Your Local Content Bills Could Scare Away Investors, Ajumogobia, SAN Cautions NASS

Former Minister of State for Petroleum, Mr Odein Ajumogobia has cautioned federal lawmakers to be wary of stringent provisions in the planned legislation on local content that could be a disincentive to foreign investors.

Ajumogobia gave the admonition on Thursday in Abuja during his paper presentation at the virtual summit organised by National Assembly joint Committee on Local Content.

The interface with stakeholders in the oil and gas industry was to stimulate discussions ahead of the public hearing on the proposed legislation.

The bills slated for public hearing include the Nigeria Oil and Gas Industry Content Development Act 2010 (Amendment) Bill, 2020 (SB.417), Nigerian Local Content Enforcement Bill, 2020 (SB. 419), and the Nigerian Oil and Gas Industry Content Act, 2020 (Repeal and Re-enactment) Bill 2020 (SB.420).

The former Minister submitted that in the zeal to promote local content in the industry, the federal lawmakers must avoid stringent provisions that could drive away foreign businessmen.

He said: “Local content provisions in these bills specifically require investors to meet certain targets, restrict them from certain areas of activities, issues of the type of investments they can make, partnership with local partners and so on, ownership of joint ventures, the equipment they can and cannot supply and jobs created.

“Now if the target in the law is too high then they may scare away investments or investors.”

He, however, maintained that the legislation should not be patronising as to leave our local investors at the mercy of their foreign competitors.

He noted that Nigerians investors must equally be protected to get value for their money.

“I am saying this to highlight the importance of framing the local content provisions in our laws.

“Targets and other local content objectives must be carefully quantified and adapted to the local context and collaborative because local content is context-specific.

“For example, there is a provision that says a stipulated benchmark of 40% for subcontractors, which must be reviewed in terms of capacity.”

Picking holes further in the bills, the Senior Advocate of Nigeria (SAN), asked: “Would the draft bill do what it sets out to do, can it meet the objectives of those stipulated goals articulated in the bill enough to achieve what we seek and are they realistic. Could there be unintended consequences?

“This bill seeks to set up a local content legal framework for everything order than oil and gas.

“However as we all know, the oil and gas are very broad and there are companies that are not oil and gas in their orientation but provide services to oil and gas; catering would be an example.

“Now does the law take into account those overlaps in terms of activities in the industry for local content.

“Are there gaps or overlaps or conflicts without the laws? These are all areas that should concern us in ensuring that the new law is consistent with existing laws even though there is a provision for superiority”.

Senator representing Oyo Central and Chairman, Senate Committee on Local Content, Senator Teslim Folarin disclosed that the two-day summit was preparatory to a public hearing that would later be organized on the bills.