During a recent courtesy visit by the Executive Secretary of the Nigerian Content Development and Monitoring Board (the “NCDMB”) to the Minister of Justice and Attorney General of the Federation (the “AGF”), the AGF pledged that the Federal Ministry of Justice (the “FMoJ”) will partner with the NCDMB to enforce compliance with the Nigerian Oil and Gas Industry Content Development Act, 2010 (“NOGICD Act”) by prosecuting entities that fail to comply with its requirements.
The collaboration between the FMoJ and the NCDMB highlights the importance placed by the Federal Government of Nigeria (the “FGN”) on the development of Nigerian content in the Nigerian oil and gas industry (the “Industry”) - which is the key theme of the NOGICD Act. The NOGICD Act applies to all operations or transactions carried out in or connected with the Industry. Consequently, all oil and gas arrangements, agreements, contracts or memoranda of understanding relating to any operation or transaction in the Industry are required to be in conformity with the NOGICD Act.
The NOGICD Act specifies mandatory requirements that must be complied with by oil and gas operating and service entities and for projects undertaken in the Industry. One of such requirements is the need to ensure that the Nigerian content in any project to be executed in the Industry is consistent with the minimum threshold for Nigerian content specified in the schedule to the NOGICD Act.
Failure to comply with the minimum Nigerian content as specified in the NOGICD Act carries severe consequences. By the NOGICD Act, an operator, contractor or sub-contractor who carries out any project contrary to the provisions of the NOGICD Act commits an offence, and is liable upon conviction to a fine of 5% (five percent) of the project sum or cancellation of the project. We should also point out that the NCDMB may in addition blacklist the defaulting entity from participating in future projects in the Industry.
Having regard to the severe consequences which attach to non-compliance with the NOGICD Act, and the FGN’s commitment to enforce the same as evidenced by the collaboration between the FMoJ and the NCDMB, the need for entities operating in the Industry to ensure that their operations, transactions and projects are carried out in line with the requirements of the NOGICD Act cannot be overemphasized.
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