OIL AND GAS INSURANCE & NIGERIA’S LOCAL CONTENT POLICY
AUTHOR: ELVIS E. ASIA
PUBLISHER: LAW FUTURE PARTNERS
YEAR OF PUBLICATION: 2020
A REVIEW BY
PROFESSOR AMBROSE O. O. EKPU, FCIArb.
DEAN, FACULTY OF LAW
AMBROSE ALLI UNIVERSITY, EKPOMA
It is with a great some of pride and fulfillment that I present today a review of Oil and Gas Insurance & Nigeria’s Local Content Policy on the occasion of its public presentation. I am as elated as a father watch his offspring doing great exploits in his own life time. Mr. Elvis E. Asia was my student for five years in his undergraduate studies leading to the award of an LL.B. degree thirteen years ago. In spite of my schedules and the current challenges occasioned by the Covid-19 pandemic, I could not resist identifying with Mr. Asia, a respectful and diligent student and colleague in his hour of celebration. I congratulate him on this epochal event.
The book being presented today deals with three different subjects of oil and gas, insurance and local content policy. Mr. Asia has connected these subject areas to make a gripping read. The book examines the local content policy in the oil and gas industry in Nigeria with particular reference to the insurance sector. The oil and gas exploration and the ancillary services in the industry, including insurance, have traditionally been dominated by foreign companies. The result is that the few local companies involved have lacked the requisite skill, expertise and finance to participate effectively in the old and gas business. The whole idea of the Nigeria Oil and Gas Industry Content Development Act, 2010 is to increase indigenous participation in oil and gas development and servicing. The Act sets bold minimum content targets for various oil and gas related goods and services including insurance.
Oil and Gas Insurance & Nigeria’s Local Content Policy is a ground-breaking, bold effort to examine this legislative initiative to increase local content in the oil and gas industry, particularly the insurance sector. The book has 205 substantive pages plus 18 preliminary pages, divided into five chapters. It has a foreword done by an accomplished commercial lawyer, Mr. George Etomi.
Chapter 1 defines the important terms sued in the study. It highlights the important roles of insurance. Mr. Asia identifies the goals of the local content policy to include transfer of knowledge, capacity building of local companies, creation of local jobs, and development and growth of the local economy. He also lists the various kinds of risks in the oil and gas industry, broadly categorized into global risks and element risks and highlights the different types of insurance in the oil and gas industry. He asserts that these various insurance packages could run into billions of dollars and that the intention of the local content policy is to ensure that 70% of these risks are placed with Nigerian insurance companies.
Chapter 2 is an overview of the Nigerian insurance industry. It chronicles the evolution of insurance in Nigeria, examines the legal and regulatory framework. The chapter also identifies and succinctly discusses the various challenges in the insurance industry in Nigeria, including low awareness level among the insuring public, negative attitude towards insurance companies, unfavourable macroeconomic environment, poor regulatory framework, low level of underwriting skill and competency, unethical practices.
In chapter 3, Mr. Asia examines the local content policy in the oil and gas industry generally with focus on insurance. There is a detailed history of the local content policy in Nigeria in its three phases, namely the period prior to the establishment of the Nigerian Content Development Division (NCD) by the NNPC, the period after the creation of the NCD, and the period after the enactment of the NOGICD Act, 2010. The chapter discusses in some admirable details the key features of the Act and the guidelines issued by the National Insurance Commission relating to oil and gas insurance. It finds that even before the Act, the Insurance Act of 2010 already mandated the insurance with local insurers any property or insurable interest domiciled in Nigeria. The chapter concludes with a discussion of the challenges to the implementation of the local content provisions on insurance.
Chapter 4 critically examines the insurance minimum content target and local capacity. This chapter raised a number of pertinent questions, such as what constitutes local capacity, what kind of risks that can be sourced offshore under section 50 of the Act. The chapter suggests that there might be conflict between the NOGICD Act and the Insurance Act. It examines the issue of capacity of the insurance industry in Nigeria both from the perspective of capital and competencies. It finds that at both levels, the industry has not measured up. The result is that Nigerian insurance companies largely act as fronts for international insurance companies. I wish to observe that this situation is not peculiar to the insurance sector. Many of the Nigerian players in the industry are content with obtaining requisite licences and allocations and then sell off their interests to foreigners. So, we end up with many oil bloc owners in flowing babariga and military uniforms, who do not know what an oil rig looks like. Local content policy perceived and implemented this way can only be for the benefit of those privileged few and not the country at large. The chapter also has an exposition on the relationship between insurance and oil and gas development. The experiences of other countries (Norway, Brazil, Malaysia, Angola, etc) on local content were discussed.
The book concludes with chapter 5, which is reform centered. Mr. Asia advocates for building of capacity, fine-tuning of the local content policy on oil and gas insurance to take into account the dynamics of the oil and gas insurance, the realities of the Nigerian insurance industry and the state of the Nigerian economy and infrastructure. The areas to be fine-tuned were clearly articulated. The book ends with a rich bibliography, which confirms the enormous amount of research that went into producing Oil and Gas Insurance & Nigeria’s Local Content Policy.
Oil and Gas Insurance & Nigeria’s Local Content Policy is up-to-date and timely. It has materials as recent as June 2020. It evaluates the current efforts by the National Assembly to amend the NOGICD Act. It made a thorough comparison of the two versions of the Bill before the House of Representatives and the Senate. The book is presented in impeccable and finest language. The packaging and the gloss cover add to the overall beauty of the book. The print is very good.
However, Oil and Gas Insurance & Nigeria’s Local Content Policy is by no means a perfect work even though it aimed at perfection. No work that is the product of human efforts can be. A few typographical errors were sported in the book. A detailed index would also have made the use of the book more convenient. The orderly arrangement of the sources listed in the table of cases, table of statutes and the bibliography should also be considered for the next edition.
The foregoing however does not detract from the significant contribution that Oil and Gas Insurance & Nigeria’s Local Content Policy has made to legal scholarship. Mr. Elvis Asia is to be congratulated for this momentous effort. The book in, no doubt, a veritable reference source. I very warmly commend Oil and Gas Insurance & Nigeria’s Local Content Policy to law teachers and student, judges, legislators, policy makers, legal practitioners, insurance practitioners, stakeholders in the oil and gas industry and all who take interest in the workings of the law and the economy.
Thank you for your attention.
Prof. Ambrose O.O. Ekpu, FCIArb.