. /.  WORLD TRADE  
ORGANIZATION   
G/TRIMS/W/89 
22 September 2011 
 (11-4569) 
Committee on Trade-Related Investment Measures Original:   English 
  
 
CERTAIN MEASURES TAKEN BY NIGERIA IN THE "ACT TO PROVIDE FOR  
THE DEVELOPMENT OF NIGERIAN CONTENT IN THE NIGERIA OIL  
AND GAS INDUSTRY" OF APRIL 2010 
 
Questions from the United States 
   The following communication, dated 21 September 2011, is being circulated at the request of the Delegation of the United States.  
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 Background 
  In April 2010, Nigeria passed an Act to provide  for the development of Nigerian content in 
the Nigeria oil and gas Industry.  The Act is inte nded to "change the shape of oil and gas business in 
Nigeria," in particular by boosting"  indigenization" of the sector.  Th e law's coverage is exceptionally 
broad, applying in respect of "all operations or tr ansactions carried out in or connected with the 
Nigerian oil and gas industry," and creating requirements on "all regulatory authorities, operators, contractors, subcontractors, alliance partners a nd other entities involved in any project, operation, 
activity or transaction in the Nigerian oil and ga s industry."  Beyond a general requirement to 
"consider Nigerian content as an important elemen t of project development and execution," the law 
creates mandatory local purchasing and local conten t requirements with respect to a comprehensive 
range of specific activities.  These include:  
 Exclusive consideration to Nigerian  indigenous service companies which 
demonstrate ownership of equipment, Nige rian personnel and capacity to execute  
work; 
 First consideration to serv ices provided within Nige ria and good manufactured in 
Nigeria; 
 Specified minimum local content requireme nts – up to 100% in many cases – in 
nearly 200 listed goods and services categor ies – everything from consulting, IT, 
banking and laundry services, to steel pl ates, electric cables, and cement; and 
 A requirement that all welding and fabri cation take place in Nigeria (essentially a 
prohibition on the importation of fa bricated or welded products). 
 The law's local content requirements entere d into effect immediately upon its passage; 
penalties for non-compliance are severe, including cancelation of projects and assessment of a fine 
equivalent to 5% of project value.  The United Stat es raised concerns about this law repeatedly during 
its draft stages, and has communicated these concer ns post-passage in bilateral discussions, as well as G/TRIMS/W/89 
Page 2  
 
  during Nigeria's June 2011 Trade Policy Review.  The EC shares U.S. concerns, and also raised the 
issue in the TPR.  Questions 
 
 The 2010 Nigerian Content Act establishes mandatory local sourcing and local content 
requirements applicable to a comprehensive range of goods and services consumed by Nigeria's oil 
and gas industry.  In addition to  general requirements to give "first consideration" to goods 
manufactured in Nigeria, the law establishes mini mum local content requirements for specific goods 
such as steel plates and pipes, cables, valves, cement , and pipes.  These requirements are applicable to 
"all operations or transactions carried out in or conn ected with" the Nigerian oil and gas industry, and 
to "all regulatory authorities, operators, contract ors, subcontractors, allia nce partners and other 
entities" involved in an oil and gas project.  Add itionally, the law requires mandatory use of locally-
manufactured welded and fabricated products.  
1. The Content Act's general requirements of "fir st consideration" to goods manufactured in 
Nigeria, its specific requirements for mandatory minimum local content in specified goods categories, and its requirement to use products fabricated and welded in Nigeria each appear to constitute measures that require the purchase or use of products of domestic 
origin or from a domestic source.  How does Nigeria believe these measures comport with the obligations in Article 2 of the TRIMs Agreement and the illustrative list thereto? 
 
 The Local Content Act also directs the Minister of Petroleum Resources to develop "a fiscal framework and tax incentives" for companies that establish facilities or operations in Nigeria "for 
purposes of carrying out production, manufacturing or  for providing any services and goods otherwise 
imported into Nigeria." 
 
2. The Act's provision on fiscal incentives appears to constitute a measure that conditions the 
receipt of an advantage on a requirement to purchase or use products of domestic origin or 
from a domestic source.  How does Nigeria be lieve this measure comports with the 
obligations in Article 2 of the TRIMS Ag reement and the illustrative list thereto? 
 
 
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