. NIGERIAN CONTENT DEVELOPMENT AND MONITORING BOARD (NCDMB) GUIDELINE ON MARINE VESSEL CATEGORISATION IMPLEMENTATION STRATEGY DATE 3 PREPARED | REVIEWED | CHECKED | RECOMMENDED BY BY: By: By R05 | April 2020 Supervisor, | Manager, | PRS/DME BD Marine s8D | /PCAD Vessel 2A Improve processes aq outcome ofthe Marine Vessel Categori i NCDMB HEADQUARTERS Glass House, Isaac Boro Expressway, Opolo, Yenagoa, Bayelsa State. I NCDMB/CBD/S8D/001/20 ilPageGUIDELINE ON MARINE VESSEL CATEGORISATION IMPLEMENTATION STRATEGY Table of Contents 1.0 Introduction, 2.0 Definitions, 3.0 Application, 4.0 Objectives of this guideline. 5.0 Responsibilities 5.0 The Marine Vessel Categorisation processes... 6.1 Marine Vessel Categorization Matrix. 6.11 Matrix A : Vessel Categorisation Matrix. 6.1.2 Matrix 8: Mandatory Documentation 7.0 Implementation Framework 8.0 Consequences of Non-Compliance 2|Page1.0 Introduction The Nigerian Oil and Gas Industry Content Development Act (2010) mandates the Nigerian Content Development and Monitoring Board, (NCDMB) to: i) Assist local contractors and Nigerian companies to develop their Capabilities and capacities to further the attainment of the goal of developing Nigerian Content in the Oil and Gas industry. cl. 70(h) il) Make procedures to guide the implementation of the Act and ensure compliance with all provisions of the Act, cl. 70(i) il) Monitor and coordinate the Nigerian Content performance of all Operations in accordance with the provisions of this Act cl. 70() 1.1 Section 105 of the NOGICD Act, 2010 empowers the Board to enforce compliance with relevant sections of the Coastal and Inland Shipping (CABOTAGE) Act in relation to matters pertaining to Nigerian Content Development in the Nigerian Oil and Gas Industry in collaboration with NIMASA. The Coastal and inland Shipping (CABOTAGE) Act, was Passed into law in 2003 to ‘Restrict trade along Nigeria's coastal waters to indigenous Operators. Under the Act, Foreigners are only to participate in coastal shipping when there is no Nigerian who has capacity for such jobs. The CABOTAGE Act is similar to the Jones Act (1938) which Fequires all goods shipped between US. ports to be transported by US. vessels (and operated primarily by Americans). it calls for providing the nation with a merchant marine that can transport goods between US. ports, increase national security during war times, and support the U.S. maritime industry. 12 In the discharge of its statutory mandate and consistent with the CABOTAGE Act of 2003, the Board in 2012, initiated the Marine Vessels Scheme (MVS), with the ultimate objective of increasing Marine Vessels Ownership by indigenous companies operating in the Nigerian Oil and Gas Industry from less than 8% (Pre-NOGICD Act) to 60% (Post-NOGICD Adi). 1.3 A key component of the MVS is the categorization of Marine Vessels and Vendors based on their level of investments in the acquisition/ownership of vessel(s) particularly vessels built in-country, amongst others. This is intended 3|Pageto give first consideration to Nigerian built and/or owned Vessels for contract award/job offers in the Nigerian Oil and Gas Industry in line with the provisions of the NOGICD Act, 2010. 14 After ten years of implementation of the NOGICD Act and practice of vessel registration, major challenges have been identified, which this process improvement is intended to address, These include: i) ii) iii) i) vy) vi) vil) viii) ix) xi) Lack of clarity in the required documentation and the processes for vessel categorisation Delayed publication report, and inadvertently slows down deployment of vessels in the industry Sharp practices by vendors who collude with foreign vessel owners 0 bring in foreign owned vessels into the country, leading to a sharp rise in capital fight and a predominantly low level of Nigerian Content in the Maritime category Failure of vessel owners to carry out the statutory inspection and maintenance/ classification of vessels, as at when due Failure of vessel owners to pay the statutory fees to government, including Customs Duties. Falsiication of supporting Marine Vessel(s) ownership documents by vendors Duplication of Vessel(s) on the MVC Reports under different vendors as @ result of leasing from the owner of the vessel Inability of the Scheme to track and ascertain the location of Vessels Categorized by the Board to ensure that Vessels under the Scheme are within the shores of Nigeria The scheme does not certify integrity of Vessels and fitness for use in line with global best practices. The current Scheme does not include physical verification/inspection of Vessels. This creates the tendency of categorizing non-existent Vessels, as evaluation is based on desktop verification of documents uploaded by vendors on the NOGIC-JQS Portal. There is need for more alignment with the approval processes of NIMASA which is a mandatory input to the vessel categorisation process. 4[Page1.5 Proposed Changes and Improvements to the Marine Vessel Categorisation Scheme Tis Quideline introduces a few changes that will greatly improve the marine vessel categorisation. Some of these improvements and immediate measures include: || Introduction of the Nigerian Content Marine Vessel Certificate (NCMVQ) which will replace the current categorisation report. The certificate will be issued to vessels. 2 Cancellation of existing categorisation of vessels operating in the Nigerian oil and Gas industry by 30 September 2020. 3. Mandatory presentation of NCMVC effective 1 October 2020, forall vessels and Companies wanting to participate in contracts in the Nigerian Oil and Gas Industry. 4. Introduction of a validity period for vessel categorisation, which is the lower of i. Five years, or il, The remainder of the validity period of the class certificate issued by International Association of Class Societies (IACS), 5. Only vessels with NCMVC shall be allowed to provide services in the Nigerian Oil and Gas industry. 1.6 Benefits of the Changes and Improvements to the Marine Vessel Categorisation Scheme The following are the benefits of the new Marine Vessel categorisation process. 1 Improved transparency in the implementation of the Marine Vessel Categorisation scheme ii Improved speed and tracking in the application processes- Application is Processed online and within 2 working days after vessel inspection. ii. Improved integrity of vessels, as vessels now require presenting requisite ‘maintenance certificates issued by relevant certifying authorities, such as 3) IACS (forall vessels weighing above SOOGT (Vessels working offshore in the oil and Gas industry, over 100 Nautical Miles offshore). b)_NIMASA (for vessels weighing between 150GT and 500GT; (Vessels working offshore in the oil and Gas industry, below 100 Nautical Miles offshore), ©) NIWA for vessels weighing less than 150GT; (Vessels working in the inland water ways), Vessels without the requisite maintenance certificates as listed above will not be issued with the NCMVC. 'v. The new scheme will also consider the development of Vessels Tracking Application/Device, which will ensure flexibility of delisting of Vessels that are SIPage Yes | Yes Yes |¥as__|Ver Yes | Ver Yes E Yes Yes Yes [Ves | Yes Yes | Yes Yes Documents listed in Matrix B and marked yes in the matrix are mandatory. They are Considered as fatal flaws and when not submitted by applicants and will result in refusal of NCMVC. Vessels in category A must be given the ‘ight of first refusal then Category B, before category C. in the absence of suitable vessels in categories A-C, the Operator shall apply to the Board for Permission to use vessels in category D. Once permitted, such vessels can be used only for a maximum. Period of two years with no period extension. Vessels categorized in E are not permitted to deliver services in the Nigerian Oil and Gas industry. 7.0 Implementation Framework The implementation and enforcement ofthis Guideline shall be the sole responsibility Of the Board in line with the provisions of the NOGICD Act of 2010. The following Information shall be strictly adhered to in ensuring effective implementation and enforcement of this Guideline: | The Guideline shall take effect from the date of approval by the Board. 'k The Guideline shall be reviewed by the Board every four (4) years or as the need arises, without prior notification li, Capacity Building Division (CBD) of the Board shall be responsible for the full implementation of this Guideline, iv. The operator shal exercise the responsibilty to carry out prel liminary checks of every vessel integrity and assure that the vessel is suitable for its operations, and ensure that NCMVC is presented by vessel company before engagement Of vessel into any operation in the Nigerian Oil and Gas Industry. 11] Pagev vi vil 8.0 Consequences of Non-Compliance Operators/project promoters, contractors, alliance Partners, service providers, vessel vi. vil vil Promoter. Refusal of the Board to participate in the Operator's Tenders or issuance of Nigerian Content Compliance Certificate (Neco, Refusal/withdrewal of privileges, support and/or @pprovals required from the Disqualifiction/denial from participation at Tenders and in the award of contracts in the Nigerian Oil and Gas Industry. Blackiisting and denial of NCMUC for al vessels in the fleet of the company and Cancellation of all active NCMVC issued by the Board, Initiation of penal sanctions as provided in section 68 of the NOGICD Act of Any other penalties including imposition of Capacity Development Initiative (CDI) as may be determined and deemed fit by the Board in line with the Provisions and aspirations of the NOGICD Act of 2010, I2|Page