Nigeria content Act misses 4 reviews as experts, operators seek clarity
Nigerian Oil and Gas Industry Content Development Act has missed its recommended bi-annual review four times the first of which was due in 2012 and experts say there is urgent need to re-align provisions of the law with current realities.
At a roundtable recently organised by Ernst & Young, a global leader in assurance, tax, transactions and advisory services to address the situation, Tunde Adelana, director Monitoring and Evaluation at the Nigerian Content Development and Monitoring Board (NCDMB) said there is provision for the NOGICD Act to be reviewed bi-annually but this has not happened since it came into force on April 22, 2010. “The Act is subject to bi-annual review and our role as a board is to make it easy for people to comply.” Adelana said.
According the a 10year Transforma
tion Roadmap developed by the NCDMB (2017 – 2027), the Board seeks to be a catalyst for industrialisation of the Nigerian oil and gas industry and its linkage sectors through technical capacity development, compliance and enforcement, enabling business environment, organisational capability and sectorial and regional market linkage.
Twenty-eighteen local content level was 30 percent. The Board targets 70 percent by 2027.
The philosophy of Nigerian content was borne out of necessity. This arose because of the fact that there were some gaps. “These were gaps in terms of skills, capacity and infrastructure in the industry. Gaps with regards to what we can do in-country against what was obtainable in the industry”, Adelana said. “You cannot effectively enforce compliance when these gaps still exist. The focus is more on development now.”
Interpretation of some sections the law has posed challenges. Adelana claims that some people tend to interpret the Nigerian content law in ways that suit them. They want to continuously look out for loopholes or gaps in the law to take advantage of. Yet there are templates that provide guidelines, procedures and processes meant to help industry players comply.
But companies and operators who play in the oil and gas sector are seeking more clarity in the definition of some terms and sections of the Act. Particularly in the light of the fact that the Act was “enacted before government started talking about ease of doing business” Linus Okeke, partner and leader, Forensic and Integrity Services at Ernst & Young, Nigeria said.
Non-review of the law has generated some level of confusion. A company that provides aviation services to offshore oil rigs has found itself in a situation where the implementation of provisions of sector 104; sub-section 2 is making it pay more for aviation fuel and less competitive. The sub-section of 104 states: (2) The sum of one per cent of contract awarded to any operator, contractor, subcontractor, alliance partner or any other entity involved in any project, operation, activity or transaction in the upstream sector of the Nigeria.
“When you have a law and there is no review of the law sometimes it leads to issues. For example, since April 22, 2010 there have been major changes and we expect the law should reflect this” Temitope Samagbeyi, partner Tax Services at Ernst & Young said. “We will have more dialogue with the regulator which we hope will get to the legislators for amendments. With regular updates, the document passes the test of time.”
In the nine years that the Nigerian content law has existed, the NCDMB have attained some milestones. “A clear example is that we have been able to integrate a 250, 000 barrels per day floating production storage offloading (FPSO) in-country”, Adelana said. “Today we have six globally competitive pipe-coating plants. We have two standard pipe mills in-country. These are clear indications of development.”