NIGERIA Invest in 2012-13 - Newsdesk Media

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oil, gas and minerals
Plans are in place to boost the
capacity of Nigeria’s oil refineries
paid to previous legislation. However, KPMG warned that
some of its terms are so stringent that “a transitional
arrangement would need to be developed, such that foreigners,
who have over the years been encouraged to invest in the
Nigerian economy, do not lose such investment”.
Preference for indigenous companies
The bill states that preference should be given to
Nigerian indigenous service companies, with the bar for
qualification set at 51 per cent Nigerian equity ownership.
Some critics argue that this is moving towards
nationalisation rather than the desired indigenisation,
but it has not stopped foreign companies from trying to
satisfy the requirement.
The proposed act also asserts that, in bid evaluations,
the awarding of contracts will not be based solely on the
principle of lowest bidder. The emphasis will be on the
capacity of an indigenous company to carry out the job – as
long as the bids are within 10 per cent of one another.
Service provider Subsea 7 created a joint venture
with Nigerian yard-owner Jagal late last year. The new firm,
invest in nigeria 2012-13
NigerStar 7, will have two fabrication yards with a combined
workforce of more than 3,000 people.
Joint ventures
Law firm McGrigors says this may be the first in a string of
joint ventures as foreign companies attempt to tie up with
good-quality partners, although the firm warns that legal
issues around corporate governance and anti-bribery
programmes are stalling the rush to sign deals.
“The key for investors is to make sure that they retain
sufficient influence within the corporate structure. They need
to safeguard their own investment in the long term, but also
ensure that they adhere to these new Nigerian content rules.
Business practices that might seem commonplace in the local
market could land joint-venture partners in trouble in their
home market,” says Gemma Crawford, a senior solicitor
at McGrigors, who worked on the deal. ■
Mark Dixon is a journalist specialising in energy and is a former
editor of Africa Oil and Gas magazine. He has chaired numerous
conferences, including Oil and Gas Offshore West Africa