NCDMB Warns Oil Firms On Compliance, Tax Revenue

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, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote, gave the warning at a Breakfast Media Parley in Abuja, Friday.
He said the planned sale of assets of Nigerian Agip Oil Company Limited 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 disagreed with the impression that the international oil companies were exiting the country because of unfavourable conditions, noting 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 interference.
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.
“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”.
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.
According to him, his position and warning was based on the Board’s experience and records which he said 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”.