The Nigerian oil and gas industry has been a vital contributor to the country's economy for decades. However, Nigeria, like most resource-rich countries, faced the challenge of limited local participation in the oil and gas industry. This led to the creation of a legal framework for local content development to promote the inclusion of Nigerian companies and workforce in the industry.
The Nigerian Oil and Gas Industry Content Development (NOGICD) Act is a legislative framework that was established in 2010 to promote Nigerian participation in the oil and gas industry. It was enacted to create an enabling environment for Nigerian companies and personnel to participate and thrive in the industry, as well as to develop the capacity and skills of Nigerian personnel.
One key provision of the Act is that a minimum percentage of Nigerian content must be deployed in all aspects of the oil and gas industry, ranging from exploration to production, including the supply chain. Currently, the minimum is set at 70%, with a target of 100% in the long term.
The NOGICD Act provides that Nigerian companies and personnel shall receive first consideration in all oil and gas contracts in Nigeria.
The Act requires oil and gas companies to submit plans for the training and development of Nigerian personnel. It also mandates that Companies operating in the oil and gas sector must establish expatriate quotas, a process that determines the maximum number of foreign personnel that a company can employ. The quotas are put in place to encourage the employment of Nigerian personnel. This has resulted in an increased number of Nigerians occupying senior positions in the industry, thereby increasing local capacity and skills.
Furthermore, the NOGICD Act mandates the use of Nigerian goods and services in the industry. Companies operating in the oil and gas industry are required to submit their Nigerian Content Plans (NCP) for their projects, which must outline how the company intends to utilize Nigerian content in the procurement of goods and services, such as construction and engineering. By doing so, it has encouraged the growth of Nigerian companies that provide such goods and services, thereby contributing to the country's economy.
The Act also establishes the Nigerian Content Development Fund (NCDF) as a funding mechanism to support the development of Nigerian content in the oil and gas industry. Companies operating in the industry are required to contribute 1% of their annual operating expenses to the NCDF.
The NOGICD Act encourages technology transfer to Nigerian companies to enhance their competitiveness in the oil and gas industry. The Act requires companies to develop programs for transferring technology to Nigerian companies and involve local companies in research and development projects.
Practical ways in which oil and gas companies can comply with the NOGICD Act
1. Develop local capacity: One of the core objectives of the NOGICD Act is to develop local capacity in the oil and gas sector. Oil and gas companies can comply with this Act by taking measures to train and develop local talent. This can be achieved through apprenticeships, internships, and other training initiatives.
2. Use local goods and services: The NOGICD Act mandates that a certain percentage of goods and services used in the oil and gas sector must be sourced locally. Oil and gas companies can comply with this requirement by identifying and using local suppliers for their goods and services.
3. Transfer technology and expertise: Another requirement of the NOGICD Act is the transfer of technology and expertise to Nigerian citizens and companies. Oil and gas companies can achieve this by partnering with local firms, conducting technology transfers, and sharing best practices.
4. Increase local content in contracts: Oil and gas firms can comply with the NOGICD Act by including provisions in their contracts that increase local content. This can be achieved by setting targets for local participation, requiring the use of local suppliers, and developing local capacity.
5. Report compliance: Oil and gas companies should ensure that they report on their compliance with the NOGICD Act. This will help to monitor compliance and ensure that companies are meeting their obligations under the Act.
To ensure compliance with the NOGICD Act, the Nigerian Content Development and Monitoring Board (NCDMB) was established. The NCDMB is responsible for ensuring that the NOGICD Act is strictly adhered to across the oil and gas sector. It provides guidelines for the implementation of the Act and conducts audits to ensure compliance.
In conclusion, the legal framework for local content development in the Nigerian oil and gas industry has been crucial in promoting the participation of Nigerian companies and workforce in the industry. The NOGICD Act has created a level playing field for Nigerian companies, as it requires operators to give priority to local companies in the award of contracts.
With the support of the NCDMB, the NOGICD Act has been successful in developing the capacity and skills of Nigerian personnel and promoting the use of locally produced goods and services in the industry. It is expected that this legal framework will continue to promote the growth of Nigerian content in the Nigerian oil and gas industry.