NMDPRA, Oil Producers Disagree on Petroleum Levy Assortment

Oil producers and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) on Monday expressed various opinions over who ought to accumulate the 0.5 per cent wholesale worth levy imposed on petroleum merchandise by the Petroleum Trade Act.

Whereas the NMDPRA stated the oil producers ought to accumulate the levy and remit it into their accounts, the gamers requested the regulator to be the collector to keep away from including extra burden to grease producers.

At a stakeholders sensitisation held in Lagos, the Chief Govt of the NMDPRA, Farouk Ahmed, stated the target of the engagement was to handle points and considerations raised in the course of the first section of the NMDPRA sensitisation programme to achieve an alignment that can allow the efficient implementation of the wholesale provide operations.

Ahmed, who was represented by the NMDPRA Authorized Adviser, Joseph Tolorunse, said that the Petroleum Trade Act got here into existence in August 2021, introducing licences for wholesale provide operations as prescribed in sections 142 and 197 of the Act.

In keeping with him, these licences are the suitable licences for entities engaged in or wishing to have interaction within the sale and supply of pure fuel and petroleum liquids, for home use or exports.

He famous that the advantages of wholesale provide operations embrace fostering investments throughout the petroleum worth chain, enhancing transparency in hydrocarbon measurement, offering instruments for imposing home obligations, guaranteeing arm’s size dealings for a degree enjoying area, and appearing as a pathway for prepared buyer-willing vendor transactions of Nigeria’s hydrocarbon assets, amongst others.

“Nevertheless, as a result of unresolved points, NMDPRA has been overwhelmed with disagreements concerning the implementation of wholesale provide operations. And so, at this stakeholder sensitisation workshop, your points and considerations can be mentioned and NMDPRA’s place on these considerations can be supplied, in an interactive method.

“As soon as once more, as stakeholders on this business, you will need to notice that it’s our collective duty to make sure that present and future wholesale fuel and petroleum liquids provide calls for are met. This isn’t solely crucial to our nationwide financial system but in addition integral to the worldwide vitality market.

“We, due to this fact, enchantment to you to make sure that we work collaboratively in enabling the operationalisation of those pointers that can pave the best way for optimised midstream and downstream oil and fuel operations, energise the event of infrastructure, and foster collaborations that can contribute to the expansion of our nation’s vitality sector,” the chief govt pleaded.

Nevertheless, because the sensitisation resumed yesterday, stakeholders below the Oil Producers Commerce Part burdened that there was nowhere it was said within the PIA that they need to be levy collectors for the federal government, calling on the regulator to imagine that duty or put the duty on the purchasers.

The PIA stipulates that 0.5 per cent of the wholesale worth of petroleum merchandise bought in Nigeria, which shall be collected from wholesale clients, can be a part of the revenues meant for the NMDPRA.

There have been arguments about whether or not the cash needs to be charged individually as within the Valued Added Tax.

However the regulator emphasised that the phrase, ’0.5 per cent of’ was used as a substitute of ‘0.5 per cent on’, saying the levy needs to be deducted from the wholesale worth, being 0.5 per cent of it.

A consultant of Oando Plc, Emmanuel Cofie-Spiff, stated the oil producers usually are not in opposition to the legislation, however they noticed a lacuna within the PIA because it didn’t specify who needs to be the collector.

“The gamers within the business don’t have points with the regulation. The PIA is the legislation. However what we try to do proper now could be that we found some lacuna and a few gaps within the legislation. These gaps are the rationale why we’re right here, in order that each the NMDPRA, with the business gamers would have an understanding of find out how to go ahead. On the finish of the day, there needs to be an understanding of find out how to go in regards to the implementation of the PIA. We aren’t averse to paying the 0.5 per cent. It’s the legislation. It’s for the nation.

“However what we’re saying proper now could be, who is meant to pay that 0.5 per cent is established. However who’s the collector? As a result of on this case, the PIA didn’t particularly say that the oil producers can be the levy collectors.

“That’s the place of the oil producers. The NMDPRA is saying that, for the reason that producers are those that can promote this product to the ultimate shoppers, they need to be those to gather that levy and remit it again to the authority. And we’re saying, no. Within the first place, after we got here into the enterprise as upstream operators, we weren’t meant to be collectors of levies. And so, in case you are now telling us at this time that we needs to be the collectors of levies, it implies that we’re completely deviating from the first explanation why we’re seen as oil producers for the upstream enterprise. So, that’s the place of the oil producers,“ Cofie-Spiff advised newsmen.

The Vice Chairperson of OPTS, Fuel Sub-Committee, Princess Edeimu-Chukwumah of Chevron, James Makinde of Seplat, and different representatives from different oil firms refused to be the collectors of the levy, saying it was not included within the PIA.

Reacting, NMDPRA Authorized Adviser, Tolorunse stated the workshop was a sensitisation programme organised to elucidate sure provisions of the PIA to the stakeholders.

“There are some points encountered after we had been implementing the PIA. These are the problems we needed to debate with our stakeholders in order that we will attain alignment. One of many points is the implementation of the gathering of presidency revenues, particularly the 0.5 per cent of wholesale worth of petroleum, crude oil and pure fuel. Due to the Provision. Sections 47 and 52 of the PIA empower the authority to gather these levies as a part of the income. However the turning situation is that as a result of the PIA really didn’t specify the entity to gather it, however a regulation has been made to offer that the provider ought to accumulate it and remit it to the federal government.

“However thoughts you, we now have defined to them that the costs usually are not on the provider. The levy is just not on the provider however slightly on the wholesale buyer. Nevertheless, the handy level to gather this levy is on the wholesale level. And because it varieties a part of the wholesale worth, the authority feels the suitable entity to remit it to the authority and the federal government is the provider who really collects the wholesale worth,” he famous.

Tolorunse expressed confidence that an alignment can be reached quickly.

He disclosed that some firms have been paying the levy whereas others haven’t.

“We try to elucidate to those that haven’t been paying to see the rationale why they need to pay. In making an attempt to implement the legislation from the time it was handed, we’re having resistance within the sense that implementation didn’t start instantly when the legislation was handed as a result of we have to move rules or we have to make pointers that can specify the procedures for assortment.

“So the timing for implementation (3:41) can also be a part of what we’re discussing. Though the pushback is that we must always not do it retroactively. We’re saying that is the legislation. The legislation was made in 2021 and it must be utilized round that point. However like I stated, we try to additionally attain an alignment on that. We haven’t, however we’re hopeful we can have an alignment,” he stated.