ANNOUNCEMENT 22 Apr 2010

In April 2010, the government of Nigeria announced a change in the required local inputs to serve domestic customers.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE



Aderemi Ogunbanjo of Odujinrin & Adefulu lawyers, 2010, 'An overview of the Nigerian oil and gas industry content development act 2010': http://de.scribd.com/doc/30564109/An-Overview-of-the-Nigerian-Content-Development-Act-2010

UNCTAD, World Investment Report 2010, p. 80: http://unctad.org/en/Docs/wir2010_en.pdf

Business News, 30 July 2014, "FG unveils $500m projects for local content development in oil and gas": http://businessnews.com.ng/2014/07/30/fg-unveils-500m-projects-local-content-development-oil-gas/

Nigerian oil and gas industry content development act, 2010: http://www.placng.org/new/laws/NIGERIAN%20OIL%20AND%20GAS%20INDUSTRY%20CONTENT%20DEVELOPMENT%20ACT,%202010.pdf

KPMG, 'Nigerian oil and gas industry content development act, 2010': https://www.kpmg.com/NG/en/IssuesAndInsights/ArticlesPublications/Documents/Newsletter%20on%20Nigerian%20Oil%20and%20Gas%20Industry%20Content%20Development%20Act%20-%20June%202010.pdf


Inception date: 22 Apr 2010 | Removal date: open ended
Still in force

Local sourcing

On 22 April 2010, Nigeria adopted an act which provides for the development of Nigerian content in the Nigerian oil and gas industry: The Nigerian Oil & Gas Industry Content Development Act 2010, also known as the 'Local Content Act' or the 'Act'.
 
The new law seeks to increase indigenous participation in the oil and gas industry by prescribing minimum thresholds for the use of local services and materials and to promote the employment of Nigerian staff in the industry.
 
The Local Content Act derives from the Nigerian Content Policy which seeks to promote active participation of Nigerians in the petroleum sector without compromising standards. The policy also focuses on the promotion of value addition in Nigeria through the utilization of local raw materials, products, and services in order to stimulate growth of indigenous capacity.
 
All regulatory authorities, operators, contractors, subcontractors, alliance partners and other entities involved in any project, operation, activity or transaction in the Nigerian oil and gas industry are required to consider Nigerian content as an important element of their projects. Nigerian independent operators shall be given priority in the award of oil blocks, oil field and oil lifting licenses as well as in all projects for which contracts are to be awarded in the Nigerian petroleum industry subject to the fulfilment of conditions specified by the Minister of Petroleum Resources.
 
The following provisions are stipulated in the act:

  • a Nigerian company is described as: 'a company formed and registered in Nigeria in accordance with the provisions of Companies and Allied Matters Act with not less than 51% equity shares by Nigerians'
  • permits are first and foremost granted to Nigerian companies
  • Nigerian companies receive a preferential margin in the bidding process
  • list with exact percentage of national content required for each service and product (see also Affected Tariff Lines)
  • establishment of Nigerian Content Development Fund (NCDF): government withholds 1% of contract sum in upstream oil and gas sector in order to secure financial future of the local industry 
  • tax reductions for companies establishing facilities in the country
  • keep bank accounts in Nigeria with at least 10% of revenue from Nigerian operations
  • employment of Nigerians-only in junior and middle-management positions
  • max. of 5% of management positions occupied by expatriates
  • ensure technology transfer to Nigerian companies
  • legal and insurance services only by Nigerians

 
Update
On 30 July 2014, the Federal Government was reported to free up $500 million for projects fostering the development of local content in the sector, such as include the pilot pipe mill being developed at Polaku, Bayelsa State, the NCDMB Headquarters building project in Yenagoa, the Oil and Gas Industrial Park development in Utuoke, also in Bayelsa State, artisanal training programme being organised by the NCDMB in conjunction with the Federal University Utuoke, and a host of other activities.