– Cautions NCDMB against stifling investments
Michael Eboh
In an executive order issued in Abuja, Tinubu blamed the high-cost operating environment in Nigeria and excessive delays in project delivery schedule on the misapplication of the Nigerian content requirements for goods and services in the sector.
Tinubu said this order became necessary in light of the significant decline in investments in the Nigerian oil and gas industry, which has seen the country attracting only five per cent of total oil and gas investments in Africa, despite the fact that the country holds 38 per cent of hydrocarbon reserves in Africa.
Tinubu affirmed that the NOGICD Act has brought significant benefits to the country and immense success has been recorded in developing local content capacity in Nigeria.
He, however, stated that in series of engagements with stakeholders and regulators in the industry, it was revealed that the operating cost in the industry was very high, while delays in project delivery schedule in the country exceeded global standards.
The president noted that it had become imperative for the country to provide policy directives to tackle these challenges, with the primary objective of attracting investments into the oil and gas sector and restoring economic growth by facilitating conducive operating and investment environment.
To this end, he said: “The Nigerian Content Monitoring and Development Board in its implementation of the Nigerian Oil and Gas Industry Content Development Act, 2010 shall take into account the practical challenges of insufficient in-country capacity for certain services and act in a manner that does not hinder investments or the cost competitiveness of oil and gas projects.
“The Board shall not approve a Nigerian Content Plan (NCP) that contains intermediary entities lacking the essential capacity to perform the services. The NCDMB shall only approve an NCP that consists of contractors that meet the legal definition of Nigerian content and demonstrate genuine, substantial, and tangible capacity to independently execute projects within Nigeria.
“The approval of an NCP by the Board that contains entities acting solely as intermediaries, with no demonstrable capacity to execute the project or activity, shall be considered a violation of the local content requirements.
“The Board shall develop guidelines for assessing and verifying the capacity of companies seeking contracts for specified activities under the Act, in consultation with industry stakeholders. This Directive shall take effect immediately. The NCDMB shall work out the modalities for the implementation of this directive.”
