Stakeholders Oppose 100% Hike in Local Content Fund


By Emmanuel Addeh

Stakeholders in the oil and gas industry, including the Nigerian Content Development and Monitoring Board (NCDMB); Petroleum Technology Association of Nigeria (PETAN); Petroleum Contractors Trade Section (PCTS); Oil Producers Trade Section (OPTS), and the Nigeria LNG Limited, have kicked against the proposed hike of the Nigerian Content Development Fund (NCDF) from the current one percent to two percent.

The controversial clause is contained in the proposed amendment of the Nigerian Oil and Gas Industry Content Development (NOGIDC) Act currently before the National Assembly.

The NCDF is deducted from the value of contracts awarded in the oil and gas industry, and was pegged at one percent by the NOGICD Act of 2010, which the National Assembly is proposing to rework.

The organisations canvassed this position in separate presentations they made yesterday in Abuja at the two-day public hearing organised by the Joint Senate Committee and House of Representatives Committee on Nigerian Content Development and Monitoring.

The public hearing is focused on the bill for an Act to amend the Nigerian Oil and Gas Industry Content Development Act, bill for an Act to enact Nigerian Local Content Act, while the third is focused on repealing the NOGICD Act and enactment of Enforcement Commission Act.

In his submission at the hearing, the Executive Secretary of NCDMB, Mr. Simbi Wabote, argued that the one per cent of NCDF deduction should be maintained.

“Given the pressure that the global oil and gas companies are facing with cost escalations and price reductions in the industry, as well as the prudent management of the NCDF and the full cooperation of the operating companies, we believe that local content shall continue to operate efficiently and grow,” he maintained.

In their speeches, representatives of the leading oil industry organisations also advised against the proposed increment, stressing that an amendment of the NOGICD Act should promote and protect local businesses as well as encourage entry of foreign capital and technology into the country to further grow the sector.

They further opposed the proposed bill which seeks to repeal the Nigerian Oil and Gas Industry Content Development Act 2010 and enact the Nigerian Local Content Development and Enforcement Commission Act.

The representative of the OPTS, Mr. Joseph Ofili, posited that the group was totally against the Commission Bill, because it would erode the gains of the past10 years of Nigerian content implementation and return the industry to ground zero with regards to local content implementation.

Also, the PETAN Chairman, Mr. Nicolas Odinuwe, stated that it would be a grave mistake to repeal the NOGICD Act which had been acclaimed by several stakeholders to be very successful.

He insisted that the best strategy would be to fine-tune a few areas to make it more effective.

On the new provision to earmark 0.5 percent of gross revenue of oil and gas companies for research and development, Wabote, who was represented by the Director, Planning, Research and Statistics, Mr. Patrick Obah, stated that the board welcomed it on the condition that the money would be for the operator’s own utilisation.

However, the board welcomed the proposal by the amendment to add naira to the benchmark currency for local contracts; the requirement for companies seeking Expatriate Quota (EQ) to provide additional information and the proposal to impose administrative sanctions on defaulters of the Act.

In his remarks, Chairman of the Senate Committee on Local Content, Teslim Folarin, clarified that the bills were sponsored by the Nigerian content committees of both Houses of the National Assembly.

The senator explained that the justification for proposing a separate legislation for the other sectors of the economy was because the oil and gas industry was peculiar, and its operations and governance structure of the NOGICD should not be disrupted.