The Petroleum Industry Act 2021 (PIA) provides timelines within which certain critical actions must be performed by holders of oil mining leases (OMLs) and oil prospecting licences (OPLs), awardees of marginal fields and settlors.
One year after the passage of the PIA, this article details the activities, relevant timelines (some of which have lapsed) & practical considerations, before opining on whether these timelines are realistic. This is done taking into consideration the relevance of the regulations and guidelines that are yet to be issued by both the Nigerian Upstream Petroleum Regulatory Commission (“NUPRC” or the “Commission”) and the Nigerian Midstream and Downstream Regulatory Authority (NMDPRA), which ought to provide guidance in complying with the PIA.
At the 6th session of the PIB Education Series, I will be joined by guest speakers – Dr Ekpen Omonbude, Managing Director, Eraskon Nigeria Limited and Dr Gboyega Oladele, Chief Financial Officer, Vertex Energy Limited. We will be speaking about the New PIB Fiscal Framework including the components of the fiscal system, dual royalty regime, dual tax system (Nigerian Hydrocarbon tax and Companies Income Tax), allowable deductions, Conversion, Cost Price Ratio Limit, ascertainment of total profits and consolidation for tax purposes amongst others. Please join us by clicking this link.
On Thursday, December 3 2020, I spoke with Mrs. Funmi Ogbue, CEO, Zigma Limited; Dr. Francis Adigwe, PIB Consultant to the Nigerian Senate; and Dr. Obinna Dike, Assistant Professor of Law, American University of Nigeria, on Host Community in the PIB. We discussed the background of host community, identification of host communities, sources of funding and allocation of host community funds, governance structure of the Host Community Development Trust, host community needs assessment and development plan. You may watch the video of the session below.
We had an amazing session talking with Ms. Ronke Onadeko, Principal Consultant, DRNL Consult Ltd, UK; Mr. Gbite Adeniji, Partner, Advisory Legal Consultants; Mrs. Ogechi Nkwoji, Head Economic Intelligence Research and Regulation, MOMAN; and Engr. Chichi Emenike, Head, Gas Ventures, Neconde Energy Limited on the Midstream & Downstream Regulation in the PIB.
Key points from the discussion include:
There should be no template or framework for the pricing of petroleum products, if we are truly operating a deregulated market. The prices should be determined by demand & supply in the market, input prices, and potential or required return on investments amongst others.
The PIB should not set the price of gas, as this will prove to be a disincentive for gas business in Nigeria. Gas prices should be determined in a “willing buyer – willing seller relationship”.
The PIB needs to address importation of petroleum products.