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NCDMB, PETAN, others oppose increment of content fund to 2%

By Collins Olayinka, Abuja
21 October 2020   |   2:59 am
The Nigerian Content Development and Monitoring Board (NCDMB), Petroleum Technology Association of Nigeria (PETAN), Petroleum Contractors Trade Section (PCTS), Oil Producers Trade Section (OPTS), and the Nigeria LNG Ltd. have cautioned against increasing the percentage of the Nigerian Content Development Fund (NCDF) from the current one percent to two percent. The increase to two percent…

Executive Secretary, NCDMB, Simbi Wabote

The Nigerian Content Development and Monitoring Board (NCDMB), Petroleum Technology Association of Nigeria (PETAN), Petroleum Contractors Trade Section (PCTS), Oil Producers Trade Section (OPTS), and the Nigeria LNG Ltd. have cautioned against increasing the percentage of the Nigerian Content Development Fund (NCDF) from the current one percent to two percent.

The increase to two percent has been proposed to be incorporated into the amendment of the Nigerian Oil and Gas Industry Content Development (NOGIDC) Act.

The NCDF is deducted from the value of contracts awarded in the oil and gas industry and was pegged at one percent by the NOGICD Act of 2010.

The stakeholders made their position in separate presentations on Monday, in Abuja, at the two-day public hearing organised by the Joint Senate Committee and House of Representatives Committee on Nigerian Content Development and Monitoring.

The public hearing is focussed on three proposed legislation, namely, the Bill for an Act to amend Nigerian Oil and Gas Industry Content Development Act, Cap 2, 2010, and other matters connected thereto, others are the Bill for an Act to enact Nigerian Local Content Act for 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.

The third legislation seeks to repeal the NOGICD Act and enact the Nigerian Local Content Development and Enforcement Commission Act and establish the Nigerian Local Content Development and Enforcement Commission.

In his submission, the Executive Secretary, NCDMB, Simbi Wabote, argued 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. 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.”

Similarly, representatives of the leading oil industry organisations advised against the proposed increment, stressing that an amendment of the NOGICD Act should promote and protect local businesses, and encourage the entry of foreign capital and technology into the country to further grow the sector.

They also strongly opposed the proposed bill, which sought to repeal the Nigerian Oil and Gas Industry Content Development Act 2010 and enact the Nigerian Local Content Development and Enforcement Commission Act.

The representative of the OPTS, Joseph Ofili, posited that the group was totally against the Commission Bill because it would erode the gains of the past 10 years of Nigerian Content implementation, and return the industry to ground zero with regards to content implementation.

The PETAN Chairman, Nicolas Odinuwe, argued that it would be a grave mistake to repeal the NOGICD Act, which had been acclaimed by several stakeholders to be very successful, adding that the best strategy would be to fine-tune a few areas to make it more effective.

On the new provision to earmark 0.5 percent of the gross revenue of oil and gas companies for research and development, Wabote, who was represented by the Director Planning, Research, and Statistics, Daziba Patrick Obah, said the Board welcomes it on the condition that the money would be for the operator’s own utilization.

The Board also supported the proposal by the amendment to add Naira to the benchmark currency for local contracts, which could represent a paradigm shift from the dollar-denominated provision to a bi-currency model.

On the requirement for companies seeking expatriate quota to provide additional information, Wabote said the Board supports the review, saying: “because it increases the information to be provided by companies seeking expatriate quota approval, which will further prevent abuse of the process and round-tripping of expatriates across sectors of the economy. We have a very good interface with the Ministry of Interior; the proposed amendment will further enhance data exchange and inter-agency collaboration.”

On the proposal to impose administrative sanctions on defaulters of the Act, he said: “The Board welcomes the change because it categorizes the various violations, and stipulates sanctions that could be applied upon conviction and now empowers 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 the additional burden on the courts.”

Speaking, the Chairman, Senate Committee on Local Content, Senator Teslim Folarin, said the Bill for an Act to amend NOGICD Act and the Bill to enact Nigerian Local Content Act for the Development, Regulation, and Enforcement of Nigerian Content in all sectors of the Nigerian economy, were sponsored by the Nigerian Content Committees of both houses of the National Assembly.

He explained that the justification for proposing separate legislation for the other sectors of the economy was because the oil and gas industry is peculiar, and its operations and governance structure of the NOGICD should not be disrupted.

Also speaking, the Deputy Leader, House of Representatives, Honourable Peter Akpatason, who represented the Speaker Rt Honourable Femi Gbajabiamila, said the proposed bills have a significant impact on the national economy.