Business

Wabote: Divestment of Assets By IOCs Hurting FG’s Tax Revenues

The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Simbi Wabote, has raised the alarm that the divestment of onshore oil and gas assets by the International Oil Companies (IOCs) is depleting the federal government’s tax revenues due to the refusal of some of the indigenous players who acquired the assets to pay tax.
Wabote, who also enumerated the enormous gains of the ongoing divestment of assets by the multinational companies, noted that while the IOCs that operated the assets paid tax as at when due, some of the indigenous Nigerian companies that bought the assets have stopped paying tax.

Speaking in Abuja during a breakfast meeting with editors of newspapers and directors of broadcasting stations at the weekend, Wabote accused indigenous operators of flouting the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010.
Wabote, however, disclosed that with the implementation of the NOGICD Act and divestment of assets by the IOCs, indigenous players have moved from near-zero participation in the oil and gas sector to the point where they are now responsible for 15 per cent of Nigeria’s oil production and 60 per cent of the country’s domestic gas supply.
“But beyond the positives, it must also be observed that the divestment of producing assets to indigenous players poses significant challenges for the implementation of the Nigerian Oil and Gas Industry Content Development Act. The worries are predicated on research findings and our experience in implementing the NOGICD Act in the past 13 years which indicates that indigenous firms, especially the indigenous operating companies are serial violators of the Nigerian Content Act.

“In many instances, international operators tend to comply with the Nigerian Content because it is in their DNA to obey laws or they have to show evidence of compliance to their home offices.
“On the contrary, many indigenous companies feel entitled and assume they can get away with non-compliance. At other times they want to save costs to the detriment of the local economy,” Wabote explained.
Wabote further disclosed that with the divestment of assets by the IOCs, the government’s tax revenues are depleting.
“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.
According to him, some indigenous firms have also argued that they should be excluded from the implementation of the NOGICD Act since their primary investors are Nigerians.

Wabote listed some of the common violations by indigenous firms including executing projects without obtaining prior approvals, non-execution of mandatory Human Capacity Development Initiative (HCDI), non-utilisation of vendors without approved Nigerian Content Equipment Certificate (NCEC), and utilisation of the services of contractors that are not registered on the Nigerian Oil and Gas Industry Joint Qualification System Portal (NOGIC JQS) and several other violations.
“Other times, the firms fail to remit their one per cent mandatory Nigerian Oil Content Development Fund and engage expatriates without requisite approvals from the NCDMB or even award contracts to foreign firms, even when other Nigerian companies can execute.

“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.
“While we commend the indigenous companies that are gearing up to acquire the divested assets, it is pertinent to remind all stakeholders of the industry that the provisions of the Nigerian Content cover all entities and all activities connected to the Nigerian oil and gas industry,” he added.
Wabote promised that the NCDMB would continue to partner with the industry stakeholders to institute regulations that would ensure that the increasing footprints and stakes of indigenous production companies would not lead to a reduction in Nigerian content compliance and participation of Nigerians in the industry.

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