Drilling firms get court order to pay NCDF levy
Sopuruchi Onwuka
The Federal High Court sitting in Yenagoa, Bayelsa State has ordered the drilling firms in the country to comply with regulatory directive requiring them to remit one percent of the value of contracts they executive in the country to the Nigerian Content Development Fund (NCDF).
The order followed a judgement by the court confirming the authority of the Nigerian Content Development and Monitoring Board (NCDMB) to collect the levy from every contract awarded in the Nigerian upstream oil and gas industry.
The provision for the levy is contained in the section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
After hearing parties in a case instituted by Incorporated Trustees of the International Association of Drilling Contractors (IADC) against the NCDMB seeking to stop the collection of one percent NCDF levy, the court ruled against the plaintiffs and ordered them to comply with the regulator’s demand.
A statement from NCDMB holds that the IADC members had filed the lawsuit – Suit No.FHC/YNG/CS/178/2022 challenging the powers of NCDMB to demand the one percent NCDF levy from their members and contractors. But the NCDMB argued that the contractors’’ position runs contrary to the clear provisions of section 104(2) of the NOGICD Act which states that “the sum of one percent of every contract awarded to any operator, contractor, subcontractor, alliance partner or any other entity involved in any project, operation, activity, or transaction in the upstream sector of the Nigeria oil and gas industry shall be deducted at source and paid into the Fund.”
The group also obtained an ex parte injunction against the Board prohibiting the demand, collection or anything whatsoever either by itself or through its agents, representatives, or privies in relation to NCDF payment or remittance from their members and contractors pending the final determination of the lawsuit.
The Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote confirmed on Wednesday that “the Board vigorously contested the issues in court and effectively countered the arguments of the plaintiffs. Hence, on Tuesday 9th May 2023, the Federal High Court finally gave judgment in favour of the Board, dismissing the suit and prayers of the plaintiffs as wholly incompetent, baseless and that the suit did not disclose any reasonable cause of action. The interim injunction earlier granted ex parte on the 19th of July 2022 was also vacated.”
Wabote stated that the decision would strengthen the Board’s resolve and commitment to Nigerian content implementation regardless of any headwind or distraction.
The NCDF is NCDMB’s only source of funding sequel to the exit of the Board from federal allocation in 2017/2018. The NCDF is applied towards funding the implementation of Nigerian content development in the Nigerian oil and gas industry, notably projects, programmes and activities directed at increasing Nigerian content in the oil and gas industry.
One of the judicious applications of the Fund is the very successful credit scheme extended to Nigerian oil and gas businesses through the Nigerian Content Intervention Fund (NCI Fund), managed by the Bank of Industry (BoI) and the Nigerian Export-Import Bank (NEXIM-Bank).
Other notable utilizations of the NCDF are the development of Nigerian Oil and Gas Parks Scheme (NOGAPS), equity participation in notable third-party ventures, Human capacity development initiatives, and the institution of the Nigerian Content Research & Development Fund as well as other R&D initiatives.
Other applications are the construction of the 17-storeyNigerian Content Tower, entrepreneurship schemes and competitions, and the ongoing construction of the Conference Hotel Project (CHP).
