The Independent Petroleum Producers Group (IPPG), representing indigenous oil and gas producers, has raised an alarm regarding the departure of several prominent international oil service companies from Nigeria. This exit, they claim, is primarily attributed to what they describe as stringent local content regulations within the nation’s upstream petroleum sector.
IPPG highlighted the rising challenges brought about by various local content levies. These levies, including the one percent Nigerian Content Development (NCD) levy on total project costs and an additional three percent charge for local content training in projects exceeding $1 million, have substantially inflated project delivery costs in the country.
Addressing the theme, “Deepening Nigerian Content Amidst Divestments, Domestication, and Decarbonisation,” Abdulrazaq Isa Kutepa, Chairman of IPPG and Group Chief Executive Officer of Waltersmith Group, emphasized the necessity of periodically evaluating the effectiveness of local content policies. He stressed the importance of ensuring that these policies remain conducive to long-term industry growth and cost efficiency.
Isa pointed out the increasing pressures faced by Nigeria’s oil and gas industry to maintain profitability and cost-effectiveness while encountering stiff competition from alternative investment destinations.
Speaking at the 12th Practical Nigerian Content (PNC) Forum in Yenagoa, Bayelsa State, Isa advocated for a review of local content policies to stimulate domestic investments and bolster Nigeria’s competitiveness within the global market. He specifically urged the Nigerian Content Development and Monitoring Board (NCDMB) to reassess elements of the local content legislation that could potentially hinder the competitiveness of the country’s oil and gas sector on the international stage.
In particular, Isa highlighted concerns regarding the mandatory human capital development training requirements, citing the obligation for industry participants to allocate three percent of project costs for local content training in projects exceeding $1 million as a notable issue.