Divestments of Oil Assets: NCDMB Warns Against Reduction in Compliance, Tax Revenue

Ogunsakin Mustapha
6 Min Read
Executive Secretary, NCDMB, Engr Simbi Wabote, President GOCOP, Maureen Chigbo with senior executives of their teams at the breakfast meeting.

The ongoing and planned divestments of onshore assets by some international operating oil and gas companies (IOCs) and subsequent acquisition by Nigerian operating companies must not be allowed to impact negatively on the level of compliance with the Nigerian Oil and Gas Industry Content Development (NOGICD) Act and remittance of tax revenues to the Federal Government, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Kesiye Wabote has admonished.

Speaking during the breakfast meeting he had with members of the Guild of Corporate Online Publishers (GOCOP) and editors of newspapers and directors of broadcast stations in Abuja on Tuesday and Wednesday respectively, the Executive Secretary enthused that the planned sale of assets of Nigerian Agip Oil Company Ltd to Oando Plc and Seplat Plc’s planned acquisition of assets of Mobil Producing Unlimited (MPNU) would transform Oando and Seplat from midsized players into big-time oil and gas operating companies.

He corrected the impression that the international oil companies were exiting the country because of unfavourable conditions, hinting that the foreign firms were carrying out assets rationalization, whereby they leave the onshore and shallow waters and focus on deep offshore operations, where they retain a competitive advantage and contend with minimal human interferences. 

He said the ongoing and other planned divestments are big accomplishments for Nigerian Content development, describing them as “bold statements that Nigerian indigenous operating companies have come of age and acquired the technical, managerial, and financial capabilities to play in the big league.”

He said: “We are proud that we have moved from near zero participation in the oil and gas sector to the point that our indigenous operators such as SEPLAT, AITEO, and others are now responsible for 15% of our oil production and 60% of our domestic gas supply.” With this planned acquisition, the share of local firms in crude oil production could reach 30 percent or more in a short while.

Executive Secretary, NCDMB, Engr Simbi Wabote, President GOCOP, Maureen Chigbo with senior executives of their teams at the breakfast meeting.

The Local Content boss however warned that the ongoing transactions and future divestments from international companies to local producing firms could pose serious challenges to the country in terms of declining Nigerian content compliance and reduction in tax payments to the Government from the new owners and operators. 

He based his position on the Board’s experience and records which showed that indigenous firms, especially the indigenous operating companies are serial violators of the Nigerian Content Act and other laws. According to him, “many indigenous companies feel entitled and assume they can get away with non-compliance. Some indigenous firms have also argued that they should be excluded from the implementation of the NOGICD Act since their primary investors are Nigerians.”

Comparing the attitude of the local firms to their international counterparts, the Executive Secretary stated that “in many instances, international operators try to comply with the Nigerian Content because it is in their DNA to obey laws or they have to show evidence of compliance to their home offices. The IOCs will do everything to comply with the provisions of the NOGICD Act. But the indigenous companies will do everything to circumvent the law.” 

He emphasized that the provisions of the Nigerian Content cover all entities and all activities connected to the Nigerian oil and gas industry and no firm is exempted from compliance. He explained that the Nigerian economy would not develop without encouraging local content in key industries, catalyzing local production of goods and services retaining spend in the country, and conserving foreign exchange.”  

On strategies that would compel the indigenous companies to comply, the Executive Secretary said the Board would continue to use existing regulations and guidelines as well as the provisions of the NOGICD Act to reign in non-compliant firms. The Board is also partnering with relevant agencies, including the Economic and Financial Crimes Commission (EFCC) and industry stakeholders to ensure that the increasing footprints and stakes of indigenous production companies do not cause a reduction in Nigerian content compliance and remittance of taxes to the Government.

He charged the media to advocate for Nigerian Content compliance by all stakeholders of the industry and to challenge indigenous oil and gas operating companies to comply with the laws of the land, including the payment of accurate taxes on their operations. 

He stated that the Board organized the breakfast meeting to update the media stakeholders about the Board’s programmes, build their competencies, enhance their professional effectiveness, and update them on the latest trends in their industry.  He described the media as a reliable stakeholder and promised the Board’s continuous support toward an enduring symbiotic relationship.   

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