The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has reiterated its commitment to resolving issues surrounding the 0.5 percent levy imposed under the Midstream Downstream Gas Infrastructure Fund as stipulated by the Petroleum Industry Act (PIA). During a stakeholders’ sensitisation programme in Abuja, the NMDPRA’s Chief, Farouk Ahmed, acknowledged the concerns voiced by wholesale natural gas producers and suppliers over the payment of this development fee. A proposal to reevaluate the levy was stated to ensure it aligns with the PIA. Ahmed, represented by Executive Director Francis Ogaree, underscored that addressing these contentious issues is crucial for fulfilling current and future demands for wholesale gas and petroleum liquids in Nigeria.
Wholesale gas producers, represented by the Oil Producers Trade Section (OPTS), expressed strong opposition to the retrospective application of the 0.5% MDGIF levy. They argued that many of their gas supply contracts were executed prior to the PIA’s enactment in August 2021, making it impractical to include the new levy. Leading voices in the OPTS, such as Chairperson James Makinde and Vice Chairperson Princess Edeimu-Chukwumah, highlighted Section 52-7A of the PIA, which they claimed places the responsibility for collecting the fee on the NMDPRA itself. They emphasized that the authority has been empowered by the regulation but is seeking to impose a levy that contradicts this arrangement. Additionally, they pointed out the broader issue of delayed payments from customers, including long-standing debts from power generation companies, rendering it unreasonable for producers to remit funds they have not yet received.
In response to the grievances raised by the stakeholders, the NMDPRA pledged to address their concerns comprehensively. Plans for a full-scale workshop were announced, aimed at providing further clarity on the contentious issues and facilitating alignment among stakeholders regarding the implementation of wholesale gas and petroleum liquid supply operations. Ahmed reiterated the ministry’s commitment to transparency and fairness in the petroleum market, which he deemed essential for effective market dealings and ensuring compliance across the supply chain. The NMDPRA viewed itself as an enabler, dedicated to nurturing a business environment conducive to sustainable growth in Nigeria’s energy sector.
While the NMDPRA emphasized the importance of the new regulatory framework, the stakeholders remain cautious about the implementation process and its timelines. The confusion surrounding retrospective levy that impacts already signed contracts is particularly troubling for producers, prompting fears about financial and operational disruptions that might arise from the new regulations. This pushback reflects broader tensions within Nigeria’s energy landscape, where regulatory shifts often meet resistance from established industry players. Ultimately, stakeholders demand clear communication, supportive policies, and collaboration to ensure that these new frameworks can be implemented effectively without undermining existing agreements or market stability.
Additionally, Ahmed highlighted the wider benefits envisioned in the wholesale supply framework, which include fostering investment across the entire petroleum value chain, enhancing transparency in hydrocarbon measurement, and promoting fair dealings within the market. He called upon stakeholders to look towards collaborative opportunities to drive the sector forward. The PIA, described as a pivotal transition from the previous 1969 Petroleum Act, was framed as a way to shift the focus toward domestic energy security, with an emphasis on maximizing operational efficiencies and infrastructural development in Nigeria’s midstream and downstream sectors.
In conclusion, the importance of operationalizing the guidelines established under the PIA was reiterated by Ahmed, as he urged stakeholders to seize the opportunities presented to optimize oil and gas operations. The successful implementation of these transformative measures is viewed as critical not just for enhancing Nigeria’s energy landscape but also for securing a robust and inclusive energy future. As the NMDPRA seeks to address the concerns of producers while ensuring compliance with the new regulatory framework, the ongoing dialogue with stakeholders will be vital to fostering a collaborative environment that supports investments and sustainable growth in the Nigerian energy sector.
