Court affirms NCDMB mandate to collect 1% NCDF from oil related projects
The Federal High Court in Yenagoa, Bayelsa State capital has affirmed the authority of the Nigerian Content Development and Monitoring Board (NCDMB) to collect the statutory one percent Nigerian Content Development Fund (NCDF) levy from every contract awarded in the Nigerian oil and gas upstream transaction.
The statutory levey is enshrined in section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
This comes following a case between a group of Nigerian drilling companies known as Incorporated Trustees of the International Association of Drilling Contractors (IADC) and the NCDMB.
Neptune learnt that the IADC went to court seeking to stop the collection of one percent NCDF Levy by the NCDMB.
In a statement issued by NCDMB corporate communications on Wednesday and obtained by Neptune Prime, 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, 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.”
Also, the group 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.
Reacting to judgement on Wednesday, the Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote confirmed 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 is optimistic that the judgment given by the court 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 and Development Fund as well as other R&D initiatives.
Other applications are the construction of the 17-storey Nigerian Content Tower, entrepreneurship schemes and competitions, and the ongoing construction of the Conference Hotel Project (CHP).
