Part 1 :A case study of paint manufacture in Nigeria Eng. S.I.C. Okoli – Protective Coatings Manufacturers Nigeria (PC

1. Measuring local content in manufacturing: A case study of paint manufacture in Nigeria Dr. Michael Warner – Local Content Solutions Eng. S.I.C. Okoli – Protective Coatings Manufacturers Nigeria (PCMN)

2. Part 1 :A case study of paint manufacture in Nigeria Eng. S.I.C. Okoli – Protective Coatings Manufacturers Nigeria (PCMN) • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria Part 2 : Measuring local content in manufacturing Dr. Michael Warner – Local Content Solutions

3. Overview • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

4. Overview of PCMN development 100% local manufacture 100% Nigerian ownership Manufacturing license signed PCMN becomes Plc 60% Nigerian ownership Semi finishing 40% Nigerian ownership Distribution license Fully imported product 100% foreign ownership 2000 2002 2004 2006 2008 2010 2012 2014 • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

5. Overview of PCMN personnel development Number of staff • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

6. Overview of PCMN capacity development New factory proposed 2015 Import / production levels (litres per annum) Capital expansion Phase II increases capacity • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

7. Importance of paint manufacturing • Global cost of corrosion > $2 Trillion per annum • Likely cost to Nigerian economy = towards $10 billion dollars per annum* • Nigerian investment to increase dramatically in next 10-20 years • Offshore oil and gas / onshore processing / transmission pipelines • Passing of PIB into law will release projects resulting in increased demand • PCMN positioning its capacity plans to capture a large % of market • Upstream / downstream and M&R activities • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

8. Local content levels in paint manufacturing Nigerian heavy duty protective coatings market estimate PCMN Projected capacity Million litres per annum • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

9. License History • License manufacturing agreement entered into 15th May 2009 • Covers manufacturing and use of registered trademarks • International Paint is a major supplier of protective coatings globally • Part of the AkzoNobel group with turnover > $ 18 billion • Extensive oil and gas experience globally • License agreement catered for • Establishing manufacturing plant in Lagos • Transfer of initial product range and associated technical support • Guidance on factory start-up and regular auditing • PCMN now accredited to ISO 9001: 2008 • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

10. Advantages of license technology • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

11. Capacity Development - Challenges • Difficulty in forward forecasting • Associated Impact of stock on working capital • Capacity building needs to be proactive • Role of operators • Forecasting assistance • Identifying associated bolt-on opportunities • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

12. Capacity development (continued) 2000 2002 2004 2006 2008 2010 2012 2014 • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

13. Capacity development (examples) • Addition of 2 off 2400 litres high speed dispersers (previous slide) • Addition of 6 off 2000 litre “pans” for mixing • Further capacity expansion planned for (5,000 litre pans) • Installation of semi automatic piston type filling line • Associated infrastructure (generators etc) • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

14. Overview of PCMN personnel development Number of staff • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

15. Manufacturing multiplier • The Local content Law gives clear economic benefit to Nigeria • Manufacturing offers significant benefit to national (Macro) AND local (Micro) economy • Increased personnel required to operate manufacturing versus distribution • Nigerian ownership is critical to the further development of the economy and the multiplier effect coming into place – for every 1 job directly created 10 additional downstream jobs are created • PCMN is proud to be at the forefront of Nigerian content development in paint and coatings manufacture • We look forward to partnering with NNPC and the oil majors to grow the Nigerian Economy into the powerhouse it should be in Africa. • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

16. In summary • Capacity is available • Proven in-country capacity should be supported • Economic means • Enforcement • Expanding markets to utilise Nigerian manufacture • Regionally • Multinational projects • Expanding portfolio • Linking proven manufacturers to customers • Expanding visibility • Infrastructure project requirements • Earlier involvement • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria

17. Part 1 :A case study of paint manufacture in Nigeria Eng. S.I.C. Okoli – Protective Coatings Manufacturers Nigeria (PCMN) • Measuring local content in manufacturing: • A case study of paint manufacture in Nigeria Part 2 : Measuring local content in manufacturing Dr. Michael Warner – Local Content Solutions

18. Background to metric selection • Increasing clarity on metrics and reporting for operators • Lack of visibility on requirements – downstream supply chain • Metrics should • Provide details on Nigerian content • Measure of ability to serve the market • Goods or services • Currently limited to single point activities i.e. supplier assessments • Metrics may need to be adjusted to reflect the organisations business • Supply chain needs to be proactive • Work in progress • Measuring local content in manufacturing: • Selecting Nigerian content metrics for the paint industry

19. Key areas of measurement • Measures identified to • Indicate Nigerian content • Identify the suitability of the business to serve the market • Currently being finalised prior to initiating monitoring • Measuring local content in manufacturing: • Selecting Nigerian content metrics for the paint industry

20. Accuracy of measures • Care should be taken when selecting national content measures • Metrics may be divided into 3 main types • Erroneous – [Insert definition] • Proxy – [Insert definition] • Accurate – [Insert definition] • Some erroneous metrics may provide useful background information into supply chain • Should be clearly identified • How to measure relationship between licensee and licensor? • Measuring local content in manufacturing: • Selecting Nigerian content metrics for the paint industry

21. Sample measures – manufacturing and services • Measuring local content in manufacturing: • Selecting Nigerian content metrics for the paint industry

22. Sample measures – manufacturing and services • Measuring local content in manufacturing: • Selecting Nigerian content metrics for the paint industry

23. Local content in manufactured paint • Assessing using drill down method for national content in each paint material • Can be used for domestically manufactured OR imported • Can be utilised with local content calculator • Limited visibility as it contains proprietary formulations belonging to licensor Michael – Please can you insert this description I was thinking of the drill down slide from the training? • Measuring local content in manufacturing: • Selecting Nigerian content metrics for the paint industry

24. Conclusion • Paint industry is an important part of supporting infrastructure development • License technology with globally recognised technology provider offers significant benefits • Offers potential for rapid start-up and capacity development • More work needs to be done on visibility of metrics for supply chain • Further guidance on national content metrics • Government • Operators • Choice of metrics is important for correctly identifying national content • THANK YOU • Measuring local content in manufacturing: • Selecting Nigerian content metrics for the paint industry