Bayelsa court permits NCDMB to collect 1% NCDF levy

Bisola David
Bisola David
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The Federal High Court in Yenagoa, Bayelsa State, delivered an important ruling on Tuesday confirming the authority of the Nigerian Content Development and Monitoring Board to collect the one percent Nigerian Content Development Fund levy from every contract awarded in the Nigerian oil and gas upstream transaction.

According to The News Agency of Nigeria, this is as mandated by section 104 of the Nigerian Oil and Gas Industry Content Development Act.

The decision was made in a lawsuit brought by a consortium of Nigerian drilling businesses known as the Incorporated Trustees of the International Association of Drilling Contractors against the NCDMB in an effort to halt the collection of the one percent NCDF charge.

In a lawsuit filed under case number FHC/YNG/CS/178/2022, the IADC members contested the NCDMB’s authority to collect a one percent NCDF surcharge on their members and contractors, which was in violation of section 104(2) of the NOGICD Act.

The Act stipulates 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 Nigerian oil and gas industry shall be deducted at source and paid into the Fund.”

The group also won an ex parte order against the Board that forbade it from making any demands, collecting any money related to the NCDF payment, or using any of its agents, representatives, or privies in relation to NCDF payment or remittance from their members and contractors pending the final determination of the lawsuit.

On Wednesday, the NCDMB’s executive secretary, Mr. Simbi Kesiye Wabote, revealed that “the Board fiercely argued the issues in court and convincingly countered the plaintiffs’ arguments.

As a result, on Tuesday, May 9, 2023, the Federal High Court issued a decision in favor of the Board, dismissing the plaintiff’s lawsuit as completely incompetent, groundless, and lacking any legitimate basis. The interim injunction that had been previously obtained ex parte on July 19, 2022, was also overturned.

According to Wabote, the choice will make the Board more determined and committed to implementing Nigerian content despite any obstacles or detours.

As a result of the NCDMB’s departure from federal funding in 2017–2018, the NCDF is the organization’s only source of funding. The NCDF is used to finance the growth of Nigerian content in the oil and gas sector of Nigeria, namely through projects, programs, and initiatives that aim to increase Nigerian content in the sector.

The highly effective lending program provided to Nigerian oil and gas companies through the Nigerian Content Intervention Fund, which is run by the Bank of Industry and the Nigerian Export-Import Bank, is one of the Fund’s wisest uses.

The establishment of the Nigerian Content Research & Development Fund, as well as other R&D initiatives, are other noteworthy uses of the NCDF, along with the creation of the Nigerian Oil and Gas Parks Scheme, equity participation in well-known outside projects, efforts to build human capacity, and others.

Other uses include the building of the 17-story Nigerian Content Tower, entrepreneurial programs and contests, and the Conference Hotel Project, which is now under construction.

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