Two Percent Is Too High for Operators to Pay Now, NCDMB Pleads

The Nigerian Content Development and Monitoring Board (NCDMB) and key organisations in the country’s oil and gas industry – the Petroleum Technology Association of Nigeria (PETAN), Petroleum Contractors Trade Section (PCTS), Oil Producers Trade Section (OPTS) and the Nigeria LNG Ltd have advised against increasing the percentage of the Nigerian Content Development Fund (NCDF) from the current 1% to 2% as proposed in 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 1%  by the NOGICD Act of 2010.

The organisations canvassed this position in separate presentations they made last 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 NCDMB argued that the 1% 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.”

The public hearing is focused on three proposed legislations, namely the Bill for an Act to amend Nigerian Oil and Gas Industry Content Development Act, Cap 2, 2010 and other maters connected thereto and  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 Nigerian Local Content Development and Enforcement Commission Act and establish the Nigerian Local Content Development and Enforcement Commission.

The NCDMB also responded to the proposed new provision to earmark 0.5%  of gross revenue of oil and gas companies for research and development, saying that 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 “This means a paradigm shift from the dollar-denominated provision to a bi-currency model,” the Executive Secretary explained.

 

 



3 comments

  1. Edward says:

    Nice of NCDMB to understand this is clearly contrary to the same governments claim to try and LOWER opex – this would just be another part of Opex.

    But what about NCDMB auditted financial results? Through 2019 they have received US$1 Billion (yes Billion with a B) from the operators – and what have they done with it? They setup the Bank of Industry $200 million loan fund, and invested equity (higher risk then debt) in various investments, but what about the balance? Why no financial reporting or strong governance in the organisation?

  2. Accountability through audit and corporate governance is still missing in NCDMB. The NCDMB seems to be veering away from the original concept of setting it up. The body is designed to help develop local content in the oil and gas industry. In order to do this it should be seen to be identifying key areas where local inputs can be developed fully to replace imports. It would then support support players in these sectors to set up the necessary infrastructure that will enhance quick attainment of sustainability. This would be through support in sourcing technology transfers, guarantees, tax holidays, single digit loans with moratorium, protection against local disturbances or brigandage and management support where necessary.
    The NCDMB we see now is like a regulator seeking more to shut off local companies rather than encouraging them, organizing expensive conferences that can only be afforded by multinationals, offering loans through the banks with non encouraging interests and being subjective in the manner it operates.
    It is hard to see any of the achievements of the NCDMB so far. Asking for 2% from 1% is just another way of making things more difficult. This is in addition to the research cluster concept which has no proper basis but requires mandatory contributions. The NCDMB has not given any indication that these contributions should be part of tax rebates as found in other business cultures.
    Money is not the problem of NCDMB at this time but a proper focus on what it is set up to do.

  3. Abubakar says:

    Nice to be associated with your company recall we Granite tiled your 17 Storey building at Yenagoa Bayelsa State. Hopefully to be contacted when next u need such Project.

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