It has been 10 years since the enactment of the Nigerian Oil and Gas Industry Content Development Act, 2010 (the “NOGICD Act”), which was signed into law on 22nd April, 2010.
To mark the 10 years anniversary of the NOGICD Act and the establishment of the Nigerian Content Development and Monitoring Board (“NCDMB” – the local content regulator), the NCDMB published the achievements which have been recorded in the Nigerian oil and gas industry (the “Industry”) in its 10 years existence.
These laudable achievements include the establishment of a floating, production, storage and offloading integration facility (with capacity to fabricate 60,000 metric tonnage of steel), establishment of two pipe mills of international standards, development of in-country pipe coating capacity, in-country manufacturing of all electrical cables required for marine and onshore oil and gas operations, significant development of local supply chain, establishment of oil and gas parks scheme, establishment of a US$200 million Nigerian Content Intervention Fund, launch of US$50 million research and development intervention fund, increase in oil and gas asset ownership by Nigerians, and human capacity development initiatives.
As noted in the NOGICD Act, the NCDMB is required to, inter alia, supervise, coordinate, administer, monitor and manage the development of the quantum of composite value added to or created in the Nigerian economy through the development of capacity and capabilities by the deliberate utilization of Nigerian human, material resources and services in the Industry. Given the NCDMB’s achievements, some of which are highlighted above, it can safely be said that the NCDMB has made appreciative progress in the actualization of its mandate.
With the outbreak of the COVID-19 pandemic and the protectionist and curtailment policies introduced by different countries to protect their citizens and economies, the need to further enhance Nigerian content development (not just in the Industry but other sectors of the economy) for the overall development of the Nigerian economy is now critical.
With respect to the Industry, the National Assembly has sought to achieve this through the proposed amendment of the NOGICD Act to consolidate the gains of the NOGICD Act, 10 years after its enactment. There are currently 2 Bills pending at the National Assembly for the amendment of the NOGICD Act.
The first Bill is Senate Bill 417: Nigerian Oil and Gas Industry Content Development (Amendment) Bill, 2020 which was first read on the floor of the Senate on 12th May, 2020 and subsequently read for a second time on 19th May, 2020. The Senate Bill has now been referred to the Senate Committee on Local Content for further legislative work in line with the legislative process of law making.
The second Bill introduced at the National Assembly for the amendment of the NOGICD Act is the House of Representatives Bill 838: Nigerian Oil and Gas Industry Content Development Act (Amendment) Bill, 2020. Similar to the Senate version, the House of Representatives Bill has also undergone the first and second reading on the floor of the House of Representatives on 12th May, 2020 and 19th May, 2020 respectively. It has now also been referred to the House Committee on Nigerian Content Development and Monitoring.
We should note that as part of the legislative process, the Senate and House Bills, if passed, will be consolidated and harmonized before the harmonized version is forwarded to the President for his assent.
While copies of these Bills are not publicly available at this time, we understand from available reports that some highlights of the proposed amendments to be noted are as follows:
a. Contribution to the Nigerian Content Development (“NCD”) Fund: Section 104 of the NOGICD Act currently requires that the sum of 1% 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 Industry be deducted at source and paid into the NCD Fund. The NCD Fund is employed for projects, programmes and activities directed at increasing Nigeria content in the Industry. The proposed amendment seeks to increase this contribution from the current rate of 1% to 2%.
b. Expanding the Scope of the NCD Fund: Currently, contributions to the NCD Fund as noted above are limited to any project, operation, activity or transaction in the upstream sector of the Industry. There is a proposal to deepen the pool of contributors by expanding the NCD Fund to include midstream and downstream operations.
c. Expatriate Employment: There is a proposal to amend Section 33 of the NOGICD Act, which provides that NCDMB’s prior approval is required before the processing of expatriate employment. It appears that the proposed amendments are aimed at streamlining and strengthening the process for obtaining expatriate quota to close the gap for current leakages.
Regarding expatriate employment in the Industry, the NCDMB, the Ministry of Interior and the Department of Petroleum Resources recently issued a joint press release noting the unlawful use of “Nigerian Professionals Only” manpower supply permits for the deployment of expatriates in the Industry and reinforcing the need for compliance with the statutory requirements for deployment of expatriate staff in the Industry.
d. Enhancement of Research and Development: There is a proposal to mandate operators to set aside 0.5% of their gross revenue from their operations in Nigeria for research and development activities to be conducted in Nigeria. Interestingly, the NCDMB recently unveiled BrentPlus – an initiative geared towards stimulating innovations in the Industry and connected sectors of the economy.
As recently noted by the Governor of the Central Bank of Nigeria, Nigeria must look inward as a nation in order to keep its ecosystems functioning sustainably and efficiently and millions of Nigerians employed in meaningful and well-paying jobs – deepening of Nigerian content in all sectors of the Nigerian economy is therefore paramount.
We will continue to monitor the progress of the Bills for the amendment of the NOGICD Act and provide further updates.
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 Letter from the CBN Governor titled; “Turning the COVID-19 tragedy into an opportunity for a new Nigeria”.