Indigenous firms kick against alleged exclusion from oil contracts

Indigenous services firms in the oil and gas sector have raised concerns about multinationals abusing local content policy, especially as it relates to the award of contracts to Nigerian companies.

According to them, the goal to increase the average local content value in the Nigeria oil and gas industry from about 30 per cent presently to 70 per cent in 2027, would be undermined if the policy is not strictly adhered to by oil firms.

The services firms particularly cited the recent tender by Shell Petroleum Development Company of Nigeria Limited (SPDC) on the ‘corporate call-off contract for supply of bare line pipes and bends at SPDC locations’, noting that the Nigerian content requirements favoured certain vendors.

They noted that the clauses in the tender undermined the broad objectives and drivers of local content policies which include, developing upstream supply chains dominated by indigenous companies, local workforce development, technology transfer to indigenous companies, stimulating local research and development, and value addition to the downstream sector of the extractive industry.

Some of the operators who do not want to be mentioned told The Guardian that the Nigerian Oil and Gas Industry Content Development Act (NOGICDA) embodies legal requirements that compel buying firms in the oil and gas industry to patronize Nigerian products and services with the objective of promoting local participation, technology transfer, and sustainable macro-economic growth.

“The thrusts of the NOGICDA are to increase indigenous firms’ participation, promote the employment of Nigerians in the industry in the oil and gas business, and boost economic activities in Nigeria through the regulation of minimum activities that must be carried out by local companies and minimum threshold goods and services to be sourced in Nigeria”, they added.

The NOGICDA prescribes that any operator, contractor, or subcontractor that contravenes the provisions of the Nigerian content law commits an offence and will upon conviction be liable to a fine of five per cent of the project sum, or cancellation of the project.

In its reaction, SPDC debunked the claims, stating that the advert in question does not exclude Nigerian companies. According to SPDC’s spokesperson, Bamidele Odugbesan, the advert is targeted at Nigerian companies with demonstrable ownership of equipment, Nigerian personnel and capacity to execute such work on land and swamps as required under Section 3(2) of the NOGICD Act 2010.

Commenting on the clause in the advert, Odugbesan said: “In reference to one of the bullet points under section 5.0 of the advert in issue, please note that there are six bullet points under the said section 5.0 all relating to qualifications to tender.

“The first bullet under Section 5.0 of the Advert (NIGERIAN CONTENT REQUIREMENTS) states: “Tenderer shall demonstrate that entity is a Nigerian-registered company. Submit certified true copies of CAC forms 10, 02 & 07 (or its equivalent; CAC 2.3, 2.4, 2.5, etc)” which supports the fact that the advert is target at Nigerian companies and that only Nigerian companies will be considered.

“Section 6.0 of the advert also states that tenderers who have Category A NCEC issued by NCDMB for this service and are registered with JQS in the Pipes and Tubes category before the advert closing date shall be invited to submit Technical and Commercial Bids. This requires no JV agreement or MOU with holders of Category A NCEC for this service. This suggests that the advert is open to all companies who meet the specified requirements”.

He noted that the advert was in compliance with the extant provisions of the NOGICD Act 2010 by adhering to the NCDMB guidelines on NCEC and obtaining NCDMB’s approval before publication.