You are on page 1of 16

OVERVIEW OF THE NIGERIAN

CONTENT ACT: KEY


OBJECTIVES AND
COMPLIANCE TOOLS
Kolade T. Olawuni
Associate
Babalakin & Co
Legal Practitioners
www.babalakinandco.com

INTRODUCTION
Nigerian Content law was passed to regulate and
coordinate Local content in all Oil and Gas operations
in Nigeria.
Presentation

analyses

the

law

extensively

and

considers the duties of both the Board and Operators


towards a successful implementation of the law.

CREATION

OF THE NIGERIAN CONTENT


DEVELOPMENT AND MONITORING BOARD

The law establishes the Nigerian Content Development and


Monitoring Board.
Major responsibility is to guide, monitor, coordinate and
implement the provisions of the law.
The board to implement the law in order to Achieve
measurable and continuous growth of Nigerian Content in
all oil and gas operations.

KEY

TASKS OF THE BOARD

Issue certificate of authorization


Conduct public review of operators content plan
Set minimum content level for projects where same is not listed in the
schedule.
Review bids, contract and subcontracts
Ensure that operators adhere to recruiting and training of Nigerians.
Ensure the establishment of catchment area offices.
Enforce the indigenous policy of the law.
Approve expatriate quotas.
Establish and coordinate the oil and gas e-market place.
Establish a joint qualification system together with stakeholders.
Effectively monitor the implementation of the Law.

OPERATOR

COMPLIANCE PROCESS

Compliance and the promotion of local content are major conditions


for the award of licences and permits.
All arrangements, agreements, Contracts or memorandum of
understanding entered into in any Operation to conform with the law
as follows:

First consideration to be given to Nigerians


Nigerian independent operators to be given 1st consideration in all
projects for which Contracts are to be awarded.
Exclusive consideration to Nigerian indigenous service companies
which demonstrate ownership of equipment and Nigerian personnel.

Submission

of a local content plan-

Operators to submit to the board a local content plan

Content Plan to demonstrate compliance with local content


requirements set out by the law.
Content of the plan:
a. Details of first consideration given to Nigerian goods and services
b. Details of locally manufactured goods to be utilized by the
operator
c. Employment and Training Plan
d. Research and Development Plan

Projects above 1million USD


Operator to provide to the board for approval all advertisements,
prequalification, technical bid documents etc.
Operators have a duty
board.

to submit sufficient information to the

Establishment

of project office in
catchment areas-

Operators to establish project office in the catchment


area where project is to be sited
Project

office

to

have

personnel

that

can

make

decisions.
Operators to maintain an office in a community where it
has significant operations
Operators may be required to have personnel that are
indigenous to the area of operation.

Employment

and Training of Nigerians-

Nigerians to be given first consideration for employment and training.


Nigerians not employed for lack of training, are to be provided with
training in Nigeria or elsewhere.
Only Nigerians are to be employed in all junior and intermediate
cadres.
All projects in excess of 100Million USD to have a labour clause
requiring the usage of a minimum percentage of Nigerian labour.

Expatriate Quota-

Operators to retain only 5% of management position.


Applications for expatriate quotas to be made to the board and approval
received before any other made to any other government agency.

Technology

Operators

to

Transferhave

technology

transfer

programmes.
Technology transfer plan to be submitted to the
board.
Plan to show technology transfer initiative of the
operator.
Operators may be mandated to set up factories
or production units.

InsuranceOperators to insure all insurable risks with a Nigerian insurance


company through a Nigerian insurance broker.
Operators not to place any risk offshore without the written
approval of the National Insurance Commission.
Operators to submit a comprehensive Insurance Report to the
board.

Legal

services-

Only Nigerian Legal practitioners whose offices are located in


any area of Nigeria to be engaged.
Operators to submit a Legal Services Plan to the board every
six months.

Financial services

Only services of Nigerian Financial Institutions to be utilized except


where to the satisfaction of the board it is Impracticable.

Operators to submit to the board a financial services plan.

Fabrication and welding

All fabrication and welding to be carried out in-country

BIDDING PROCESS
Operators to consider Nigerian content in the evaluation of bids.
Bids within 1% of each other at commercial stage and bids
containing the highest level of Nigerian content to be selected
Nigerian Content in the selected bid must be at least 5% higher
than its closest competitor.
Bidding for goods and services to give full and fair opportunity to
Nigerian indigenous contractors ad companies.
A Nigerian company not be disqualified on the basis of not being
the lowest financial bidder, provided the bid does not exceed the
lowest financial bid by 10%

ESSENTIAL

TIMELINES

Public review of an content plan, the review to be concluded with the


issuance or denial within 30 days from the date of commencement of the
review.
Operators to submit to the board 30 days before the 1st day of each
quarter a list of all contracts exceeding $1millon to be bided and executed
in the coming quarter.
The board to inform the operator by the 1st day of each quarter
contracts designated for review and the outcome of the review.
Operators to submit to the board within 30 days at the end of each
quarter a list of all contracts exceeding $1million awarded in the previous
quarter.
Submission of annual Nigerian content performance report within 60days.
The following to be submitted every six months:

Employment and Training Plan


Research and Development Plan
Insurance programme
Legal services plan
Financial services plan

PENALTY FOR NON COMPLIANCE


Operator who carries out any project
contrary to the law commits an offence
and is liable upon conviction to a fine of
5% of the project sum or cancellation of
the project.

CONCLUSION

The law on Nigerian content seeks to regulate the quantity of


value added or created in the Nigerian economy, this it does
though the utilisation of Nigerian human and material resources
for the provision of goods and services in the oil and gas sector.

This presentation has demonstrated the steps to be taken by both


the operators and the Board toward achieving the targets set by
the law.

THANK

YOU