Home Economy NAICOM, NCDMB partner to enhance insurance local content in oil, gas

NAICOM, NCDMB partner to enhance insurance local content in oil, gas

by Business News Report

Commissioner for Insurance / CEO Thomas O S has said that the Federal Government’s drive towards enhancing local content speaks to the long-term plan burn out of good intention and strategy to grow our economy, develop the Nigerian Industries and her human capital. It is in alignment with this national interest that we converge this day to append our signatures to the instrument that solicits information evidencing adherence to the Government’s local content determination. During the signing ceremony of a joint guideline between the two federal agency he said “it is important to state that, prior to the NOGICD Act 2010, the Insurance Act 2003 made far reaching provisions for the domestication and domiciliation of insurance services in Nigeria.  In particular Section 65 (7) of the Insurance Act 2003 made it compulsory for any property located in Nigeria whether moveable or immovable to be insured by a Nigerian registered insurer. Section 67 requires that insurance of all imports into Nigeria must be insured by insurers registered in Nigeria. In addition, Section 72 prohibits any person from transacting insurance or reinsurance with foreign insurers/reinsurers except with the written permission of the Commission. 

The National Insurance Commission (NAICOM) and the Nigerian Content Development and Monitoring Board (NCDMB) 8th June, 2022 officially launched and unveiled Guidelines on Submission of Insurance Programme by Operators, Project Promoters, Alliance Partners and Indigenous Companies in the Nigerian Oil & Gas Industry. The ceremony took place at the Headquarters of the NCDMB in Yenagoa, Bayelsa State.
Present at the ceremony from the insurance sector were the CFI, the Deputy Commissioner for Insurance, Technical Alh. Sabiu Bello Abubakar, NAICOM Director Policy and Regulations Mr. Leonard Akah, the Chairman, Nigeria Insurers Association Mr. Ganiyu Musa and Mr. Tunde Oguntade who repsented the President of NCRIB.

“Following the peculiarity of the Oil and Gas industry, the NOGICD Act was enacted which therefore facilitated the hitherto collaboration between the NCDMB and National Insurance Commission; This amongst others, led to the proactive considerations of the specific provisions of the NOGICD Act relating to the Insurance Industry.  The Guidelines for Oil & Gas Insurance Business was issued in 2010 which amongst others, stipulates the roles and responsibilities of insurance institutions in ensuring compliance with local content law. This was done with the primary consideration of ensuring that available In-Country Insurance Capacity is fully filled before any foreign consideration. The overall aim of the guideline is the development of indigenous content through increased indigenous participation. The NOGICD Act 2010 was therefore applauded by the entire insurance industry as it greatly complemented the National Insurance Commission roles and responsibilities in performing its regulatory and supervisory oversight function.

“In similar vein, Sections 49 and 50 of the NOGICD Act specifically relate to Insurance & Reinsurance and Approval for Offshore Insurance respectively. The Act also contains a Schedule with recommended minimum levels of Nigerian Content Level measured by percentage spend. The historical synergy between our agencies has therefore necessitated a veritable platform for inter-agency collaboration in order to give effect to the requirements of Section 49 and 50 of the NOGICD Act 2010 by providing guidance to Operators in the Oil and Gas necessary for satisfying the provisions of the law in relation to insurance transactions. The joint Guidelines which is today issued with the objectives of enforcing and strengthening compliance with the provisions of the referenced sections of the NOGICD Act and relevant provisions of the Insurance Act with respect to companies carrying on insurance business in the Nigerian oil and gas industry is to also enable the Board monitor utilisation of in-country insurance capacity. I therefore implore all operators, project promoters, alliance partners and Nigerian indigenous companies engaged in any form of business, operations or contract in the Nigerian oil and gas industry to note that the sighted relevant laws have demanded our adherence and continued compliance, hence the issuance of this Guidelines. It is on this note that I express optimism in relation to the realization of the benefits of increased local content which are but not limited to; increased retention, growth in in-country technical capacity. Job creation and employment generation, increased penetration and GDP growth, human capacity development, and many others.

Whilst we note the need to secure domestic supply chains through strong backward domestic integration which has the potency of protecting economies from imported contagion of both a health and economic variety, we are also mindful of the capacity gap of the Supply side. Consequently, the National Insurance Commission is committed to creating an enabling environment that will consistently enhance increased capacity of the Insurance Institutions both financially and technically. 

In his own remarks Engr. Simbi Kesiye Wabote, FNSE, FIPS said “today’s event marks yet another giant stride in our quest to actualize the Board’s mandate under the NOGICD Act, 2010, which is primarily to drive and promote Nigerian Content in the Nigerian Oil and Gas industry. This event is the culmination of consistent, persistent and rigorous engagement between the Board and NAICOM in the last twelve months. This engagement, and the outcome, between the two agencies speak to the advantage derived from collaboration. The success of our engagement, earmarked by this launch of the Insurance Guidelines, further attests to my belief that the local content enforcement and implementation is not a sprint but a marathon. I am delighted to announce that this Insurance Guidelines addresses loopholes that have been identified by the Board in implementing the provisions of the NOGICD Act, particularly sections 49 and 50. As we are aware, the combined provisions of sections 49 and 50 require all operators engaged in any form of activity or project in the Oil and Gas industry to ‘’insure all insurable risks related to its oil and gas business…with an insurance company, through an insurance broker registered in Nigeria.’’

“The NOGICD Act provides that where an operator seeks to place an insurable risk offshore, a written approval of NAICOM must first be sought and obtained and that NAICOM, prior to the issuance of the approval, must first determine that ‘’…local capacity has been fully exhausted.’’ The essence of the above provisions of the NOGICD Act was to ensure the full utilization of available in-country capacity in the Insurance sector before seeking offshore insurance services. This is expected to support retention of capital in-country and build capacity of Nigerian insurance companies in the oil and gas industry.  It is believed that the implementation of this Insurance Guidelines will further strengthen the Board’s local content drive and ensure that a greater portion of the spend in the Insurance industry as it relates to oil and gas activities in Nigeria is retained in-country. I am therefore excited that this Insurance Guidelines, drawn up by the Board and NAICOM, will lead to more value addition and usage of Nigerian insurance firms and insurance brokers registered in Nigeria. I am glad to announce that today’s launch of the Insurance Guidelines marks the first step in the implementation of the Guidelines. This is following the series of meetings over the past one week between representatives of the Board and NAICOM to draft the framework implementation plan, which has now been concluded.

“Let me conclude by reminding us that this event is another step by the Board to attaining 70% Nigerian Content by 2027 under the Board’s 10-Year Strategic Roadmap. Finally, the Board is delighted to collaborate further with NAICOM to ensure the successful implementation of the Insurance Guidelines and every other activity that will lead to the attainment of the objectives of the NOGICD Act, 2010. We will further dissipate information about the new Insurance Guidelines during the Nigerian Content Seminar session at the 2022 Nigerian Oil and Gas Event scheduled for next month, 4th to 7th July 2022 in Abuja. I look forward to seeing you at the event as we deepen the discussions on the requirements and benefits of the Insurance Guideline to industry practitioners.

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