By Bassey Udo
The domestication and domiciliation of insurance services through the enforcement of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010 will result in increased retention of Nigerian content capacity in the oil and gas industry, the Commissioner of Insurance, National lnsurance Commission/CEO, Thomas Sunday, has said.
The guidelines were issued jointly by the Nigerian Content Development and Monitoring Board (NCDMB) and NAICOM.
The NAICOM CEO said the partnership between NAICOM and the NCDMB, which led to the document, was to strengthen the mutual oversight functions of the two organizations.
To enhance local content, Sunday said the commitment by the Federal Government was to grow the country’s economy, develop the local Industries and her human capital.
He said it was in alignment with the national interest that the signing of the approved guidelines to the government’s local content policy.
Prior to the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010, the NAICOM boss said the Insurance Act 2003 had made far reaching provisions for the domestication and domiciliation of insurance services in Nigeria.
In particular, he identified Section 65 (7) of the Insurance Act 2003, which made it compulsory for any property located in Nigeria, whether moveable or immovable, to be insured by a Nigerian registered insurer.
Also, he said Section 67 of the Act requires that insurance of all imports into Nigeria must be insured by insurers registered in Nigeria.
In addition, he said Section 72 of the same law prohibits any person from transacting insurance or reinsurance with foreign insurers/reinsurers, except with the written permission of NAICOM.
As a result of the peculiarity of the oil and gas industry, he said the NOGICD Act was enacted to facilitate the collaboration between the NCDMB and NAICOM, leading to the consideration of specific provisions of the Act relating to the Insurance Industry.
The Guidelines for Oil & Gas Insurance Business issued in 2010 spells out the roles and responsibilities of insurance institutions in ensuring compliance with local content law, primarily to ensure that available In-Country Insurance Capacity was fully filled before any foreign consideration.
The NAICOM CEO said the overall objective of the guidelines was to ensure the development of indigenous content through increased indigenous participation.
Again, Sections 49 and 50 of the NOGICD Act specifically relate to Insurance & Reinsurance and Approval for Offshore Insurance respectively, apart from a Schedule which contains recommended minimum levels of Nigerian Content Level measured by percentage spend.
The joint guidelines, the NAICOM Chief said, would help enforce and strengthen 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, to enable the NCDMB monitor utilization of in-country insurance capacity.
Urging 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 embrace compliance with the guidelines.
With such compliance, he said NAICOM was optimistic that the realization of the benefits of increased local content would result in increased retention, growth in in-country technical capacity, job creation and employment generation, increased penetration and gross domestic product (GDP) growth, human capacity development, and others.
Whilst stressing the need to secure domestic supply chains through strong backward domestic integration to protect economies from imported contagion of both a health and economic variety, he said NAICOM was also mindful of the capacity gap of the supply side.
He reiterated NAICOM’s commitment to create an enabling environment to enhance increased capacity of the insurance institutions, both financially and technically.
Wambote said event is the culmination of engagements between the Board and NAICOM in the last one year, which has resulted in the launch of the Insurance Guidelines, to promote the local content enforcement and implementation.
Je said Insurance Guidelines has addressed the loopholes identified by the Board in implementing the provisions of the NOGICD Act, particularly sections 49 and 50,
The provisions of these laws 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 businesswith an insurance company, through an insurance broker registered in Nigeria.’’
Besides, he said 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 provisions of the NOGICD Act, the NCDMB sxribe said, was to ensure the full utilization of available in-country capacity in the Insurance sector before seeking offshore insurance services.
“1This is expected to support retention of capital in-country and build capacity of Nigerian insurance companies in the oil and gas industry,” Wabote said.
He said ths Board was convinced that the implementation of the Insurance Guidelines would further strengthen its local content drive and ensure a greater portion of the spend in the Insurance industry as it relates to oil and gas activities in Nigeria was retained in-country.
The unveiling of the Insurance Guidelines, he noted, marked the first step in its implementation. following a series of meetings between representatives of the Board and NAICOM to draft the framework implementation plan.
