Downstream: Oil Producers and NMDPRA Disagree Over Petroleum Levy Collection

A disagreement has arisen between oil producers and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) regarding the collection of a 0.5% wholesale price levy.

While the NMDPRA insists that oil producers should collect the levy and remit it to the designated banks, the producers argue that the regulatory authority should handle the collection directly.

NMDPRA Chief Executive Farouk Ahmed, represented by the Authority’s Legal Adviser, Joseph Tolorunse, noted that the engagement aimed to address issues raised during the first phase of the NMDPRA’s sensitization program.

“Due to unresolved matters, NMDPRA has been overwhelmed with disagreements about the implementation of wholesale supply operations,” Tolorunse said. “During this stakeholders’ sensitization workshop, we will discuss these issues and concerns, providing NMDPRA’s position interactively.”

Princess Edeimu Chukwumah, Vice Chairperson of the Oil Producers Trade Section (OPTS) Gas Sub-Committee and a representative of Chevron Nigeria Limited, along with James Makinde from Seplat and other representatives from International Oil Companies (IoCs), voiced their opposition to the idea of oil producers collecting the levy.

Emmanuel Cofie-Spiff of Oando Plc stated, “The stakeholders do not have issues with the Petroleum Industry Act (PIA). However, we have identified some gaps, and those gaps are why we are here—to resolve and work collaboratively. The NMDPRA believes that oil producers should collect and remit the levy, which is the crux of the argument.”

In response to these concerns, NMDPRA’s representative, Tolorunse, clarified to journalists that the implementation of government revenue collection—specifically the 0.5% wholesale price levy on petroleum products and natural gas—has been contentious.

“The PIA, in sections 37 and 52, provides for the collection of levies but does not specify which entity should be responsible for them. We have explained here that the charges apply not to the supplier but to the wholesale customers. Collecting the levy at the wholesale point is more efficient, as it is part of the wholesale price,” Tolorunse noted.

He also explained that since the PIA was enacted in 2021, implementing it has been delayed due to the need to establish regulations and develop guidelines for collection procedures.

Tolorunse urged stakeholders to collaborate in facilitating the implementation of these guidelines to optimize midstream and downstream oil and gas operations in Nigeria.