Oil And Gas Stakeholders Oppose Content Fund Increase To 2%

The Nigerian Content Development and Monitoring Board as well as stakeholders in the oil and gas industry, have opposed the proposed increment in the percentage of the Nigerian Content Development Fund from one per cent to two per cent, as contained in the amendment of the Nigerian Oil and Gas Industry Content Development Act.

NCDF which is an amount deducted from value of contracts awarded in the oil and gas industry had been pegged at one per cent by the NOGICD Act of 2010.

The fund is used to develop critical capacities in the oil and gas industry as well as provide accessible and low-cost financing to oil and gas firms.

The Executive Secretary NCDMB, Wabote Simbi in a statement on Tuesday said that the one per cent 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.

He said, “With prudent management of the NCDF and the full cooperation of the operating companies, we believe Local Content shall continue to operate efficiently and grow.

“This means a paradigm shift from the dollar-denominated provision to a bi-currency model.”

The Executive Secretary NCDMB was represented by the Director Planning, Research and Statistics, Daziba Patrick Obah at the public hearing.

The hearing is focussed on three proposed legislations, which includes; the Bill for an Act to amend Nigerian Oil and Gas Industry Content Development Act, Cap 2, 2010 and other maters connected thereto and the Bill for an Act to enact Nigeria Local Content Act or the development, regulation and enforcement of Nigerian Content in all sectors of the Nigerian economy except Oil and Gas Industry Sector and for related matters.

On the requirement for Companies Seeking Expatriate Quota to Provide Additional Information, Wabote said the Board supports the review because it increases the information to be provided by companies seeking Expatriate Quota approval.

He said this would further prevent abuse of the process and round-tripping of expatriates across sectors of the economy.

Speaking further, Wabote explained that the proposal to impose administrative sanctions on defaulters would empower the Board to mete out administrative sanctions against erring companies on certain categories of infractions without first securing a conviction in court.

“We believe this will further enhance the regulatory functions of the Board and reduce additional burden on the courts,” he added.

The Chairman, Petroleum Technology association of Nigeria, Nicolas Odinuwe in his remarks 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.

In his remarks, Chairman of the Senate Committee on Local Content, Senator Teslim Folarin 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.