How bribe kills oil and gas entrepreneurship in Nigeria

By Usman Habeeb

I came across a Saudi Arabian, Afzal Ahmad, at Dubai International Airport in 2011. Ahmad who later became my close associate has been in the oil and gas business in his home country, Saudi Arabia, for over 10 years. At every given opportunity, he encourages me to invest in the Nigerian oil and gas industry in view of the Local Content Act in Nigeria citing the remarkable success of a similar policy in Saudi Arabia.

After much deliberation with Ahmad, I summoned the courage to focus on the upstream arm of the oil and gas sector believing that the Local Content Law aimed at localizing management and control of the oil and gas industry will be a plus for indigenous players. The establishment of the Nigerian Content Monitoring Board (NCMB) to serve as enforcer and regulator by coordinating, monitoring and execution of the local content law further boosted my confidence.

Based on the foregoing, with my parents’ consent, I decided to mortgage my family’s property to secure a loan from a commercial bank believing in the effectiveness of enacted acts and laws regulating the oil and gas industry aimed at giving Nigerian independent operators and Nigerian service companies’ first consideration in the award of oil and gas-related contracts and “exclusive consideration” for contracts and services respectively.

I went ahead to borrow a huge sum of money at exorbitant interest rates and ridiculously short tenors to invest in the acquisition of vessels to provide support services to offshore drilling operations as a way of creating jobs and wealth for the teeming youths in the country.

Upon securing the fund, I bought my first ship and employed 50 people. A few years later, I acquired my second vessel and employed additional 30 workers to drive operations and management of the fleet.

It was challenging but with perseverance, I was able to make profit in the early years, which I ploughed back into the business. With a passion to grow, I increased my staff strength to over 300 people mainly Nigerians with about 100 vendors servicing my company. The ability to put food on the table of many kept me going, as I was motivated to drive the business further.

Despite being heavily indebted to the bank, I sustained the servicing of my bank loan in order not to default and to change the negative reputation of Nigerian business people who many see as reckless.

While trying to consolidate my investment came the flood of briefcase companies who lack the technical and financial capacities to render quality services but rely on doling out money to officials of concerned authorities in government (i.e. NNPC) and international oil companies (IOCs) to secure long-term contracts at the expense of credible corporate citizens.

These cheap companies are professional bribe payers and are always able to secure long-term contracts even though they don’t have assets but end up engaging the services of third parties (who are mainly foreign entities) to the detriment of capable wholly owned Nigerian companies who are ceaselessly denied contracts for reasons best known to government and officials of IOCs).

This unfair treatment being meted out to genuine Nigerian investors is painful and not to the advantage of the country as a cabal has been formed to jeopardise due process in the award of contracts by NAPIMS and IOCs. All these foreign companies benefitting from the lapses in the industry end up transferring their earnings to their home countries without looking back.

This is why in Nigeria, vessel owners cannot compete with brokers, a resultant effect of the unethical conduct of staff members of government entities and IOCs involved in the procurement process. It is then that I understood how a middle-level employee of concerned authorities could afford a two million dollar house in Lagos, Abuja, London and the United States. I still have not made that kind of money.

Now, I am getting frustrated and have disengaged over 75 staff as I have consistently tried to find work for my ships to no avail.  I will not pay bribe to anyone because of my conviction in a competitive process that will put into consideration technical and financial capacities of entities bidding for contracts in the industry.

It is important to note that despite all these challenges, as a company, we still pay taxes and levies when due. This patriotic act is being threatened by the inability of local players to win oil and gas contracts. Government should remember that indigenous companies are not afraid of healthy competition (or requesting for favours) but are only asking for a level playing ground in the bidding process and award of contracts.
If these anomalies in the industry are not corrected, they will only get worse.

• Usman Habeeb wrote from Lagos

The above article first appeared on The Guardian