-By
Harrison Declan. Harrison is a local content law expert and author of the book ‘Local
Content in Africa’s Petroleum States: Law and Policy’.
On
the 2nd of June, 2015, the Nigerian legislature passed a Bill
amending the country’s local content law. The Bill is titled the Nigerian Oil
and Gas Industry Content Development (Amendment) Bill 2015 (HB. 452). Currently,
the amendment Bill has been forwarded to the President for assent. Vide
section 58 (4) and (5) of the Constitution of the Federal Republic of
Nigeria, 1999 (As Amended), where
a Bill is presented to the President for assent, he shall within 30 days signify
that he assents or withholds assent. Where he withholds assent and the Bill is again
passed by each House by two-thirds majority, the Bill becomes law and the assent
of the President shall not be required. There has been no expression by the President
signifying that he assents or withholds assent. The simple implication of this
is that up till this point, there still exists the possibility of some further
amendments being included in the Bill, as the President can refer the Bill back
to the National Assembly for further deliberations.While
the amendment to the Act is appreciated, they are still insufficient. Some
suggested further amendments to be made are:
a. The provisions on employment of expatriates
The
original Act contains provisions which require that Nigerians be given
preference in employment opportunities. Some of the sections relevant in this
regard are sections 10(1)(b), 28(1),
31(1)
and 33(1).
Expatriates would only be allowed where Nigerians are not capable of
performing the jobs, and where expatriates are brought in, they must have
Nigerian understudies to take over from them after a duration of four years.
However, there have been numerous instances where the employment of expatriates
has been abused by oil companies. In July 2013, the Board introduced the bio-metric registration for expatriates in order to have a database of
expatriates working in the industry to check the abuse. While this is important
and to some extent successful, it is also important to limit the possibility of
abuse through legislation.
To
check this abuse of expatriate positions, it is suggested that sections 10(1)(b) and 28(1) be amended. The expression “first
consideration” should be deleted from the section, as there is no meaning
ascribed to that expression in the Act. The sections should provide that only
Nigerians shall be given consideration for employments and training in any
project executed by any operator. Where an operator believes that the existing
capacities cannot be performed by Nigerians, then expatriates should only be brought
in subject to section 33(1). Also,
specific penalties should be made for violation of provisions on employment of
expatriates. The general penalty regime of the Act makes enforcement in this
regard treacherous.
b. Rate discrimination
Another
provision of the original Act deserving of amendment is section 31(2)
which provides for rate discrimination between Nigerians and expatriates.
It is important to emphasise that rate discrimination is one of the factors
that undermine development of local capacity in the Nigerian oil and gas
industry. In some other jurisdictions, rate discrimination between locals and
expatriates is not allowed in their local content laws. For instance, Article 5 of Angolan Decree-Law No.
17/09 prohibits any form of discrimination as regards the conditions of work
between local and foreign personnel. It mandates operators to ensure that both
Angolan and foreign personnel employed by them who have the same job grade and
perform identical functions have equal rights, and as such enjoy the same
benefits in respect of pay and welfare and also the same working conditions.
It
is important that this section is amended to eliminate discrimination in
conditions of service between Nigerians and expatriates.
c. Incentives for compliance
Section 48
of
the original Act is the incentive section. Unfortunately, the provision of the
said section on incentive is vague and doesn’t really incentivise. It is
suggested that a more practical incentive regime be brought into the Act.
Having implemented the Act for half a decade, the Minister as well as the Board
should be able to determine what incentives are appropriate for compliance with
the Act, and such incentives should basically be included in the Act.
d. The penalty provisions
Another
section deserving of amendment is section
68
of the original Act which provides for penalties for non-compliance with
the provisions of the Act. It is submitted that the penalty regime created
under the Act is one that is difficult to impose, especially where the violation
is considered minute or not very grievous. For instance, would the Board have
the moral strength to cancel a project or impose a fine of five per cent of the
project sum if the operator as defined under the Act exceeded his expatriate
quota by just two expatriates, or would the Board cancel a project or impose a
fine of five percent because an operator as defined under the Act furnishes its
office with imported furniture?
The penalty regime is so stringent that they become impracticable to enforce in
instances where the violation is considered not deserving of such harsh penalty
created under the Act.
For this reason, there are numerous cases where operators as defined under the
Act have had their way with violations of the provisions of the Act simply
because the Board could not impose the penalty provided under the Act in such
situations. This has created the impression that the Board is too weak to
enforce the provisions of the Act. It is important to state that the law would
be better served if there are no penalty provisions, than where there are
penalty provisions that can’t be enforced in all instances.
Accordingly,
it is suggested that the penalty section should be more detailed than it is at
the moment. Where there are sections creating obligations under the Act, the
penalty section should state the penalty for a contravention of each of those
provisions. That way, any violation under the Act, no matter how minute it
might seem, would have a penalty attached thereto.
e. Protection of whistle-blowers
The
Act should be amended to provide for protection of whistle-blowers. In every
company, employees are more disposed to have knowledge of violation of the
provisions of the Act by their employers. The story of where companies with
unapproved expatriates hide these expatriates and only present their Nigerian
employees when the Board is to pay a scheduled visit lends credence to the fact
that a special form of protection is needed for whistle-blowers in the industry.
This provision should be without prejudice to any law on protection of whistle-blowers in the country.
