On Wednesday, The house of Rep called for the payment of local vendors in the oil and gas industry in the order to save the industry, this followed a motion by Rep. Henry Nwawuba (PDP-Imo), which was unanimously adopted by members through a voice vote. Moving the motion, Nwabuba explained that Local Content Act was primarily intended to promote local players in the oil and gas industry, he also added that the Act was also to protect them against unfair practices tending to give their foreign counterparts dominance in the oil and gas sector of the Nigerian economy.
All contracts between the FG and the contractors on one hand and the contractors amongst themselves on the other hand are regulated by a policy of 60 to 40% ratio, the payment is supposed to be 60% payment in dollars and 40% in naira. He expressed concern that the new policy required 100% payment in naira to local contractors, even when government and foreign contractors still retained the practice of 60 to 40% payment in dollars in their transactions.
The House therefore mandated its Committees on Petroleum Resources (Upstream), Petroleum Resources (Downstream), Gas Resources and Local Content to interface with the agencies and stakeholders in the oil and gas industry on the policy, the committees were mandated by the house to report back within 6 weeks for further legislative action.
The local content contractors, in many contracts and transactions still procure and pay for items and services in dollars and now have to source for foreign currency at the parallel market, If this policy is not reviewed, it will throw many local contractors out of business, thereby defeating the purpose of the Local Content Act; According to him.
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