The Nigerian Oil and Gas Industry has developed substantially since its inception. This is the reason the Government is focusing on increasing interest and participation of Nigerian citizens in the industry.
This is evident through the Nigerian government initiative of increasing Local Content and ensuring that indigenous companies have a larger part in developing oil and gas assets.
The Local Content Act was enacted on April 22nd 2010. It provides a system, for increased Nigerian interest in the Oil and Gas Industry.
It prescribes minimum thresholds for Nigerian investment in activities within the industry through the usage of Nigerian human and material resources and services in the upstream sector of the industry.
This includes all activities, associated with the exploration, development, exploitation, transportation and sale of Nigerian crude oil and gas resources.
The steps and regulation of starting Oil and Gas business or organization in Nigeria could be in contrast from starting other sort of business like food processing, mining, agriculture and so forth.
Companies that offer products and services in Oil and Gas industry in Nigeria are called oil and gas companies.
To set up an oil and gas servicing company to offer services to the Nigerian oil and gas industry, these are the steps to follow:
REGISTRATION OF COMPANY OR INCORPORATE
Registration of organization or Incorporate of organization in Nigeria is solely done by Corporate Affairs Commission (CAC). It takes a minimum of 4 – 14 working days to complete. The minimum share capital is one (1) million share capitals.
As at the time of writing this article, it could cost you Eighty Five Thousand Naira (₦85,000) to incorporate an organization one (1) million share capitals.
Besides, it is advisable to increase your share capital to five (5) million share capital so as to fit in into major categories that may share capital.
OBTAIN TAX IDENTIFICATION NUMBER (TIN).
This will empower you to open a corporate organization bank account for your organization with Nigerian banks. You can obtain your TIN through with Nigerian Federal Inland Revenue Service.
Below are the steps required to obtain your TIN
- Fill the TIN application form.
- Provide your business registration number: Business Name, Registration Certificate or Certificate of Incorporation.
- Provide the company’s business address, location and commencement’s date as well as other information required by the form.
After all these documents are filled, you are required to take them to the tax Office. You can go to the closest office around you.
It takes up to 10 business days counting from the day you submit your application for Tax Identification Number in Nigeria and the day you get it.
However, when your tax number is ready you will be notified.
OBTAIN DEPARTMENT OF PETROLEUM RESOURCES (DPR) PERMIT.
DPR permit is a permit that allows a company to operate in Nigerian Oil and Gas industry. Application takes 4 – 14 working days to be completed.
For companies that wants to offer oil and gas servicing services on the Offshore have to obtain “OFFSHORE SAFETY PERMIT”
There are three OGISP categories of DPR permit you can use to operate in Nigerian Oil and Gas industry. These are “OGISP General Category”, OGISP Major Category” and “OGISP Special Category” DPR Permits.
General DPR permit allows to do convey minor goods and services. Application charge is 5,000.00 Naira as it were.
Major Category of DPR allows you to convey majority goods and services in Nigerian Oil and Gas industry business. There are thousand and one goods and services this permit can offer you. Application fee is 5,000.00 Naira.
As you desire to increase your company’s capacity, you can consider a “Special Category” of DPR permit. However, there are some goods and services you may not be permitted to convey in Nigerian Oil and Gas Industry without special category permit.
Special Category DPR Permit application is obtained at the cost of 250,000 Naira. At the point when you start contemplating those specialized services, some services demand you have a five (5) minimum level of share capital.
It is advisable for beginners to start with Major Category of DPR permits. All DPR permits application attracts some service charge; some requires DPR inspections and certifications.
The requirements for obtaining DPR permit are listed below:
- Certificate of Incorporation
- A certified true copy of Memorandum and Articles of Assoc.
- Other company incorporation documents, such as CAC Form 1.1 or CAC Form CO2 & CAC Form CO7
- Current Tax Clearance Certificate
- List of Equipment/Facility available to the company
- Receipt of payment of the Employee’s Compensation Scheme (Nigeria Social Insurance Trust Fund)
- Medical Retainership Agreement with a hospital.
- Company’s Profile
- Staff’s list (including the position and qualification of staff)
- DPR endorsed request for the expatriate quota (where applicable)
- List of approved expatriate quota position and their Nigerian understudies (where applicable)
- Proposed training programme for Nigerian staff for the current year
- Registration by a relevant professional body (where applicable)
- Technical agreement or MOU with Nigerian Company/DPR accredited laboratory (where applicable)
- Health, Safety, Environment and Community (HSEC) Management System
OBTAIN NIGERIA SOCIAL INSURANCE TRUST FUND (NSITF)
NSITF is one of the requirements in order to obtain your firm’s DPR permit. Your fee depends on your staff salary assessment and can be finished up in 5 working days.
OBTAIN COMPANY’S TAX CLEARANCE CERTIFICATE
Organization Tax Clearance Certificate is a crucial and compulsory certification for any organization to operate officially in Nigeria.
Tax Clearance Certificate (TCC) in Nigeria is an important document issued by Federal Inland Revenue Service (FIRS) or States Inland Revenue Service showing that applicant’s tax affairs are in order.
TCC in Nigeria is necessary for various corporate transactions by both individual and corporate organizations in Nigeria.
One of the requirements for obtaining DPR permit is organization tax clearance, regardless of whether you recently registered or not, initiated business or not. The tax clearance certificate is a must have. The certificate will indicate if you have not initiated business or recently registered.
SET UP AN OFFICE, TECHNOLOGY AND FEW STAFF.
Office size does not make any difference but location is of utmost important. As a beginner, office location might be better situated at Port Harcourt or Lagos State. Nigerian Oil and Gas Free Zone could be another great spot to lease office for your Oil and Gas servicing company business in Nigeria.
You can commence operations with a couple of admin staff and one operational staff.
REGISTER WITH NIGERIAN CONTENT DEVELOPMENT AND MONITORING BOARD (NCDMB).
The Nigerian Content Development and Monitoring Board (NCDMB) was established by the president, Dr. Goodluck Ebele Jonathan following the signing into law of the NC act on 22nd April, 2010.
NOGIC JQS was made in line with section 55 of the act which states that the board shall establish, maintain and operate a joint qualification system (JQS) in consultation with industry stakeholders which shall be administered in understanding with provisions set out in the regulations to be made by the Minister in agreement with the provisions of this ACT.
REGISTER WITH NATIONAL PENSION COMMISSION (PENCOM).
This is not compulsory for new companies whose staff strength is beneath five. This mostly comes as a prerequisite to register with Nigerian Petroleum Exchange (NipeX), a division of NNPC. PENCOM is for employee contribution.
PENCOM certificate are gotten when your organization is making contribution to the scheme and can be gotten in 5 working days.
OBTAIN INDUSTRIAL TRAINING FUND (ITF) CERTIFICATE
Industrial Training Fund (ITF) Certificate is one of the important documents your organization needs to accommodate NiPex registration for oil and gas servicing business in Nigeria.
In contrast to some of the federal agency that have online portal for application, ITF application is still physically done or on their online portal in Nigeria.
Below are the steps required to obtain an ITF certificate:
- You are required to complete ITF Form 7A (which is available online).
- The completed Form 7A will then be submitted to the nearest ITF Area Office along with a copy of company’s Corporate Affairs Commission’s Certificate of Incorporation, Certified true copies of the company’s Audited Account and a copy of the company’s Tax Clearance.
- The company will be assessed for its liability by ITF Revenue, Inspectorate and Compliance Officers.
- After then, you will generate RRR through the ITF Pay-portal or Remitta platform.
- When the RRR is generated, take same to the Bank to pay your Training Contribution.
- After payment, you will take the printout of payment and duplicate Teller from the Bank to ITF Office.
- You will then be issued hard copy of receipt and acknowledgment letter.
- The ITF Area Office will then forward the employer details as contained in the form 7A to Headquarters’ Revenue, Inspectorate and Compliance Department for issuance of ITF National Number.
- The ITF National Number will then be sent to the Area Office for Scripting and issuance of Certificate of Compliance.
- A Certificate of compliance will be given to you as evidence of compliance with the ITF Act.
READ ALSO: How To Start An Independent Power Company in Nigeria
REGISTER WITH NIGERIAN PETROLEUM EXCHANGE (NIPEX).
NIPEX, an arm of National Petroleum Investment Management Services (NAPIMS) is the online meeting venue for purchasers (IOC, NOC) and suppliers (you).
You can do your Oil and Gas servicing business in Nigeria for a considerable length of time without registering with NipeX. This is because, there numerous minor jobs and contracts in the Nigerian Oil and Gas industry that is not deemed high or important enough to go through the NipeX bidding system.
It is worthy to note that you cannot be a decent player in Nigerian Oil and Gas industry without registering with NipeX. Every major contract and Jobs are completed in NipeX bidding platform.
Contracts below N25 million can be won and executed by organization without going through NipeX platform or registration. NipeX application expense is N25,000 for new applicants. Time edge to complete the registration usually varies.
Listed below are the steps required to register with NIPEX
- Register and open account at NipeX website.
- Make Payment of N25,000 via FG Online Remita
- Upload your payment receipt online.
- Send the form and original copy of the deposit slip/online payment receipt or valid NNPC registration to NipeX. The address to send these documents is on the registration form. Scanned copies sent to firstname.lastname@example.org, email@example.com will be accepted.
- On receiving these documents and confirming payment of the registration fee, NipeX will send (via the e-mail address provided on the form) login details & guidelines to enable access and completion of the pre-qualification questionnaire.
- Send scanned copies of the following statutory documents possibly pdf file to firstname.lastname@example.org : Certificate of Incorporation, Form CO2 – Allotment of shares, Form CO7- List of Directors, Department of Petroleum Resources (DPR) Certificate (not less than N25,000 and valid), 3 years of current Company Tax Clearance Certificate, VAT Certificate, PENCOM Certificate (where applicable), Reference letter from your bank, Current ITF Registration certificate
- NipeX verifies the questionnaire for accuracy and notifies you of any amendment where necessary.
REGISTER WITH PRODUCTION COMPANIES IF YOU ARE SERVICE COMPANY.
On the off chance that your organization is into production of Oil and Gas, you may not require this step.
For oil and gas servicing companies, most of oil and gas production companies (multinationals) will need you to register with them before you can work with them. Companies like SHELL, NLNG, TOTAL E&P Limited and so on.
The time required in registering with multinationals differs from one organization then onto the next. Some companies, their system of registration is so hard that you may not complete registration without securing consultancy firms.
SECURE TECHNICAL PARTNER MEMORANDUM OF AGREEMENT.
Not compulsory especially if you have in-house capacity to render your services. Normally, you have to find a foreign supplier to strategically align with. Make certain to secure a Memorandum of Agreement NOT Understanding with these foreign suppliers.
Start business. Great marketing strategy is exceptionally required for your business to succeed. Invitation to bid will also be coming to your organization from NipeX, NNPC and different organizations you registered with.
Note: Some of these permits, certificates or registrations are not compulsory before you can commence business. In any case, you will surely meet some of them as you progress in the Nigerian oil and gas business.
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We can help you write a detailed, bankable and comprehensive business plan for your business idea.
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Now i can start my own oil and gas servicing company, i so much appreciate this information.
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Wow…your article is so insightful. I stayed glued on the phone till the end. Kudos to you for breaking it down, this will help a long way into starting up!
Dayo Adetiloye Business Hub
We are glad you got value