister overseeing the petroleum sector considering the fact that you were not originally from the energy sector?
Actually there was a lot of speculation during the screening process, a lot of articles about where I would likely be posted because I am a lawyer, a Senior Advocate of Nigeria (SAN), it seems natural that I should go to the Justice Ministry, infact there were two other Senior Advocates who were also nominated, Michael Aondoaaka, the Present Attorney-General and Adetokunbo Kayode, and there were about four other legal practitioners and the all of us can not be sent to the justice ministry, I personally kept an open mind as I felt it was a great honour to be nominated to serve in the federal cabinet and I was looking forward to serve in whatever ministry I was assigned to, I really believe that at the level of ministerial appointment its more about your ability to organise, plan, strategise, and implement the policies of the federal government as the only area that the law specifies that one must be technically qualified is the office of the Attorney-General which stipulates that you must be a legal practitioner for at least ten years, hence every other cabinet position is opened based on your experience and your ability to organize and marshal resources. I was also lucky because a significant part of my practice as a corporate lawyer was basically on oil and gas which has seen me representing most of the major oil companies for most of my professional life, so it wasn't strange to me, though its clearly not my core area of competence as that is the law aspect, but it is still not a totally strange territory and it wasn't too difficult to settle in very quickly.

Now under your supervision so far, what is the state of the petroleum sector in Nigeria?
When I came into office, the sector was more than facing a crisis, it was clearly in decline. Let me give an example, Shell Petroleum Development Company which until recently is the biggest oil producer in the country was producing well in excess of a million barrels per day, today, it is producing less than six hundred thousand barrels per day, while Exxonmobil produces about eight hundred thousand barrels and that's why they claim to be the biggest producer in the country today. I think it's a shame, because if two decades ago a company is producing over a million barrels a day then two decades later, given the resources that God has given us they should be producing significantly more than that. Why haven't they, because there was a constant decline in investment in the sector, partly created by the structure of the sector, we started off in 1969 under the former ministry of mines and power where Shell was the sole concessionaire across the entire country, then we move to another level where some of their concessions were taken over and given to other competitors. At each time the structure of the oil industry was that the government would contribute its portion, the International Oil Companies would also contribute their funding for whatever project in place then, hence they were in a joint venture and continue to explore and produce, and the challenges of development continues to increase, population increased, likewise the number of Universities and all these posed new problems for government in trying to meet the demands of the new population of Nigeria. So in the allocation of resources you have to prioritise and because that was the matrix that was chosen that we would determine how much we would put into our investment with Nigerian venture partners, if there was any competition whatsoever then this investment sector suffers. I think one of the things that one must commend President Yar'Adua for is taking the decision to let investment opportunity determine the amount of what we put into the sector whether it is through budgetary allocation or through other sources, at the end of the day we recognise that this is a profitable venture and if we don't have the money to put in from our budgetary allocation then we can find it, as our partners indeed do. All our partners didn't put their hands in their pocket and fund their projects necessarily from equity, they go to banks and say look there is this project, and for every dollar invested there is going to be a return of say 6,7,8 or sometime 9 dollars over a period, so if the bank looks at it and it makes commercial sense to them, they give you the two dollars you want knowing fully well that they'll get their two dollars back plus the interest and you would get your return on investment.
So I think President Yar'Adua recognized that and said this is what we would do, we should find the money to invest so that we can continue to grow the industry. I think Nigeria is in a very unique position today, we have very unique crude oil, very light, low sulphur content, there are very few countries which has the kind of oil we have and that makes us unique for a start, if we can produce more than we are producing, as to our maximum potentials and the President has said that we should try and produce about 4 million barrels by 2010 then we would be able to bridge some of the gaps in supply that are anticipated in the next few years.
So Nigeria also has a great opportunity to exploit its resources under the new policy that has been directed by the President. However, right now we have a major challenge of sourcing for N3.8 billion to meet the work plan in investment requirement for 2008, but the President has directed NNPC for the first time to go to the banks as well as the capital markets, to go to local and external banks to find this money, to make this investment .

Now we are looking at the issue of local content, there has been reports that government has not been too serious about it in an effort to please the IOC's and that this is the same reason why the bill has been lying unattended to at the floor of the National Assembly for years now, what is your reaction to this Sir?
I do believe that the National Assembly is patriotic, they represent the good people of Nigeria and therefore their primary mandate is to represent those interests. Now we first of all need to determine what we mean by local content, do we define it as per capita, as in the number of employees? Now if I have a company and I employ five hundred people and four hundred of them are Nigerians doing menial works then that is eighty percent local content if I define it as per capita, but meanwhile the value of the work the company is executing outside the country is about 90 percent of the work that is being done inside the country, by that definition it is then 10 percent local content.. So I think first of all the stake holders both government and the IOC's should define what we mean by local content, and that is why a legislation by the National Assembly is most important, so that every one would know that this is what Nigeria means by local content, this is what we have to achieve, and I think my job as a Minister to set realistic target as there is no gainsaying for instance that we want to achieve 100 percent local content by the end of 2008, its just not feasible as this involves a whole lot, it needs capacity building, it requires training of technicians and engineers. It takes four years to get the basic training as an engineer, it takes another several years after the basic training to be able to add value to whatever company you are working for, so its going to take time, but i think a measured targeted program that all participants in the industry sign on to and are monitored by would enable us achieve it. As I said earlier I was in practice for many years and I used to represent companies in the industry, to get an expatriate quota you have to explain to the ministry of internal affairs what your program was for 'Nigerianising', this is not a new thing, as far as 1980 when I started practicing and then I used to go ministry of internal affairs which was in Lagos at the time and you have to fill a form to explain how long it would take for these positions that you are asking for expatriates to come and man to be 'Nigerianised' to get a permanent or renewed quota was very difficult, because before you get the quota you would have to show how these positions would invariably be owned by Nigerians, but I think we lost our will along the line and today we have expatriates doing virtually all sorts of things that even Nigerians can also do with little or no supervision. I have a good example of a company that needed about 120 scaffolders and they were going to import them from abroad, now how long does it take to train somebody to do scaffolding? But through a policy, another Nigerian who felt just like I do said that no, that Nigerians can do almost anything, Nigerians are in NASA, so scaffolding would only require a few weeks training and this company actually did so and trained people, it dint create so many jobs, maybe 120 jobs in the first three months and subsequently 40 jobs a year for the next five years as the project was originally for five years.
So I am saying that its only government that can first clear to an extent these positions so it can be given to skilled and professionalized Nigerians, and it is in this regard that we have directed the Petroleum Training Institute (PTI) to revert back to its original program of training technical manpower, because would be lots of employment as well, but its not true because it is highly technical and as such is driven by technology. The number of people that are actually employed in the industry are relatively few but a robust oil industry would provide other collateral employment, take Kaduna refinery that just came on stream for example, if you go in there today you'll see hundreds of trucks coming in to lift products so that would bring employment for truck drivers, vulcanizers would also be needed to fix the tires and other sorts of collateral things, so it actually helps to turn the economy around. I personally feel very passionate about this issue of local Content and I think its only fair to talk about the challenges. Now why is there reluctance? There are reluctance because its more expensive, I mean, the business man wants to look for the least cost for anything he does, the least cost Unfortunately because of the global village we now live in is certainly not in the favour of Nigerian entrepreneur today because of economics of scale. A Korean shipyard that is hundred times the size of our biggest shipyard would certainly provide a lower unit cost than the Nigerian shipyard for the time being. Now if you allow lowest cost to determine who wins the bid then our small Nigerian entrepreneur can never compete, but if you encourage him he would grow, and at some point in the future he will be able to compete, and the federal government drew a policy that can assist the local industry, this is not just rhetoric, its being done everywhere, both in Malaysia, in Brazil, in Venezuela and other places, and these countries I'm mentioning are countries that were on the same level with Nigeria at the time of independence in 1960, so I believe that now we have to first of all bring the policy, we also have the legislature that will provide an enforcement mechanism... I really do believe that with all of these in place it would be driven. As far as the concern as to whether the National Assembly is serious, I have spoken with the Chairmen and members of the various committee that are driving this process and they have assured me that the passing of the bill is imminent as they are really at the last stage, hence I'd be shocked if it is not passed within the next few months.

Do you foresee it coming through say in the next three months?
I do, I do, they've gone through the second reading and I think there are one or two changes they wanted to make but they are also as concerned as I am to see the bill passed.

- By Olalekan Adeoye

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