AN OVERVIEW OF THE NIGERIAN LOCAL CONTENT ACT

Nigerian Oil & Gas Industry Content Development Act (“Local Content Act” or “Act”) applies to all operations in the Nigerian oil and gas industry including Exploration and Production / Service Companies.

NIGERIAN CONTENT IN BID EVALUATION

Where bids are within 1% of each other at commercial stage, bid containing the highest level of Nigerian content shall be selected provided the Nigerian content in the selected bid is at least 5% higher than its closest competitor.

The award of contract shall not be solely based on the principle of the lowest bidder where a Nigerian indigenous company has capacity to execute, the company shall not be disqualified on the basis that it is not lowest financial bidder, provided the value does not exceed the lowest bid by 10% (Section 16).

ABOUR AND EMPLOYMENT

Nigerians are given first consideration for employment and training in any project by any operator or project promoter in the industry.

Section 35 requires all operators and companies to employ only Nigerians in their junior and intermediate cadre.

Each operator required to submit a succession plan covering any position not held by Nigerians with provision for Nigerians to understudy each incumbent expatriate for a maximum period of 4 years after which the position shall become Nigerianised
(except retention of a maximum of 5% of management positions to take care of the interests of investors).

PROHIBITION OF IMPORTATION OF WELDED PRODUCTS

All operators, project promoters, contractors and any other entity engaged in the Nigerian oil and gas industry shall carry out all fabrication and welding activities in – country (Section 53).

Above is subject to where it can be shown to the Minister of Petroleum Resources there is no capacity for in-country fabrication. In this circumstance, the Minister may approve importation of welded products for a period not exceeding 3 years as stated in Section 11 of the Act.

NIGERIAN CONTENT MONITORING BOARD

The Act establishes the Nigerian Content Monitoring Board (“the Board”) which is the regulatory agency vested with the responsibility of regulating Local Content.

The Board shall implement the provisions of the Bill with a view to ensuring a measurable and continuous growth in Nigeria content in all and gas arrangements, projects, operations, activities or transactions in the Nigerian oil and gas industry.

NIGERIAN CONTENT MONITORING BOARD (II)

Some of the functions of the Board include:

Approval of Nigerian Content Plan.
Issuance of Certificate of Authorization.
Setting minimum Nigerian content level for project or project items which were not included in the Schedule A to the Act

To read the entire Act, please see here: Nigerian Content Act

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