Court gives NCDMB go-ahead to collect 1% content development fund

The Federal High Court sitting in Yenagoa, Bayelsa State, has ruled that the authority of the Nigerian Content Development and Monitoring Board (NCDMB) can collect the one per cent Nigerian Content Development Fund (NCDF) levy from every contract awarded in the Nigerian oil and gas upstream transaction.

The mandate is contained in section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.

The judgment was delivered in the case instituted by a group of Nigerian drilling companies known as Incorporated Trustees of the International Association of Drilling Contractors (IADC) against the NCDMB, seeking to stop the collection of one percent NCDF levy.

IADC members had filed the lawsuit – Suit No.FHC/YNG/CS/178/2022 challenging the powers of NCDMB to demand the one per cent NCDF levy from their members and contractors.

Section 104(2) of the NOGICD Act which states: “The sum of one per cent of every 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 oil and gas industry shall be deducted at source and paid into the Fund.”

The group also obtained an ex parte injunction against the Board prohibiting the demand, collection or anything whatsoever either by itself or through its agents, representatives or privies in relation to NCDF payment or remittance from their members and contractors pending the final determination of the lawsuit.

Speaking on the contestation, the Executive Secretary of NCDMB, Kesiye Wabote, explained: “The Board vigorously contested the issues in court and effectively countered the arguments of the plaintiffs. Hence, on Tuesday May 9, 2023, the Federal High Court finally gave judgment in favour of the Board, dismissing the suit and prayers of the plaintiffs as wholly incompetent, baseless and that the suit did not disclose any reasonable cause of action. The interim injunction earlier granted ex parte on July 19, 2022 was also vacated.”

Wabote declared that the decision would strengthen the Board’s resolve and commitment to Nigerian content implementation regardless of any headwind or distraction.

A statement by the corporate communication of the Board said the NCDF is NCDMB’s only source of funding sequel to the exit of the Board from federal allocation in 2017/2018.

The NCDF is applied towards funding the implementation of Nigerian content development in the Nigerian oil and gas industry, notably projects, programmes and activities directed at increasing Nigerian content in the oil and gas industry.

One of the judicious applications of the Fund is the very successful credit scheme extended to Nigerian oil and gas businesses through the Nigerian Content Intervention Fund (NCI Fund), managed by the Bank of Industry (BoI) and the Nigerian Export-Import Bank (NEXIM-Bank).