Nigerian Content Development & Monitoring Board

Nigerian Content Development Fund (NCDF) FAQ




  1. A Fund to be known as the Nigerian content Development Fund (the “Fund”) is established for purposes of funding the implementation of Nigerian content development in the Nigeria oil and gas industry.
  2. The sum of one per cent of every contrary awarded to any operator, contractor, subcontractor, alliance partner or any other entity involved in any project, operation, activity, or transaction in the upstream sector of the Nigeria oil and gas industry shall be deducted at source and paid into the fund.
  3. The fund shall be managed by the Nigerian Content Development Board and employed for projects, programmers and activities directed at increasing Nigerian content in the oil and gas industry.
Whose obligation is it to deduct the 1% NCD fund?

Every entity awarding the contract should deduct 1% and remit to the fund.

What should be the effective date of 1% deduction?

22ND APRIL,2020

Should this obligation be affected by non-receipt of response from NCDMB on any question raised by an awarding entity on the application of the deduction?


Is the mandatory deduction for the NCD fund applicable to any contractual arrangements executed prior to 22nd April,2010?


Should awarding entities deduct 1% from ongoing projects which were awarded to its contractors before the effective date of the act (22nd April 2010)?


Should the contractor in turn deduct 1% from subcontractors on such projects awarded before the act?


What category of sub-contracts should the 1% NCDF apply to with regards to the amount?

It applies to all contracts without any minimum limit.

Does the deduction apply to say: -purchase of furniture’s; hire of contract staff; office cleaning; catering services and other contracts of this natures?

Yes, it applies all contracts of any nature in the upstream sector.

Should the 1% deduction apply to sub-contracts awarded to community suppliers of minor consumable materials and manpower/ labor?

Yes, all contracts and contractors irrespective of size of contractor or contract.

In the event that the operator (awarding entity) has directly paid the 1% to the NCD Fund, will there be a further deduction of 1% from the contractor’s invoices from the same Operator.

Deduction should only be made once by an awarding entity on behalf of its contractor, Any payment made by the awarding entity is recoverable from the contractor.

Should the Contractor’s sub-contractors and suppliers be deducting        the 1% from their lower-tier sub-contractors and suppliers, some of which may be supplying non-petroleum industries under the contract?


Which of the following variation types should be affected by NCDF deductions?
  1. Additional work to original scope of work?
  2. Extension of time for any reason whatsoever?
  3. Claims due to work stoppage?


All variations that escalate contract price

Should the Operator (awarding entity) make 1% deduction on variation orders on projects awarded to contractor before the act approved after the act bearing in mind that such variation orders are also governed by same conditions of the main projects awarded before the act?

All variations that escalate contract price

Is the mandatory deduction applicable to extensions and variations made after 22nd April 2010 to contracts entered into before 22nd April 2010, where these extensions are the result of normal and foreseen growth in work within the scope of work (and remaining within the contract signed in December 2006?

Yes, to the extent of variation.

Between Contractor and sub-contractor, who will bear the brunt for 1% deduction on the sub-contracts on project awarded to contractor post act era for which contractor submitted commercial tender pre-act era, bearing in mind that contractor did not consider 1% NCDF in its commercials, and that sub-contractor will ask for a refund of 1% if deducted from its payment or still it will factor it in its bid?

The Sub-contractor has the primary obligation to pay the 1% deduction, while the Contractor has the obligation to deduct it and remit to the Board. Will not treat the deduction as a tax which must be passed to the contractor, but a contribution imposed by the law on all contracting stakeholders.

At what stage the deduction be made? : at contract stage or invoice stage?

Deduction should be made upon award.

In computing the levy, is it the product of the contract sum before taxes or after taxes?

It is a product contract sum before taxes.

How will the Board treat the issue of overpayment?

Reconciliation procedure is already put in place by the Board to address the issue of refund’s owing to over payments.

Will remittance receipts be issued by NCDMB (similar to the treatment of VAT and WHT transaction) in a manner that such receipts could be on-transferred to vendors on whose behalf the deduction were made?

All deduction to NCDMB will be receipted by NCDMB.

Should 1%deduction apply to purchase order issued to overseas vendors?

Yes, [deductions will apply to overseas vendors once the contract was awarded by a Nigerian awarding entity or awarded on its bill by a foreign entity.

Will the deduction apply to transactions taking place in the Free Trade Zone considering that such transaction are technically taking place outside Nigeria?

Deductions shall apply to all upstream contracts awarded within the territory of the Federal Republic of Nigeria including its Territorial waters, Exclusive Zones and Free Trade Zones?