Gas producers oppose 0.5% levy as NMDPRA promises resolution
The Nigerian Midstream and Downstream Petroleum Regulatory Authority has assured stakeholders of its commitment to address the contentious implementation of the 0.5 per cent levy imposed by the Midstream Downstream Gas Infrastructure Fund under the Petroleum Industry Act.
Speaking at a stakeholders sensitisation programme in Abuja on Wednesday, NMDPRA Authority Chief, Farouk Ahmed, acknowledged the concerns raised by wholesale natural gas producers and suppliers regarding the collection of the development fee.
He assured them that a reevaluation of the levy would be conducted to ensure compliance with the PIA.
Ahmed, represented by the Executive Director of Hydrocarbon Processing Plant, Installation and Transportation Infrastructure, Francis Ogaree, emphasised the importance of resolving these issues to meet current and future demands for wholesale gas and petroleum liquids.
Producers push back
Wholesale gas producers, under the Oil Producers Trade Section, argued that implementing the 0.5% MDGIF levy retroactively is impractical.
Many of their gas supply contracts were signed long before the PIA was enacted in August 2021, making it difficult to incorporate the new levy.
Chairperson of the OPTS Gas Sub-committee, James Makinde and Vice Chairperson Princess Edeimu-Chukwumah, pointed to Section 52-7A of the PIA, which they claim places the responsibility for fee collection on the NMDPRA.
“You’ve been empowered by the PIA section 52-7A to do what you are asking us to do. And in the regulation, 23 section 13-2 you’ve been empowered to be the collector,” Edeimu-Chukwumah stressed.
Additionally, the producers highlighted delayed payments from some customers, including power-generating companies, with outstanding debts dating back to 2011.
This, they said, makes it unreasonable to expect producers to remit funds they have yet to receive.
NMDPRA reacts
In response, the NMDPRA assured the stakeholders that their concerns would be thoroughly addressed. A full-scale workshop will be organised to provide clarity on the contentious issues and align stakeholders on the implementation of wholesale gas and petroleum liquid supply operations.
Ahmed also highlighted the broader benefits of the wholesale supply framework, noting that it fosters investment across the petroleum value chain, enhances transparency in hydrocarbon measurement, and promotes fair market dealings.
“These licences are the appropriate licences for entities engaged in, or wishing to engage in, the sale and delivery of natural gas and petroleum liquids, for domestic use or exports,” Ahmed said.
He added that the PIA represents a significant evolution from the 1969 Petroleum Act, shifting focus from production and exports to domestic energy security.
“We appeal to stakeholders to explore these opportunities through the operationalisation of these guidelines that will pave the way for optimised midstream and downstream oil and gas operations, energise infrastructure development, and foster collaborations to grow Nigeria’s energy sector,” Ahmed concluded.
