By Adewale Sanyaolu
A growing dispute seems to be unfolding between the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and gas producers over the implementation of the 0.5% Midstream Downstream Gas Infrastructure Fund (MDGIF) levy, as mandated by the Petroleum Industry Act (PIA).
At a one-day Stakeholders Sensitisation on the Requirements, Opportunities, Benefits and Values of Wholesale Gas and Petroleum Liquids Supply Operations convened in Lagos yesterday by the NMDPRA, the gas producers vehemently rejected the role of collection agents for the 0.5 per cent levy.
They contended that, given the ambiguity in the PIA regarding the designated collector of the levy, the responsibility should fall either to the NMDPRA or the gas off-takers.
Speaking at the meeting, the Vice Chairman of Gas Subcom of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry, Edeimu Chukwumah, said the PIA does not in any way place a legal obligation on gas producers to collect the levy.
“While we recognise the position of the law in setting up this levy, there exists no statutory or legal obligation on producers to collect the levy on behalf of the Authority in the governing law.
She added that collection of the o.05 per cent levy on behalf of NMDPRA imposes additional burden on firms that lack the capacity and resources to implement.
Besides, she argued that the levy was introduced in August 2021 and many of the contracts were signed off before then as the levy was not in consideration , and they couldn’t have factored it in.
Defending the PIA, Director, Gas of Hydrocarbon Processing Plants, Installations and Transportation Infrastructure (HPPITI) Mr. Joseph Musa, said the position of the law cannot be altered as it is the law as of today.
To repeal the law, he advised gas producers and other interested parties to approach the National Assembly with their concerns for possible consideration
He said the levies are to be collected by the wholesale supplier (gas producers) as a component of the wholesale price and shall be remitted by the supplier within 21st of the month following the payment by the customers.
Musa maintained that the NMDPRA shall enforce the non-remittance by the wholesale supplier in accordance with the law, referring them to Regulations 4 of the Midstream and Downstream Petroleum Fees Regulations for modalities of payment.
However, this position was further countered by the producers who 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.
The Director added that the PIA represents a significant evolution and departure 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 optimized midstream and downstream oil and gas operations, energise infrastructure development, and foster collaborations to grow Nigeria’s energy sector,’’
Musa maintained that the NMDPRA shall enforce the non-remittance by the wholesale supplier in accordance with the law, referring them to Regulations 4 of the Midstream and Downstream Petroleum Fees Regulations for modalities of payment.
However, this position was further countered by the producers who highlighted delayed payments from some customers, including power-generating companies with outstanding debts dating back to 2011.
They argued that it is unreasonable to expect producers to remit funds they have not yet received.
Earlier in his remarks, NMDPRA Authority Chief Executive, Mr.Farouk Ahmed, earlier in his remarks, said the PIA came into existence in August 2021, introducing licences for wholesale supply operations as prescribed in sections 142 and 197 of the Act.
According to him, 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.
He added that the benefits of wholesale supply operations cannot be over emphasized which, he said, include; fostering investments across the petroleum value chain, enhancing transparency in hydrocarbon measurement, providing tools for enforcing domestic obligations, ensuring arm’s length dealings for a level playing field and acting as a pathway for willing buyer-willing seller transactions of Nigeria’s hydrocarbon resources, amongst many other significant advantages.
However, due to unresolved issues, he stated that NMDPRA has been overwhelmed with disagreements regarding the implementation of wholesale supply operations.
“And so, at this stakeholder sensitisation workshop, your issues and concerns will be discussed and NMDPRA’s position on these concerns will be provided, in an interactive manner.
“Once again, as stakeholders in this industry, it is important to note that it is our collective responsibility to ensure that current and future wholesale gas and petroleum liquids supply demands are met. This is not only critical to our national economy but also integral to the global energy market.
We, therefore, appeal to you to ensure that we work collaboratively in enabling the operationalisation of these guidelines that will pave the way for optimized midstream and downstream oil and gas operations, energise development of infrastructure and foster collaborations that will contribute to the growth of our nation’s energy sector,’’