4 March 2010

Nigeria: House Set to Pass Local Content Bill

Photo: Elaine Gilligan/Friends of the Earth
Shell oil barrels: The new oil and gas bill, which is set to be signed into law, will regulate the activities of multinational oil companies by ensuring locals are engaged in key economic sectors.

Abuja — A Conference Report on the Nigerian Oil and Gas Industry Development Bill 2010 was laid before the House of Representatives yesterday.

The legislation, also known as the Local Content Bill, seeks to increase the participation of more Nigerians and indigenous companies in the sector which is currently dominated by multinationals.

It was passed by the Lower Chamber on Tuesday, November 17, 2009, and transmitted to the Senate for concurrence. Thereafter, the Senate passed the same bill but with minor differences. The two chambers met on Wednesday February 10, 2010, where they harmonised the bill.

A joint meeting between both chambers took place yesterday after which a report was issued. And it is regarded as one of the major steps Nigeria must take in tackling some of the problems in the industry.

The legislation makes provision for the establishment of a Nigerian Content Monitoring Board which will oversee the implementation of the provisions of the law.

It stipulates that Nigerian independent operators in the industry "shall be given first consideration in the award of oil blocks, oil field licences, oil lifting licences and shipping services and all projects for which contracts are to be awarded in the Nigerian oil and gas industry; subject to the fulfillment of such conditions as may be specified by the minister; and there shall be exclusive consideration for Nigerian indigenous service".

It also requires the operators to ensure that more Nigerians are engaged in key sectors of the industry to enhance indigenous human capital development and technology transfer.

However, where Nigerians are not employed because of their lack of training and requisite skills, the operator should ensure, to the satisfaction of the Board, that every reasonable effort is made within a reasonable time to supply such training locally or elsewhere, says the bill.

"Such effort and the procedure for its execution shall be contained in the operator's employment and training plan while the operator shall report to the Board quarterly, on employment and training activities for the reporting period and compare this to the employment and training plan," states the bill.

According to the legislation, such report should include the number of new employees hired during the year and their places of residence at the time of hiring as well as their employment status. Furthermore, it spells out a clear career path for Nigerians in the industry as each operator is required to submit to the board a succession plan for any position not held by Nigerians.

Such succession plan shall provide for Nigerians to understudy each incumbent expatriate for a maximum period of four years after which the position shall be taken over by the Nigerian. The bill, however, makes a provision of five per cent for management positions for expatriates to protect the interest of the investors.

Chairman, House Committee on Rules and Business, Hon. Ita Enang, said in a telephone interview last night that with the adoption of the harmonised report of the two chambers, the bill would now be transmitted to the President for assent.

The adoption of the bill however came on a day the capacity of key operators and managers of the industry was called to question. The House in a unanimous resolution summoned the Minister of Petroleum Resources, Dr. Rilwanu Lukman; Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr. Mohammed Barkindo, as well as the headship of the Petroleum Product Pricing Regulatory Agency (PPPRA).

They are to appear before the House Committee on Petroleum Resources (Downstream) to explain the root causes of the perennial fuel shortage in the country.

The House said it would be forced to invoke Section 88 of the Constitution and issue a warrant of arrest on these officials if they failed to honour the invitation. The resolutions followed a motion brought to the floor by Minority Leader of the House, Hon. Mohammed Ali Ndume, and 21 other legislators seeking the intervention of the National Assembly on the incessant scarcity of petroleum products.

In the lead debate, Ndume lamented that despite repeated assurances from the NNPC, the scarcity of petroleum products has become a culture across the federation. He added that the phenomenon has had adverse effect on the economy and social well being of Nigerians.

Several lawmakers spoke in favour of the motion.

Chairman, House Committee on Petroleum (Downstream), Hon. Clever Ikisikpo, disclosed that efforts by his Committee to tackle the problem had been frustrated by the NNPC and the Federal Ministry of Petroleum Resources. According to Ikisikpo, several invitations to these key stakeholders in the petroleum import and distribution chain in the country had been shunned by them.

He alleged that the NNPC appears to have become overwhelmed by the problems associated with fuel distribution in Nigeria. About 50 per cent of products imported into the country to meet local consumption ends up in the neighbouring countries of Niger Republic and Benin Republic, he added.

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