Oil firms fail to comply with 1% contract sum payment to NCDMB

MANY OIL AND GAS FIRMS OPERAT ING IN NIGERIA ARE FAILING TO COMPLY WITH THE LAW requiring them to pay one percent (1%) of the value of contract undertaken in the industry in-country, thereby putting a wedge on Nigeria realising the goal for which it established the local content legislation.

This action by the oil firms is inhibiting the work of the Nigerian Content Development Board (NCDB), and broadly affecting the ability of Nigerians to enjoy the maximum benefits of the oil and gas industry through the establishment of the board.

The board says it is being frustrated in this regard and it is unable to function effectively because its only source of funds for its operation is from the one percent payment that oil companies are supposed to make to it.

Information made available to Business a.m. suggests that the NCDMB, not being an agency with budget allocation, depends on the one percent to carry out its activities across the country.

In the last three years, the NCDB, which has carried out some forensic audits, found through the audits that a good number of the oil and gas companies operating in the country are defaulting in their statutory obligation to the agency.

The NCDMB found that in the last three years, the agency has been able to discover 275 non-compliances, some of which it is currently dealing with through litigation.

Akintunde Adelana, director, monitoring and evaluation, (NCDMB), who was represented at the Nigerian Content Capacity Building

Workshop for Media Stakeholders organised by NCDMB, by a general manager in his directorate, revealed that the forensic audit carried out showed that some companies have failed to honour the law in respect of the levy.

He said prior to the NOGIC Act statistics showed that the country had five percent of the Nigerian content value in the entire spend of the oil and gas industry. This shows that there was serious capital flight because expatriates were running the entire gamut of oil and gas, including the service industry.

He said the main thrust of the NOGIC ACT is to ensure Nigeria derives maximum value from the $20 billion or more, spent in the oil and gas industry.

From 2017 the agency began to implement a 10-year strategic programme whose key thrust was to retain 70 percent of the $20 billion spent in the industry, if not more. With these, about 300,000 jobs should be created within the industry and millions of other indirect jobs. There should be major fabrication yards in-country and also put in place the necessary infrastructure that would act as catalysts for other sectors of the economy.

He said the key thing about the local content development is not to Nigerianise the industry but to encourage domiciliation of facilities in-country, domestication and value-adding activities in-country, these are the focus of NCDMB.