Nigeria: Preference to local companies in new oil industry law
The Nigerian Oil and Gas Industry Content Development Bill (2010) has been signed into law by the acting president Goodluck Jonathan. The law gives preference to local companies in the oil industry in Nigeria and seeks to encourage local employment.
The new law sets comprehensive and detailed discriminatory requirements for projects in the oil and gas industry. Not only are services and equipment used for the exploration natural resources subjects to the new rules. Also, auxilliary services such as financing and insurance are affected by the new law. The following list seeks to enumerate the core aspects of the bill:
- Submission of Nigerian Content Plan. When bidding for a licence, companies have to submit a plan specifying the utilization of Nigerian goods and services in the prospective project. Also, companies will have to provide details on how they will train and develop Nigerian staff.
- Compliance with mandatory amounts of Nigerian content. In the schedule attached to the Bill, the Nigerian government enumerates Nigerian content requirements for both products and services. Companies operating in oil and gas industry will have to prove their compliance to the given rules.
- Nigerian content as an evaluation criteria in official tenders. In case further bids lie within 1 percent of the best bid, the bid withholding a significantly higher share of local content shall be awarded the contract.
- Preferential price margin for domestic bidders. Bids from Nigerian companies are granted a 10 percent price margin against the lowest foreign competitor.
- Employment and development of Nigerian staff. Nigerians shall be given first priority in employment as well as training.
- Quotas for foreign workers. Foreign personal may only account for 5 percent of the management staff for a given project.
Any Evidence-Based Deliberation:
|Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations?||Don't know|
|Is there any evidence that alternatives to the proposed measure were considered?||Don't Know|
|Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government?||Don't Know|
|Was such evidence identified?||Don't Know|
|Is such evidence publicly available?||Don't Know|
|Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives?||Don't Know|
|Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken?||Don't Know|
|Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory?||Don't Know|
|Did the government state its intention to review the measure within one year of implementation?||No|
Date Discovered: 30/04/2010
Date of inception: 22 Apr 2010
GTA Evaluation: Red
Nigerian Oil and Gas Content Development Bill 2010. Available at http://www.nape.org.ng/images/stories/Nigerian%20Content%20Development%2...
Onuah, F. 2010. 'Nigeria's acting leader signs local content oil bill.' Reuters Africa. 23 April. http://af.reuters.com/article/topNews/idAFJOE63M03V20100423?pageNumber=1...
Odujinrin & Adefulu. (2010). An Overview Of The Nigerian Oil And Gas Industry Content Development Act 2010. Available at http://www.mondaq.com/article.asp?articleid=99294