Speakers at a Nigerian Content stakeholders' workshop in Abuja, has decried the lingering absence of enabling legislation for such an important component of the nation's Vision 2020 strategy.

Chief Henry Okolo, CEO of Dorman Long, told the Abuja meeting that local content should be treated as a national strategic imperative. Indeed, the government's economic strategy document requires the oil industry to contribute to economic development and employment creation through the enforcement of a Nigerian content policy.

Okolo, who is also the chairman of the fabrication group of the Nigerian Content Consultative Forum, emphasised the gains the nation stands to reap from increasing Nigerian content. These include accelerated economic growth, employment creation, technological acquisition and development and enhanced national security.

George Osahon of the Nigerian Content Division of NNPC admits that much remains to be done to attain higher levels of local participation. "Drastic measures are required to achieve 70 per cent local content by 2010," he told the Abuja gathering.

He conceded that there has been an overwhelming interest by Nigerian investors to establish manufacturing plants, engineering companies and fabrication yards to service the oil and gas industry. Despite these investments, Nigerian suppliers still face resistance from the oil majors and suffer the negative fallouts of the unduly long budget cycle prevailing in the industry.

Nigeria remains without specific local content legislation, nine years after a bill to that effect was first presented to the National Assembly. Several lawmakers have presented versions of private member's bill on the subject since 1999, but none has enjoyed the prospect of becoming law.

National Assembly sources disclosed that it is precisely because they recognise the strategic imperative of Nigerian content that they have been pressing for an executive bill on the issue, rather than using private member's bills.

Massive investments by Nigerians, encouraged by the Nigerian content policy, are also imperiled as they are not guaranteed patronage and are further hamstrung by a tariff regime that is not supportive of local content aspirations. The loss to the economy is projected at $67 billion over five years, the participants noted.

The local content law is expected to outline the legal universe within which the oil and gas industry should operate with changed rules and emphasis.

It ought to codify a new regime to which the oil majors must comply, and to prescribe the structures of coordination among ministries, departments and other agencies that are essential to a successful local content policy. Experts say this is particularly important because local content gains have multipliers in other industries such as power, telecommunications and shipping.

In the absence of specific legislation, the NNPC has been relying on existing laws to issue regulations and directives on local content. This has yielded a few gains, but industry sources insist that a significant leap forward depends on robust legislation that is comprehensive in its purview, clear in its intent and non-permissive of extensive ministerial discretion. "Any law that grants ministers or supervisors too much discretion is prone to having the perverse effect of making those ministers violate the very spirit of the legislation," an oil executive explained on the sidelines of the Abuja workshop.

Many of the Nigerian investors in Nigerian content facilities are also eager for legislation to clarify what actually constitutes local or Nigerian content. Although there is no argument that Nigerian content means the quantum of value created in the Nigerian economy using Nigerian resources in the exploration, production, exploitation, transportation, sale and marketing of oil and gas, it matters who is creating the value and who is organising the value creating activities.

"Legislation should avoid ambiguity about what constitutes Nigerian content. Locating a project or facility in Nigeria should not suffice. To qualify for Nigerian content status, a service provider should have both majority Nigerian ownership and a proven programme of actual technology transfer," the chief executive of a manufacturing firm demanded.

To be effective, stakeholders expect the policy to be primed to reward verifiable investments in local capacity. This should include a mandatory requirement for the NNPC and its joint venture partners to give supply contracts to service providers that are building in-country infrastructure. Where services and products are to be imported, why should that not be undertaken by companies that are building the local facilities that would eventually make such imports unnecessary?

Stakeholders also identified robust regulation as a critical success factor for meaningful benefits to the economy from higher local content levels. While awaiting comprehensive legislation, they urged the NNPC to use the powers available under extant petroleum industry legislation to enforce Nigerian content regulations and prevent oil majors from frustrating implementation by hiding under issues of standard.