Towards the ease of doing business in Nigeria’s petroleum industry

Introduction

TIn December 2024, the Nigerian Content Development and Monitoring Board (“NCDMB” or the “Board”) issued Guidelines for approving Contracting Processes in the Nigerian oil and gas industry.  These Guidelines update the 2018 Project Certification and Authorization Directorate (PCAD) Guidelines and operationalise the Presidential Directives on the Reduction of Petroleum Sector Contracting Costs and Timelines, issued in February 2024 (“the Directive”).. The Directives designated NCDMB as a key regulatory stakeholder in the contract approval simplification process and mandated the Board to issue implementation guidelines for oil & gas contract approval stages under its supervision.

PCAD Guidelines: Challenges and Shortcomings

The 2018 PCAD Guidelines adopted a segmented approach for approving the tendering process, from formulating contract award strategies to advertisement, prequalification assessment, submission of technical and commercial bids, and final award. Specifically, in the Open Tendering Process, Operators were required to obtain NCDMB’s approval for nine distinct stages, namely: Contract Strategy, Nigerian Content (NC) Plan, Advertisement, Technical Invitation to Tender (TITT), Technical Evaluation Criteria (TEC), Technical Evaluation, Commercial Invitation to Tender (CITT), Commercial Evaluation Template (CET), Commercial Evaluation, and Nigerian Content Compliance Commitment (NCCC). Consequently, the approval timelines were unpredictable, posing  a significant challenge to operators.

Presidential Directives: Initiatives and Recommendation

To address the challenges posed by the PCAD Guidelines, the Directive recommended adopting a simplified contract approval process with a single level of approval by both NUIMS and NCDMB at various contracting stages; including prequalification, technical, commercial, and final approval. As a direct result, the number of NCDMB’s touchpoints in the contracting process was reduced for Open Tendering, Selective Tendering, and Sole Sourcing; and approval timelines were revised to 6 months to streamline the contracting process.

Procedure for Contract Approval under the 2024 NCDMB Guidelines

Under the new Guidelines, the approval stages for NCDMB have been specified and reduced for all tendering processes, with 5, 6, and 4 approval stages for Open Tendering, Selective Tendering, and Sole Source Tendering, respectively. Below, we outline the various approval stages and their applicability to each tendering process.

Contract Strategy, Nigerian Content (NC) Plan, and Advertisement stages

Under the new Guidelines, Open Tendering processes, now consolidate NCDMB approvals for the Nigerian Content (NC) Plan, Advertisement, and Contract Strategy into a single approval, with the Contract Strategy and Advertisement requirements incorporated into the NC Plan Template. Upon approval of the NC Plan, Operators will receive a six-month Certificate of Authorisation (CoA). In contrast, Single Source and Selective Tender processes require separate approval of the Contracting Strategy prior to NC Plan submission, highlighting a distinction in the approval process.

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