Brokers want mass participation in oil and gas

Brokers want mass participation in oil and gas The President, Lagos Area Committee of the Nigerian Council of Registered Insurance Brokers (NCRIB) Mr Tunde Oguntade, has canvassed for engagements of more brokers in oil and gas business to meet the slot appropriated in the Local Content Act. The Local Content Act stipulates that 70 per cent risks in oil and gas should be underwriting by local insurers. Oguntade told Inspen that the appointment of only 14 brokers to manage the Nigerian National petroleum Corporation (NNPC) insurance this year, fails below expectations, adding that efforts should be made to encourage brokers mass participation. He noted that the operators are not rest on their oars in beefing up the capacity, adding giving them access to the business would help boost their knowledge on oil and gas. He said: “There are requirement spelt out in the guidelines for you to be an active practitioner. But how many of our people can meet the requirement? For instance, for you to participate in oil and gas as a broker, your licence must include oil and gas and cover special risks. But I can tell you that about 90 per cent of the brokers carry life and general business licences. “So, with this requirement, NAICOM is restricting entry into the area, because how many people can meet the requirement. It is not an open thing; there is no level playing field. Another issue is how many oil and gas professionals are in the industry? Probably 10 and these 10 are likely to be with the top five brokers. “The oil and gas pool created by Nigerian Insurance Corporation (NICON) in the past ought to be a training school for practitioners, but the thing died a natural death because some people form themselves into cartel and the businesses did not spread. The guidelines are good to check malpractices and distress, but it has not provided a levelling playing ground for practitioners. “On the part of the NCRIB we have arranged seminars; HSBC of London came was the country last year and our member were encouraged to attend the training, there was another training organised by NAICOM and some of our member attended. We have also visited the United Kingdom and South Africa. This year, we are looking towards going to America. “We will continue to do our best and enlighten our people. The basic thing is that government should create rooms for participation. It should tell NAICOM to encourage its operators to allow free entry to the market. As it in Nigeria today, we have only like four or five brokers operating within oil and gas market. And these five brokers are not indigenous brokers per se; they are foreign brokers that got indigenised.” He said the operators are presently doing well on paper in oil and gas, but in actual practice they are far of. He noted that operators within the market are still struggling to get into the cartel that exists in the oil and gas business, adding that the rate in the sector is determined foreign underwriters. “There is a cartel. The truth of the practice is that there is nothing fantastic about the local content. It boils down to property, fire and burglary. Those are the packages. The truth of it is that it is in Dollars and the risks are determined by the offshore practitioners that is foreigners. The local market does not have control of the rates, because the rates are determined globally and the advantage of rates can not give us the leverage that we require to participate actively. The multi-nationals that are into oil and gas have their technical partners and affiliates abroad with whom, they do these businesses. The fact is that they give us the non oil aspect of it 100 per cent. But the real oil aspect of it still does not stay in Nigeria. Because they will tell you that the total capacity of the industry is not up to 10 per cent of the risk capacity required and what is the recapitalisation required? It runs into billions of Dollars. The law says we can operate up 70 per cent, but even when it was 30 per cent, we do not participate up to five per cent. As at today, the participation of the local market is not up to 30 per cent. If they say is up to that, it may be with some companies within the group who have their foreign fathers or affiliates, who are fronting as Nigerian companies,” he said. He noted that the human capacity challenge which is considered as reason for ceding of oil and business abroad is being tackled, adding that challenge exist due to the restriction put in place by few individuals who benefits from the business. “They would say that there is manpower development problem. Why would not there be manpower development problems, companies that have been handling the risks in the past 30 years would not allow consortium of brokers or underwriters to come in, forgetting that people can learn on the job. There are challenges that are outside the text books that people need to come into the industry to learn. The only thing government should do, is to ensure mass participation in these policies. Consortiums of brokers and underwriters should be allowed in and everybody should be mentored in the business to inject new ideas and expand the capacity. I do not think we have participated enough and we need industry leaders to take proactive steps to expand the horizon. And that is the way we would stop losing foreign exchange,” he added.