The Local Content Act was enshrined into Nigerian Law on the 22nd of April 2010. This act sets out specific work scopes that must be performed in Nigeria and it guarantees fair access to foreign companies. The Act 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.
It provides privileges for indigenous companies by making sure there is first consideration for the training and employment of Nigerians and it sets out the criteria to be used by the operator and the contractor in assessing how first consideration is to be given to Nigerians in the process of evaluating bids for goods and services required for projects. This act directly affects operating companies, contractors, sub contractors and service providers in the oil and gas industries. In addition, the Act also affects, professional services engagements including legal and financial services in the oil and gas sectors of Nigeria
CONTENT OF THE LAW
Briefly, the Nigerian oil and gas industry seeks to increase indigenous participation in the sector by prescribing a minimum threshold for the use of local services and materials and to promote transfer of technology and skill to Nigerians in the industry. To actualize this, a Nigerian Content Development and Monitoring board (The Board) has been established and vested with the responsibility of implementing the provisions of the Act, making procedural guidelines and monitoring compliance by operators within the industry.
The Local Content Act can be divided into several segment set out below.
- GENERAL OBLIGATIONS: The purpose of the Act is to set out general obligations which are applicable to
- Open actors and participants in the oil and gas industry
- Activities taking place in the oil and gas industry
The provisions of the Act which are of general application are contained in section 3, section 7 and section 11 of the Act. These general provisions are developed in the body of the Act by providing further details of steps, procedures and obligations imposed on operators or on the activity performed.
- OVERALL POLICY OBJECTIVES: The local policy objective and overall obligation imposed in respect of transactions in the oil and gas industry are set out in section 3 of the Act.
- MINIMUM NIGERIAN CONTENT SPECIFICATIONS: Section 11 of the Act states that the minimum Nigerian content in any project to be executed in the Nigerian oil and gas industry shall be consistent with the level set out in the schedule. The schedule in question lists out various activities that are carried out in the oil and gas industry and sets out the desired level of Nigerian content in accordance with various units of measurement.
- NIGERIAN CONTENT PLAN: Section 7 states that, “in the bidding of any license permit or interest and before carrying out any project in the Nigerian oil and gas industry an operator shall submit a Nigerian content (plan) to the board demonstrating compliance with the Nigerian content requirements of the bill.”
- BID EVALUATION: In order to promote the Nigerian content, the Act makes provisions allowing for the consideration of Nigerian content in the evaluation of bids and for advantage to be conferred on bidders on the basis of the level of Nigerian content. The general provisions in this regard are contained in sections 14, 15 & 16 of the Act.
- PROJECT OFFICERS: Sec 25- 27 sets out the provisions of the Act in regard in regard to the maintenance of a project office by the operators or any organization submitting a Nigerian content plan.
- EMPLOYMENT AND TRAINING: The promotion of Nigerian content is dealt with in section 28- 35 of the Act