The Nigerian Content Development Monitoring Board, NCDMB has insisted on 50 per cent equipment ownership for indigenous firms in the petroleum industry.
The Board stated that it has already developed a model and approved precedence for 50 per cent equipment ownership by a Nigerian Subsidiary based on some criteria.
It maintained that, “There must exist a Nigerian subsidiary which shall also meet the definition of a Nigerian Company under the NCDMB Act. That is to say, at least 51 per cent of the shares of the Nigerian subsidiary must be owned by Nigerians.
The Board maintained that the Nigerian subsidiary must own at least 50per cent of the equipment, or a satisfactory plan for it to own 50 per cent of the equipment.
The NCDMB stated that ownership or plan to transfer ownership must be in writing, legally binding, credible, and verifiable by NCDMB.
It stated that, “Ownership or agreement to transfer ownership shall not be predicated on impossible or dodgy conditionalities. All conditionalities or encumbrances based on 3rd party interest such as banks or financiers shall be submitted to NCDMB for verification.
The NCDMB stated that a plan to transfer ownership shall take place during the life cycle of the contract for which the equipment is being imported.
It stated that where NCDMB is giving approval based on a plan to transfer ownership, the approval will be provisional, normally for a period of one year, renewable upon satisfactory compliance with the terms of the Agreement for the Transfer of ownership.
The Board stated that, “NCDMB will not allow round tripping of ownership whereby agreement is entered with the foreign vendor or parent company to transfer ownership of asset/equipment after the life cycle of a contract. Except where the Nigerian shareholders (who shall have the first right of refusal to purchase the equipment) have declined interest in taking up the foreign equity interest, foreign shareholder(s) shall not be allowed to have the first option of buying back the equipment after the contract.”