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LOCALCONTENTKEYISSUESANALYSISSERIES
PAPER1:
THENIGERIANCONTENTPLAN
Odujinrin &
Adefulu
Church House
st
1 Floor
29, Marina, Lagos
By Dr. Adeoye Adefulu & Aderemi Ogunbanjo*
ABOUTTHELOCALCONTENTKEYISSUESANALYSIS(LCKIA)SERIES
The LCKIA series has been designed by the Energy Practice Team of Odujinrin
& Adefulu as brief papers which provide practical analysis of the critical
elements of the Nigerian Oil and Gas industry Content Development Act 2010.
Some of the issues the Series is expected to cover are:
*
DrAdeoyeAdefuluisapartnerandMs.AderemiOgunbanjoisaseniorassociateintheEnergyPracticeTeam
ofOdujinrin&Adefulu.Theymaybereachedatfirstname.lastname@odujinrinadefulu.com.
1. Introduction
T he N ig er ia n C o n te nt P la n is a ke y re qu i rem e nt o f t he N i ge r ia n O i l a n d Gas In d us t r y
C o nte nt De ve lo p me nt A ct 20 10 ( NC A ). T his pa pe r b r ie f ly exa m in es the issu es
w h ic h m us t b e co ns i de r e d i n pr e pa r in g s u c h a pl a n.
2. Scope of Requirement for Submission of Nigerian Content Plan
PlanbyOperators
S ec t ion 7 o f th e NCA r eq u ir es op e rat ors 2 to submit a plan showin g compli ance with
t he N i ge ri a n co nte nt r e qu i re me nts o f t he Ac t, a s p a r t o f th e con d i tio n f o r b i d d in g
f o r a l i ce nc e, p er m it o r o th e r o il a n d gas in te r est and be fo re th e exe c ut io n o f an y
p r o j e c t i n t h e i n dus t ry. W h i ls t t he w o r d in g o f t his se ct io n su ggests th e plan s ho ul d
demo nstrate histo r ical compliance of a n o pe ra to r w it h t he A ct, s e ct io ns 12 a n d 1 3,
w h ic h dea l w i th th e c o n te nts o f t he p la n r e q ui re a f o rwa r d pr o gr a m me i n d ic a t in g
h o w a n o pe ra to r i nt en ds to co mp l y w i th t he p ro vis io ns o f t he A ct . W e s u g ges t t ha t
t he lat te r in te r p ret a t io n is t he co r re ct o n e.
A Pl a n is a ls o r e q u i re d .. . b e f o r e ca r ry i n g o u t a n y pr o je c t i n t h e N i ge r ia n o i l a nd
gas i n dus t ry ... W h ils t t hi s p ro visi o n ma y s ee m v e ry w id e in t he se nse tha t it co ve rs
e ve r y t y p e o f p ro j e c t i n w h i ch a n o p e r a t o r m ig ht be i n vol v e d in res p e ct o f a f ie ld
o pe ra ti on, w e su g ges t t ha t i n pra ct ic al te rm s, it wo u ld m ea n no m or e t ha n t he P lan
being re quired when s uc h pr o je cts r eq u ire s o m e f or m o f go ve r nm e n t / re g u la t o ry
a ppr ova l. F or e xam pl e, a F ie l d D ev el opme nt P ro g ram m e i n an u pst ream p roj ec t
2 Companies in this category include NNPC, its subsidiaries and joint venture partners and any Nigerian or foreign or
international oil and gas company operating in the Nigeria oil and gas industry under any petroleum arrangement. See
Section 109 of the Act.
w o u l d in vol v e va rio us o t h e r m i no r p ro j e c t s w h ic h w o u l d a l l be s ubs u me d u n de r t he
m a j or pro j e ct re q u i rin g a p rio r s ubm iss ion o f a P lan.
3. PlanApproval
4. ContentofthePlan
T he P la n mu s t c o n t a i n p ro v is ions g i v in g :
a. f i rs t c o nsi d e ra t io n t o t h e ut il i za t ion o f s e r v ic e s p ro v i de d f ro m w it h i n
N i g e ria a nd go ods ma nu fa ct u red i n Ni ge r ia ; an d
b. f i rst c ons id e rat io n fo r t he t ra in i n g an d em p lo y me nt o f Ni ge r ian s i n th e wo rk
p r og ra m me f or w h ic h t he Pl an was s ub m it te d. 5
3
Section8oftheAct.
4 Sections 8 & 9 of the Act.
5 Section 10 of the Act.
6 A Nigerian company is defined in section 109 of the Act as a company formed and registered in Nigeria in
accordance with the provision of Companies and Allied Matters Act with not less that 51% equity shares by
Nigerians.
that the provision could be interpreted to mean either services provided by
Nigerian contractors or Nigerian service companies as defined under the Act
(that is companies with 51% Nigerian shareholding) or services provided by a
company registered in Nigeria regardless of the percentage of Nigerian equity
in the company. The only practical interpretation however is that the Act is
referring to Nigerian contractors and service companies.
5. DeterminingFirstConsideration
7 Providing detailed analysis of this in the Plan would require operators liaising with their contractors on how the
contractors intend to meet these requirements in their service delivery and in engaging sub-contractors. This would
generally also be part of the required documentation to be provided by bidders in an Invitation to Tender.
ma de. Su ch a cho i ce ma y be ma de wi th r es pe ct t o a ll pro je cts fo r wh i c h t he
o pe ra tor is i n vol v ed in th e Nig e ri an o i l a nd gas i n dus try , o r m ay be determin ed on a
project by project basis.
A s a lr e a dy s t a t e d , t he A ct re q ui r e s o pe ra t o rs t o gi ve f i rs t co ns i de ra t io n f o r t he
t ra i ni n g and em p lo yme nt o f N i ge r ia ns i n th e wo r k pr o gr am me f o r wh i ch t he Pla n
w as s u bm i tt e d. 8
7. OtherImportantConsiderations
quota positions.
sw am p ope ra tin g a re as. 10 W h ils t t he te rm is not de fine d in t he Act, it can
be ta ke n to mea n t ha t o n ly Nige ria ns ca n be co ns idere d fo r a pro ject in this
o pe ra ti n g a r ea. T he re fo re i nv it a t io n to te nde r fo r s u ch p r o j ec ts wo u ld o n ly be
i ssu e d to Ni g e ria n co m pan ie s. T his e ff ec ti v e ly al lo ws fo r so l e so u rc in g and
t he p ri n ci pl e o f ex cl us iv e co ns ide ra ti o n wou l d a p pea r to a p pl y irr es pe ct i ve o f
cost.
11
F ul l & Fai r Op po rt un i t y - T h is m eans th at no t on l y m ust c on tr ac ti n g
p r o c e d u re s n o t u n fa ir ly d is a dva n t a g e local supplie rs, but the operator should
be able to demo nstrate that a ll reasona ble e f fo rts ha ve bee n ta ke n to ens ur e
t ha t loca l s up p l ie rs ha ve bee n a f for ded am pl e o ppor t un it y to pa rt ic i pat e i n
t h e c o n t ra c t i n g p ro c e s s . E f fo rts w o u l d in cl ud e s u p pl y in g a d e qua t e a n d t i mel y
n ot ic e an d i n for ma ti on in re lat io n to o p era tors n ee ds an d r eq ui r em en ts fo r
u p co mi n g p r o j e c t s . T h is co ul d a l s o in c lude proper debriefin g o f u ns uc ce s s f u l
b i d de rs fo r p u r po s e s o f f u t u re bid s .
8. ConcludingRemarks
W e h o p e yo u f in d t h e i n f o r m a ti o n c o n t a in e d h e r e in u s e f u l . T h i s N o t e i s fo r g e n e r a l
p u r p o se s a n d g u i da n c e o n l y a n d s h o u l d n o t b e r e ga r d e d a s l e ga l o r p r o f e s s i o n a l
a d v i c e . A n y q u e s ti o n s , c o m m e n t s o r c la r i fi c a t io n s m a y b e d i r e c t e d to : D r A d e o y e
A d e f u lu t e l- + 2 3 4 8 0 2 2 2 4 0 8 8 8 e m a i l
adeoye.adefulu@odujinrinadefulu.com
10See section 3(2) of the Act. Nigerian indigenous service companies can best take advantage of this concession by