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Since the discovery of oil in commercial quantities in Oloibiri, Rivers State by Shell
Corporation in 1957, the Nigerian oil and gas industry has grown to become a
major player in the international oil and gas market.
Today, 53 years later, Nigeria is the largest oil producer in Africa and the eleventh
largest in the world, averaging 2.5 million barrels per day, with proven reserves of
over 35 billion barrels and is currently the 5th largest exporter of crude oil to the
United States of America with oil revenue making up over 90% of Nigeria's foreign
currency receipts.
Despite this impressive profile, however, the Nigerian oil and gas sector's
contribution to national GDP has been minimal. According to energy reports in
2008, the sector accounted for less than 38% of national GDP. This has been a
direct consequence of the noticeable absence of indigenous participants in the
industry given that over 80% of the goods and services needed for projects were
being imported from foreign countries.
Furthermore, for the greater part of the last four decades, the Nigerian oil and
gas industry has been dominated by major international oil companies with large
numbers of expatriate workers being deployed to carry out projects in various
onshore and offshore locations in the country. This preponderance of expatriate
workers has resulted in a paucity of jobs, skills development, capacity building &
utilization for the indigenous workforce and in the long run, a lack of sustained
national economic development.
A major stride in this regard was the passage into law of the Nigerian Oil and Gas
Industry Content Development Bill (The Content Act) by President Jonathan on
the 22nd of April 2010.
The Content Act which takes precedence over all existing content laws and
regulations was enacted with the aim of providing for the development of
indigenous content in the Nigerian Oil and Gas Industry by ensuring that
henceforth priority would be given to indigenous services companies.
Under the Act, the utilization of Nigerian human and material resources for the
provision of goods and services to the petroleum industry within acceptable
quality, health, safety and environment standards are made obligatory in order
to stimulate the development of indigenous capabilities.
The Act creates the Nigeria Content Monitoring Board (The Board) which
is vested with the authority to make procedural guidelines for the industry,
coordinate and implement the provisions of the Law to the end of
achieving increased participation of indigenous companies in the
Nigerian oil & gas industry and ensuring continuous growth of Nigerian
content in all oil and gas arrangements, projects, operations, activities or
transactions.
§ Submission of the Nigerian Content Plan - Before bidding for any license,
permit or interest and before carrying out any project in the Nigerian oil
and gas industry, operators (in the Nigerian oil and gas industry) are
required to submit a Nigerian Content Plan to the NCMB and to
demonstrate compliance with the Nigerian content requirements of the
Act. The Plan shall set out how the operator and their contractors intend
to -
i. give first consideration to Nigerian goods and services and the
engagement of Nigerians in the Project Work Programme; and
ii. ensure the use of locally manufactured goods where these meet
industry specifications.
Once a plan submitted meets the Board's standards, the Board shall within
30 days issue a Certificate of Authorization for the Project.
§ Expatriate Quota - Under the provisions of the Act, operators are required
to submit a succession plan for every position held by an expatriate.
Expatriates can only occupy any position for a maximum of 4years during
which the expatriate occupying that position is obligated to have
procured a Nigerian understudy who will fill in the vacant position at the
end of the stipulated 4 year time period. The Act also makes an
allowance of a maximum of 5% expatriates for management positions in
respect of the operator for each of its operations and requires that the
Board must pre-approve any application for expatriate quota with the
relevant authority. Operators are also mandated to employ only Nigerians
in their junior and intermediate job cadres.
§ Penalties
Failure by operators and their contractors and sub-contractors to comply
with the provisions of the Act in their operations is an offence punishable
by a fine of 5% of the contract value for each of the projects in which the
violation occurs or the total cancellation of the project.
Conclusion
To achieve the laudable aims of the Act however, it is vital that the Government
continually collaborate with the industry stakeholders to ensure the effective
implementation and enforcement of the provisions of the Act.
Hopefully, in the no distant future, Nigeria will have joined the ranks of oil
producing countries with successful local content policy driven economies such
as Norway, Brazil and Angola.