Chika Amanze-Nwachuku and Ugo Aliogo
The Nigerian Content Development and Monitoring Board (NCDMB) will sanction local and international companies that flout the local content law, its Executive Secretary, Mr. Simbi Wabote, has warned.
Wabote, who gave the warning in an exclusive interview with THISDAY wednesday in Lagos, said there would be no sacred cows in the implementation of the local content law as well as sanctions against defaulters, insisting that any company, contractor or operator that contravenes the law, would be sanctioned accordingly.
He said, “In implementing the act, there is no doubt that there will be people who deliberately want to circumvent the process, who try to flout the law and do what is not right. We have a very robust monitoring outfit, when we discover such, we sanction them and we ask them to restitute for what they have done. So a lot of companies- local and international companies, contractors and operators, have been sanctioned for flouting the local content law and it is an ongoing thing.”
He noted that international oil companies (IOCs) in strict compliance with the local content law, support the local companies that do businesses for them, adding that the biggest culprits in circumventing the local content law are Nigerian producers.
Wabote told THISDAY, “The IOCs have been very supportive of the local companies that do business with them. The local companies have challenges in dealing with indigenous producers. The indigenous companies are the biggest culprits in terms of circumventing the Act. But the IOCs, in compliance with the local content act, support the local companies.
“For instance, in the drilling and oil servicing activities in the country, 90 per cent of these activities is managed by Nigerian companies. These were businesses hitherto managed by foreign firms such as Halliburton, Slumberger and Baker Hughes.”
The NCDMB boss also said that the forensic auditors recruited to determine and recover unremitted NCDF obligations in the oil and gas industry have been doing great work, adding that the industry has recorded an upsurge in remittances of the compulsory one per cent of contract sum to the Nigerian Content Development Fund (NCDF) on account of that.
The local content law stipulates that one per cent of every contract in the upstream sector of the Nigerian oil and gas industry shall be deducted at source and paid into the fund.
The fund, managed by the Nigeria Content Development and Monitoring Board (NCDMB), is meant for projects, programmes and activities directed at increasing Nigerian content in the oil and gas industry.
Prior to the appointment of the forensic auditors, most companies reneged in remitting the amount to the fund.
Wabote explained, “On assumption of office, we agreed that we are going to launch a forensic audit on all those companies since the inception of the Act in 2010 to see how we recover unremitted funds. Three months ago, we were able to recruit forensic auditors who are now busy on the field trying to verify documents of most of the companies and I can tell you since that exercise commenced, we have seen an upsurge in the remittances to the NCDF. “Several companies that we noticed before the forensic auditing started that were not remitting, we were able to fish them out and notified them about the consequences of such and they were able to comply. Nobody has remained recalcitrant for us to punish.”
Wabote had at a recent event announced that defaulters of the local content law in the nation’s oil and gas industry are to lose five per cent on total contract sum.
He said non-compliance with the law, would also result in the suspension of projects/contracts, withdrawal of NCDMB’s services and project cancellation and unrecoverable sunk cost.
Other penalties for non-compliance, according to Wabote, are escalation to other regulators to withdraw or suspend licence, withdrawal of approval for declassification of contractor from pre-qualification list, application of the full weight of the law in accordance with Section 68, and publication of non-compliant operators in newspapers and professional gazettes.