Court rejects oil drillers’ request to stop 1% Nigerian content levy
The Federal High Court sitting in Yenagoa, Bayelsa State, has delivered a
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.
