Misapplication of Local Content Regulations Frustrating Oil Industry Businesses
President Bola Tinubu has instructed the Nigerian Content Development Monitoring Board (NCDMB) to ensure that while implementing the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, it should not deter companies from investing in Nigeria or impede the cost competitiveness of oil and gas projects.
In an executive order issued in Abuja, Tinubu attributed the high-cost operating environment in Nigeria and significant project delivery delays to the improper application of Nigerian content requirements for goods and services in the sector.
Tinubu emphasized the necessity of this order due to the substantial decline in investments in Nigeria’s oil and gas industry. Despite holding 38% of Africa’s hydrocarbon reserves, the country has only attracted 5% of total oil and gas investments in the continent.
While acknowledging the benefits of the NOGICD Act in developing local content capacity, Tinubu highlighted concerns raised during engagements with industry stakeholders and regulators. These concerns include excessively high operating costs and project delivery delays surpassing global standards.
The president underscored the urgency of providing policy directives to address these challenges, with the primary goal of attracting investments and revitalizing economic growth in the oil and gas sector by fostering a conducive operating and investment environment.
In line with this directive, Tinubu stated, “The Nigerian Content Monitoring and Development Board, in implementing the Nigerian Oil and Gas Industry Content Development Act, 2010, must consider the practical challenges of insufficient in-country capacity for certain services and act in a manner that promotes investments and maintains cost competitiveness in oil and gas projects.”
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Furthermore, he emphasized that the NCDMB should only approve Nigerian Content Plans (NCP) that involve contractors meeting the legal definition of Nigerian content and demonstrating genuine capacity to execute projects independently within Nigeria.
The directive also includes the development of guidelines by the Board to assess and verify the capacity of companies seeking contracts for specified activities under the Act, in consultation with industry stakeholders. These measures are to be implemented immediately, with the NCDMB tasked with outlining the modalities for their execution.
