Court rejects oil drillers’ request to stop 1% Nigerian content levy

The  Federal   High   Court  sitting   in   Yenagoa,   Bayelsa   State, has   delivered   a  judgment  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 as mandated under section 104 of the Nigerian Oil and Gas Industry Content Development Act.

The   judgment   was   delivered on Tuesday  in   the   case   instituted   by   a group   of   Nigerian   drilling companies, known as  Incorporated  Trustees of  the  International Association of  Drilling Contractors against  the  NCDMB, seeking  to  stop the  collection  of one  percent NCDF levy, the local content agency said in a statement.

The IADC members had led the lawsuit – Suit No.FHC/YNG/CS/178/2022 challenging the powers   of  the NCDMB   to   demand   the   one   percent   NCDF   levy   from   their   members and contractors.

According to section 104(2) of the NOGICD Act, 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 obtained an ex parte injunction against the Board prohibiting the demand, collection or anything whatsoever either by itself or through its agents, representatives, or privies in relation to NCDF payment or remittance from their members and contractors pending the nal determination of the lawsuit. 

The Executive Secretary of NCDMB, Mr Simbi Wabote, said in the statement, “The Board vigorously contested the issues in court and effectively countered the arguments of the plaintiffs. 

“Hence, on Tuesday 9th May 2023, the Federal High Court finally gave judgment in favour of the Board, dismissing the suit and prayers of the plaintiffs as wholly incompetent, baseless and that the suit did not disclose any reasonable cause of action. The interim injunction earlier granted ex parte on the 19th of July 2022 was also vacated.”

Wabote said the decision would strengthen  the Board’s resolve and commitment to  Nigerian content implementation regardless  of any headwind or distraction.

“The NCDF is NCDMB’s only source of funding sequel to the exit of the Board from federal allocation in 2017/2018. The NCDF  is applied towards funding the   implementation of Nigerian content   development in the Nigerian oil and gas   industry, notably projects, programmes and   activities directed at increasing Nigerian  content in the oil and gas industry,” the statement said.

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