OVERVIEW OF THE NIGERIAN OVERVIEW OF THE NIGERIAN CONTENT ACT: KEY CONTENT ACT: KEY OBJECTIVES AND OBJECTIVES AND

COMPLIANCE TOOLSCOMPLIANCE TOOLS

Kolade T. Olawuni Associate

Babalakin & CoLegal Practitioners

www.babalakinandco.com

INTRODUCTION

2

•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.

•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.

CREATION OF THE NIGERIAN CONTENT DEVELOPMENT AND MONITORING BOARD

KEY TASKS OF THE BOARD

Issue certificate of authorization Conduct public review of operator’s 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.

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.

OPERATOR COMPLIANCE PROCESS

• 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 servicesb. Details of locally manufactured goods to be utilized by the

operatorc. Employment and Training Pland. 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 to submit sufficient information to the board.

Submission of a local content plan-

•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.

Establishment of project office in catchment areas-

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.

Employment and Training of Nigerians-

•Operators to have 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.

Technology Transfer-

•Operators 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.

Insurance-

• 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

Legal services-

•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