Non remittance of the compulsory one per cent contract value of upstream contracts by oil companies is slowing down the operation of the Nigerian Content Development and Monitoring Board (NCDMB), TBI Africa has learnt.
An audit report instituted by the Board revealed that many oil companies default in payment of the statutory one per cent into the Nigerian Content Development Fund (NCDF) resulting in huge debt to the Board.
The NCDF was established by Section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010 and provides that one per cent of every contract in the upstream sector of the Nigeria Oil and Gas industry shall be deducted at source and paid into the Fund.
However, it was discovered that many companies refuse to comply with this provision in the Act.
Confirming this at a capacity building workshop for media stakeholders organised by NCDMB in Lagos, with the theme “Sustaining Nigerian Content amidst shifting energy landscape: The role of the media,” the Manager, Capacity Building, Monitoring Directorate, NCDMB, Barr Dan-Esueme Kikile, who represented the Director, Monitoring and Evaluation, NCDMB, Mr. Akintunde Adelana, identified non-remittance of the one per cent as one of the major challenges of the Board.
In his presentation entitled “11 years of monitoring and evaluating Nigerian Content implementation: Lessons learnt so far,”Kikile said: “We also see non-deduction and remittance of our one per cent. We have companies that refuse to comply with the provision of the NOGICD Act. They cannot comply with the provision of the Act on their own volition except they are forced to.
“A forensic audit that covered the first 10 years of the Board revealed that many companies are guilty of violation of the provision in the Act.
“The Board discovered 275 non-compliances over the past three years, which it has dealt with and some the companies have proceeded to the point of registration on the Nigerian Oil and Gas Industry Content Joint Qualification System (NOGIC JQS).”
When asked about how much the Board is owed by non-remittance of the one per cent of the upstream contract awards, Kikile said it was during the audit that the team was able to establish the amount that was owed by those companies that have not made those remittances but noted he couldn’t be able to make the projection at the workshop.
He, however, noted the importance of remittance of the one per cent to the Nigerian Content Development Fund as it helps the Board to efficiently run its operations. The NCDMB has over the years been off government appropriation and runs on internally generated revenue through the NCDF. Therefore, it is important that oil companies pay their one per cent into the NCDF as it is the livewire of the Board.