The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr Simbi Wabote, has expressed concerns about the impact of the divestment of onshore oil and gas assets by International Oil Companies (IOCs) on the federal government’s tax revenues.
He highlighted that some indigenous players who acquired these assets are refusing to pay taxes, which is affecting government revenue.
He disclosed this during a breakfast meeting with newspaper editors and broadcasting station directors in Abuja, he criticized these indigenous operators for not complying with the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010.
He emphasized that while IOCs paid their taxes as required, some indigenous Nigerian companies that purchased these assets have ceased tax payments.
Declining government tax revenues
He also raised the issue of declining government tax revenues due to non-payment of taxes by some indigenous players who acquired onshore assets.
In his words,
- “We also found out that the government’s tax revenues are dropping because some of the indigenous players who acquired the onshore assets have refused to pay tax,” he added.
Common violations by Indigenous companies
Additionally, some indigenous firms have argued that they should be exempt from the NOGICD Act’s implementation since their primary investors are Nigerians.
Wabote listed common violations by indigenous firms, such as executing projects without obtaining prior approvals, neglecting mandatory Human Capacity Development Initiative (HCDI), not utilizing vendors with approved Nigerian Content Equipment Certificates (NCEC), and using services of contractors not registered on the Nigerian Oil and Gas Industry Joint Qualification System Portal (NOGIC JQS), among others.
Wabote stressed the importance of compliance with the Nigerian Content Act, saying,
- “It is very surprising to see local companies undermine and flout the Nigerian Content Act despite being the immediate beneficiaries of the Nigerian Content policy, thereby causing capital flight, loss of jobs, and opportunity for technological development.”
He commended indigenous companies preparing to acquire divested assets and reminded all industry stakeholders that the provisions of the Nigerian Content Act apply to all entities and activities connected to the Nigerian oil and gas industry.
Positives of international oil companies’ divestment
Wabote did, however, mention a positive aspect of the situation. He revealed that with the implementation of the NOGICD Act and the divestment of assets by IOCs, indigenous players have significantly increased their participation in the oil and gas sector.
They now account for 15 per cent of Nigeria’s oil production and 60 per cent of the country’s domestic gas supply.
