Daily Independent Online.
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Monday,July 19, 2004.
Bill to promote indigenous participation
in the oil services sector Explanatory memorandum
This Bill seeks to promote the national interest and
security in the oil and gas industry in Nigeria, by encouraging and ensuring
substantial and realistic indigenous participation in the oil services sector.
This Bill also stipulates a minimum corporate social
responsibility for oil services companies in their areas of operation mainly in
relation to employment opportunities, as well as good and safe environmental
practices to ensure company-community relationship. Senator Ibiapuye
Martins-Yellowe sponsored it
The Bill
Be it enacted by the National Assembly of the Federal
Republic of Nigeria -
Part 1 - interpretation
1. In this Bill -
“Bid” means an offer to perform a contract for
work and labour, or supplying materials or goods at a specific price;
“Citizen of Nigeria” has the meaning ascribed to it in the
Constitution of the Federal Republic of Nigeria 1999; “Company”
includes anybody corporate established and registered in Nigeria or elsewhere;
“Deep offshore” means any water depth beyond 200
metres;
“Firm” means an unincorporated body of two or
more individuals of one or more individuals and one or more corporations who or
which have entered into partnership with one another with a view to carrying on
business for profit;
“Foreign company” means a company incorporated
elsewhere other than in Nigeria;
“Indigenous people” means people native to a
particular Local Government Area or State in Nigeria.
“Inland basins” means any of the following
basins, namely - Anambra, Benin, Benue, Chad, Gongola, Sokoto and such
other basins as may be determined from time to time by the Minister;
“Joint Venture” means an association of two or
more persons in the nature of a partnership to carry out a business enterprise
for profit;
“Minister” means the Minister charged with
responsibility for matters relating to petroleum and gas;
“Minimum corporate social responsibility” means
measures taken by a company to enhance harmonious company-community relations
and includes, but shall not be limited to job opportunity for indigenous people
of the host community, other socioeconomic investment within the area of the
company’s operations “Subsidiary” in relation to a body
corporate, means, a subsidiary as defined by Section 338 of the Companies and
Allied Matters Act, 1990 or any enactment thereof;
“Operational base” means the principal place
where a company carries on its business;
“Person” includes an individual or a firm or a
company;
“Share” means the interest in a company’s
share capital of a member who is entitled to share in the capital or income of
such company; and except where a distinction between stock and shares is
expressed or implied, includes stock.
Part ii - contracts in the
services sector of oil and gas industry
2. - (1) All contracts in the services sector of the
oil and gas industry in
Nigeria, shall be awarded to -
(a) a citizen of Nigeria; or
(b) a firm, establish and registered in Nigeria and owned by
citizens of
Nigeria; or
(c) a company incorporated in Nigeria whose shares are
wholly owned by citizens of Nigeria;
(d) a company incorporated in Nigeria, with majority of its
shares owned by citizens of Nigeria;
(e) a foreign company in a joint venture partnership with
any person in Nigeria wherein the interest of the Nigeria partner in the joint
Venture is not less than 60 per cent
(f) a foreign company which has an established subsidiary
company incorporated in Nigeria, and the subsidiary company
(i) has its operational base in Nigeria
(ii) employs citizens of Nigeria in its managerial,
professional and
supervisory grades (or any corresponding grades designated
by it in a
manner approved by the Minister) such that at least 30 per
cent of the total subsidiary number of persons employed by the subsidiary in
Nigeria in the managerial, professional and supervisory grades are citizens of
Nigeria, and grades shall not be less than 75 per cent of the total number of
person employed by the subsidiary company in the said managerial professional
and supervisory grades in Nigeria;
(2) A company incorporated and registered elsewhere other
than in Nigeria may be eligible for the award of contract in the service sector
of the oil and gas industry in Nigeria, provided -
(a) at least 50 per cent of its shares are owned by citizens
of Nigeria; and
(b) its shares are listed and quoted on the Nigerian Stock
Exchange
3, - (1) A contract awarded to any person under this
Bill, shall, as much as practicable, be executed wholly in Nigeria
(2) Where a person lacks the capacity to execute all aspects
of the contract in Nigeria, he shall apply and obtain a written permit from the
National Petroleum Investment Management Services (NAPIMS) authorizing the
relevant aspects of the contract to be executed elsewhere other than in
Nigeria.
(3) In an application made pursuant to Subsection (2) of
this Section, the
National Petroleum Investment Management Services may grant
a written permit if it is satisfied that -
(a) only 10 per cent of the contract shall be executed
outside Nigeria;
(b) the execution of any part of the contract outside
Nigeria shall not lead to capital flight.
(c) the execution of any part of the contract outside
Nigeria shall not prevent a transfer of technology to Nigeria;
(d) the execution of any part of the contract outside
Nigeria shall not be
against National Interest; and
(e) the applicant has complied with the minimum social
corporate
responsibility required in the circumstance
4. In any bid for specialised services in the oil and gas
Industry in Nigeria, the following persons shall be given preferential
consideration -
(a) an individual who is a citizen of Nigeria;
(b) a firm, established and registered in Nigeria, and owned
by citizens of Nigeria;
(c) a company incorporated in Nigeria whose shares are
wholly owned by citizens of Nigeria;
(d) a company incorporated in Nigeria, with majority of its
shares owned by citizens of Nigeria; and
(e) a foreign company in a joint venture partnership with any person in
Nigeria wherein the interest of the Nigerian partner in the
joint venture is not less than 60 per cent.
Part iii - minimum
corporate social responsibility
5 - (1) A company or firm awarded any contract under
this Bill shall -
(a) establish an administrative head office in the state;
(b) comply with all directives, regulations and enactments
relating to the welfare, safety, health and environment of the community in
which it operates;
(c) employ the indigenous peoples of the community and Local
Government Area and State in which it operates in the execution of its
projects; and
(d) Local
Government Area and State in which it operates.
(2) A person awarded any contract under this Bill shall
comply with -
(a) the provisions of the minimum corporate social
responsibility under
Subsection (1); and (b) any other statute or enactment
thereof
Part iv - offences,
jurisdiction and savings
6. - (1) Any person who awards contract to a person or
(persons) other
than those mentioned in Section 3 of this Bill commits an
offence and is liable on conviction to a fine not exceeding N1,000,000.
(2) Any subsidiary company that contravenes Section 3 (1) of
this Bill
commits an offence and is liable on conviction to a fine not
exceeding N2,000,000.
(3) Any person who fails to obtain a written permit from
National Petroleum Investment Management Services for the execution of any part
of any contract in a place other than in Nigeria commits an offence under
Section 3 (2) of this Bill and is liable on conviction to a fine of not less
than N3,000,000.
(4) A company or firm that fails to meet the requirements of
minimum
corporate social responsibility as set out under section 5
of this Bill commits an offence and -
(a) is liable on conviction to a fine of not less than
N5,000,000;
(b) shall have its -
(i) premises sealed up, and
(ii) activities halted, by the Directorate of Petroleum
Resources during the period of contravention.
(5) A person who in purported compliance with any
requirement under this Bill, for any other reason whatsoever, provides false or
misleading information in any manner commits an offence and is liable on
conviction to a fine of not more than N1,000,000.
(7) Any person who aids, abets, counsels or procures the
contravention of this Bill commits an offence and is liable to be tried as a
principal offender.
8. The Federal High Court shall have original jurisdiction
over all matters mentioned in this Bill.
9.howsoever arising, appertaining to the oil and gas
industry, including the deep off-shore and inland basin
10. All provisions of other relevant legislation and
regulations that are for the time being in force immediately before the
commencement of this Bill shall, so far as they are consistent with the Bill,
continue to be in force.
II. Except as expressly provided in this Bill, nothing in
this Bill shall affect the rights of any party to any proceedings commenced in
any court on or before the commencement of this Bill.
12. The Minister may make regulations to bring into effect
the provisions of this Bill
13. This Act may be cited as Oil and Gas Services Bill,
2004.
