The Nigerian Content Development and Monitoring Board (NCDMB) says it will embark on a forensic audit of the nation’s oil and gas industry in a bid to ensure full compliance with the Nigerian Content Development Fund (NCDF).
The Executive Secretary of NCDMB, Simbi Wabote, stated this on Monday in Lagos at a stakeholders’ forum on the NCDF remittances.
The NCDF was established by Section 104 of the Nigerian Oil and Gas Industry Content Development Act of 2010, and provides that one per cent of the value of every contract in the upstream sector of the industry should be deducted at source and paid into the fund.
The Act also gives the NCDMB the mandate to manage the fund and employ it for projects, programmes and activities directed at increasing Nigerian content in the industry.
As of November 2016, the fund stood at $600m, according to the NCDMB.
Wabote said the forum was specifically intended to provide a window for all entities to understand the channels for making their remittances to the board.
He said, “The board will embark on a forensic audit of the industry with a view to tracking and recovering the NCDF held in some covered entities.
“Having been in existence for nearly seven years, one would expect that most industry stakeholders will be complying with remittances to the NCDF in all ramifications.”
According to him, the NCDMB is aware of infractions by some covered entities with regards to deductions and remittances meant for the NCDF.
Wabote said, “For the avoidance of doubt, the NCDF deductions and remittances apply to all operators, contractors, sub-contractors, alliance partners and other companies, including, but not limited, to exploration and production companies; gas producing, processing and compressing companies; EPC and EPCI companies; Original Equipment Manufacturers and all other service companies involved in any project, operation, activity or transaction in the upstream sector of the Nigerian oil and gas industry.”
He noted that the board opened up the fund for utilisation from 2013 based on the approved operating model that segmented 70 per cent of the fund to financing commercial interventions, and 30 per cent for developmental initiatives and activities carried out by the board on behalf of the industry.
He said under commercial interventions, the fund was leveraged to provide 30 per cent partial guarantee to commercial banks for loans granted to oil and gas service companies towards financing project execution, asset acquisition or facility upgrade.
“It also provided 50 per cent interest rebate on performing loans. Beneficiaries of the fund include Ladol, Starz and Vandrezzer,” Wabote said.
The NCDMB boss said the introduction of the Treasury Single Account policy by the Federal Government and the need to deepen accessibility of the fund for critical activities created the need to re-engineer the operating model.
He said the board had fully complied with the TSA policy by opening naira and foreign currency accounts in the Central Bank of Nigeria, into which all the NCDF remittances were to be made.
“Let me stress that the NCDMB does not operate an account in any commercial bank, contributors are, therefore, expected to pay all remittances into the NCDF accounts in the CBN,” he said.
Wabote added that the board had commenced engagements with multilateral institutions, such as the United Kingdom Export Finance, to attract cheaper funds for developing Nigerian content.