C 4823

rSB. 236J

A BILL
FOR
TI II: LE(;>\L ,\",) Rr:GULI Torn FrUIIL1\{)II.K, h'sTi [""!IV'S

A.\ ACT T(J (Slt\llUSIl ANI) REGi!LATORY ES1A]lLJSII

IJrHORITIES ron TIlE NIUI:RIAN PETROLn;M 01'[1<111101\ UF TlIF UJ'S1REI,\1 IVIlII

1~1lI'" rer , TO

GUIDEu,<r:s H!RIIIE

.1"lJ ])()\\'~STk[,\M

Sr:CT{JI(.'i, ,,\~D FOR PURPOSES CO.'-:NUTI'1l

:111- SA,11'

Commence.
mcut.

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

1. Property and sovereign ownership of pctroleun: wirhin Nigeria, its territorial waters, the continental shelf, extended continental shelf shall vest behalf of the people of l'.'igeria, 2. Any company qualified under terms and conditions prescribed from time to time by {he relevant Institutions \hall be free
[(I

Vesting u"

petroleumanu
lilt

Exclusive Economic Zone and rhc

slate ill'

natural giiS.

ill lilt:

sovereign

Nigeri;J for and

UIl

Atlocatlon of Acreage

apply for tile grant or

award ofa license, lease or contract, as the case may be, for the exploration and production of petroleum. 3.-( I) The management and allocation of petroleum resources and their

or Petroleum
R~5()Urce5.

Management

derlvanves in Nigeria shall be conducted strictly in accordance with the principles of good governance, transparency and sustainable development of Nigeria. (2) Subject to subsection (I) of this section, the main cnrencn for the

management of petroleum resources shall be the total benefits that wiJl accrue to the sovereign state of Nigeria. 4.-( 1) The Minister shall grant licences and leases on the recommendation of the Directors General oruie Insuturions and in accordance with guiddincs. impose special terms and conditions that are not rrcons.srenr with the provisions of this Act on any licence or Iease 10 which this Act applies, including terms and conditions as to:
(a) participation by the Federal Government in the venture to which the
Government

Parucipauon.

19
3J 21 22

licence or lease relates, on terms to be negotiated between the Minister and the applicant for the Hcence or lease; and
(b) exploitation of any natural gas discovered.

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24

C 4824 200S No.

Petroleum Industry
(2) Subsection (1) of this section shall not apply to any indigenous company

2 3
fransparcncy
ani.! UO!1i.!

operating in the upstream sector whose aggregate production

is less than or

equal to fifty thousand barrels per day of crude oil or natural gas equivalent 5. In achieving their functions and objectives under this Act, the Institutions and the National Oil Company shall be guided by principles of the Nigerian Extractive Industries Transparency Initiative Act of 2007.

4 5 6

(i()v~rnan[~

Luviroument .1Il,1 Air Quatitv bni"iow;,

7 8 9 10 II 12 13 14 15 \6

6.~( I) The Federal Government shall, to the extent practicable, honour international environmental obligations and shall promote energy efficiency, fuel

the provision of reliable enctgy, and a taxation policy that encourages efficiency by producers and consumers.

(2) In accordance with tnc provisions of subsection (1) of this section, the Federal Government shall introduce and enforce integrated health, safety and environmental quality management systems with specific quality, effluent and

emission targets for oil and gas related pollutants, without regard fer fuel type such as gas, liqUid or solid, in order to ensure compliance with international standards, 7. The federal local governments Government shall, in co-operation encourage with the state and

Community Dovrlopment.

17 IS 19 20 21

and communities.

and ensure the peace and

development of the petroleum producing areas of the Federation through the implementation of specific projects aimed at ameliorating the negative impacts of petroleum ucttvtues. 8.-( I) The Federal Government shall at all times promote the involvement of indigenous companies and manpower and the use of Iocally produced goods and services in all areas of the petroleum industry in accordance with existing laws and policies. (2) Where
{IllY

Nigcriun
C'"llell\,

22 23 24 25
"]jj

contract for work or services is considered

to.be within

27 2R 'E 30 3\

the capabilitie', of Nigcriun companies, in accordance with any law relating to Nigerian content, the tender list shall be restricted to Nigerian companies. (3) All companies involved in any area of the upstream or downstream petroleum industry shall, as a condition of their licence, tease, contract or

permit, as the case may he, comply with the terms and conditions of any law

Petroleum Industry
relating to the Nigerian content law in force at the time.

2008 No. C 4825

2
3 4

(4) Failure to comply with the terms of any local content law as determined

by the Inspectorate shall be a ground for revocation of a licence, lease, contract or permit that may have been previously granted to the company that failed to comply with the said terms.
PART

5
6 7 8 9 10 11

If -

INSTITUTIONS

Chapter I - The Minister

9.

The Minister in charge of petroleum resources shall he responsible for of the activities of the petroleum industry and shall have

The Minister.

the co-ordination

overall supervisory functions over petroleum operations and all the Institutions of the industry.
10.

12
13

The Minister shaft-. the Federal Government in all transactions between the

Functions and powers

(a) represent

14
15

Government and any other person in respect of any matter contemplated by this Act;
(b) exercise supervisory

16
17

functions over the affairs and operations of the

petroleum industry;
(c) report developments in the petroleum industry to the Federal Executive

18 19

Council annually;
(d) advise the Federal Government on all areas pertaining to the oil and

aJ
21

gas industry;
(e) administer the petroleum industry through strategies and programmes

22 23
24 25 16 II

that may be developed by the National Petroleum Directorate; (j) represent Nigeria at meetings of international organisations that are primarily concerned with the petroleum industry such as the Organisation of Petroleum Exporting Countries, the Gas Exporting Countries Forum, and the African Petroleum Producers' Association;
(g) on behalf of the Stale. negotiate within OPEC for the most beneficial

28 29 JJ
31

production quotas for the State;

(h) advise the President as to the appointments

of the chief executive

officers of the Insututions:

C .;t82h 2()08 No.

Petroleum lndustry
(I) have access at all times to-

2 3 4
5

(i) areas covered hy existing licences, leases or contracts; and (Ii) all installations to which this Act applies, including refineries, storage depots, plants and stations of every description,
for the purpose of ;n~pcctil1gthe operations conducted therein and enforcing the

6 7 8 9 10 II 12 13
l.stablishrnem
[h~ Nauona l
Llf

provisions of this Act and any regulations made under it. 11.-( I) On the recommendations of the Directors General of the

Institutions. the Minister may by regulations prescribe all matters which under this Act arc required and necessary to give effect to this Act, consistent with the provisions ofthi.~ Act
(2) The Minister may delegate any of the functions under subsection (I)

of this section to the Directors General of any of the Institutions. Chapter I! _.. The Ntuionai Petroleum Directorate 12.-0) There Directorate
is established

14

hy this Act the National

Petroleum

15
16

r-mc Directorate")

which shall he a body corporate with perpetual

Pctrorcvm
Directorate.

succession and a common seal. (2) The Directorate shall have power to acquire, hold and dispose of property, sue and be sued in its own name.

17
18

IY
20

0) The Directorate shall function as the secretariat of the Minister and

shall take over any functions which were previously undertaken by the Ministry ofPetroleum Resourceof the Directorate shall he \0-

21
i-'<lll(l;OnS of the

22
23 24 25 26
T7

13. The lunctiuns

l)irec(ora(L

(a) formulate and develop strategies to implement the petroleum policy

and other related policies approved for the petroleum industry by the Minister; (b) coordinate and pay to the Directorate, the Inspectorate, the Agency

and the Centre, the agreed amounts of ttscallsed crude designated for the funding of thc said Institutions in accordance with their approved budgets. and collect any unspent amounts at the end of the financial year for payment hack to the Federal Treasury:
(c) liaise and co-operate with the other Institutions,

28 29 30 31

private and public

organisations, institutions, enterprises and individuals operatingin all sectors

Petroleum Industry of the petroleum industry: 2 3 4 5 6 7 8 9 10 11 12 13 14 IS 16 17

18

2008 No. C 4827

(til ensure that the government derives maximum advantage from all petroleum contracts and fiscal arrangements that may be entered into by any of the Institutions and companies for the economic benefit of the people of Nigeria; (e) promote competitive trading of Nigerian petroleum in the upstream, midstream and downstream sectors; i,f) promote open and competitive processes for(i)

the allocation of licences or contracts for exploration and production; for the

Iii) upstream and downstream petroleum quota allocations, purpose of the maximisation of benefits to the people of Nigeria;

(8) advise the Minister on the allocation of licences, contracts and quota allocations; (II) formulate and promote policies and strategies to-(i)

stimulate investment and participation in all areas of the petroleum

industry: (ii) encourage the use of advanced technology in the petroleum industry;
and (iii) develop Nigerian content in the industry;

19 JJ 21 22
23

(i) promote measures to increase the national reserves base; (I) promote measures to increase productivity in all areas of the petroleum industry;
(k) promote the use of locally available raw materials in preference

to

24 2..') 26

previously imported materials, without at any time compromising quality,

safety and environmental

standards in the petroleum industry;

(I) promote and ensure the use of Nigerian goods and services in all sectors including insurance, finance, and professional services as a first resort, without at any time compromising cost, quality and competence;
(111) ensure regular consultation

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28
19

with all stakeholders of the Nigerian

(0-

]) 31

petroleum industry, including but not limited

(i) the petroleum producing companies;

C 4828 2008 No.

Petroleum Industry
Cii)all companies operating in all sectors of the downstream petroleum

2
3 4

industry;
(iii) federal, state and local governments; (iv) communities

residing or conducting

activities in areas where

5
6 7 8
9

petroleum is produced;
(v) non-governmental

organisations

directly involved with matters

pertaining to the petroleum industry; and

(vi) institutions

and professional

bodies relevant to the petroleum the Society of

industry including the Nigerian Society of Engineers;

10 11

Petroleum Engineers, the Nigerian Mining and Geosciences Society. the Nigerian Economic Society, the Nigerian Bar Association and the Nigerian Institute of Management;
(Il) receive data from the Institutions and all entities operating

12
13

in the

14
15

Nigerian petroleum industry for the purpose of formulating appropriate policies for the benefit of the State;
(0) maintain economic,

16
17 18 19 2D

commercial

and technical data relating to all

areas of the industry;

(P) relate with relevant international

agencies, in accordance with the

directives of the Minister;

(q) hold, on behalf of the State and people of Nigeria,

all unallocated

21 22
23

acreages of crude oil and natural gas;

(r) promote the peaceful development

of all sectors of the petroleum

industry. in consultation with all stakeholders;

(s) promote

24 25 26
TI

compliance

with all legislation

by all participants

and

stakeholders in the industry;

(l) initiate periodic reviews of existing policies in the petroleum industry

in consultation with the Institutions and all other stakeholders;

(u) initiate periodic

28 29
JO 31

reviews of existing laws and regulations

in the

petroleum industry in consultation with all stakeholders improvements thereto:

(v) conduct

and recommend

annual comprehensive

assessments

of the impact of

Petroleum Industry

2008 No. C 4829

development programmes of petroleum companies on communities with a 2 3 4 view to evolving appropriate policies and guidelines for oil companies in respect of such programmes;
(w) initiate measures that promote appropriate and indigenous technology

5 6
7 8 9 10

for the petroleum industry in Nigeria;

(x) perform such other functions as the Minister may from time
(0

time

direct, in accordance with the terms prescribed by this Act.

14.-( I) There is established a Governing Board which shall consist of(a) a chairman,

Governing
B()~rd

who is the Minister; and

(b) Directors of the Directorate;

11
12
13
14

(c) the Director General of the Directorate,

(2) The proceedings of the Board of the Directorate and other ancilliary matters shall he regulated by Schedule 1 to this Act. 15.-(1) There shall be an officer of the Directorate to be known as the who shall be appointed by the President. shall be a person with cognate knowledge and
Director-

General.

15
16

Director-General,

(2) The Director-General

17 18
19 X)

experience in the petroleum industry and who is able to show impartiality and object! vity without any conn ict of interest in the petroleum industry,
(3) The Director-General

shall be the chief executive and accounting

officer of the Directorate and shall be responsible for running the day-to-day affairs of the Directorate (4) The Director-General shall have the status of a permanent secretary

21 22 23 24 25 26 27 28 19

of the civil service of the Federal Republic of Nigeria. 16.-(1) The Director-General shall hold office for five years in the first Tenure.
Remuneration

instance which may be renewed for another period of five years only, on such terms and conditions as may be specified in the letter of appointment. (2) The remuneration, tenure and conditions of service of the Directorwithin

and
Conditions of

Service,

General shall be at a level sufficient to attract qualified professionals the petroleum industry. 17.-(1)

lJ
31

There shall be appointed Directors who shall assist the Director-

Directors.

General in managing and discharging the responsibilities of the Directorate.

C 4830 200S No.

Petroleum IndllslI),
(2) The persons to he appointed Directors shall be suitably qualified by

2 3 4

having extensive technical or managerial knowledge ofthe petroleum industry and shall he chosen through a prescribed and transparent recruitment process. (3) The remuneration, tenure and conditions of service of the Directors

5
6
Disqll<liifilJlirm.

shall be at a level sufficient to attract qualified professionals within the petroleum

industry.

18.No person shall be appointed a Director General or Director unless

8
9

heor she(0) is a Nigerian citizen; (b) has not, in terms of the laws in terce in any country:

10 II 12 13 14
15

(i) been adjudged or declared bankrupt or insolvent; or (ii) made an assignment to, or arrangement or composition with his or her creditors which has not been rescinded or set aside; (iii) been declared to be of unsound mind;
Uv) been convicted of an offence involving fraud or dishonesty;

16 17 18 19
VJ~-~li()11 of

been disqualified by a competent authority from carrying out any assignment, responsibility or function in his or her professional capacity.
(c) has not been disqualified

by the Securities Exchange Commission

from holding a hoard appointment in any public company. 19. The office of the Director General shall become vacant(a) three months after giving notice in writing
(0

Office and

20 21 71
23

Tcmunauon.

the President of his or

her resignation;
(b)

if he or she becomes disqualified under the provisions of Section 18 of

24

this Act; or
(c) on the expiration ofhis or her appointment.

25
'}fj

20. The President shall require the Director General to vacate his or her office if he or she:
(a) has committed an act of gross misconduct;

'l7

28
29 3)

(b) has tailed to comply with the terms and conditions of his or her office as fixed by this Act;
(c) sutlers from any mental, physical or legal disability which renders

31

Petroleum Industry
him or her incapable of executing his or her duties efficiently. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 :!) 21 12 23 24 25 26

2IlOli No. C 4831

21. Upon the vacancy of the Director General's office, the President
shall, subject to sections 15 and 18, appoint a candidate to fill the vacancy.

22.-(1) For the effective exercise of the functions and powers of the
Directorate there are established in the Directorate, such departments as may be deemed necessary by the Minister acting upon the advice of the DirectorGeneral. (2) Each department shall be headed by a director.

Structure or the Directorate.

23.-(1) The Directorate may, from time to time, appoint such experienced
professionals as staff of the Directorate to assist it in the performance of its functions under this Ace. (2) Staff of the Directorate appointed under subsection (I) of this section shall be appointed on such terms and conditions of service as the Directorate may prescribe. (3) Staff of the Directorate shall be public officers as defined in the Constitution of the Federal Republic of Nigeria 1999. (4) For the purpose of this section, appolnrmenr shall include secondmeru, transfer and contract appointments. 24. The tenure, remuneration, and conditions of service of staff of the

Other

serr

Directorate shall be at a level sufficient to attract qualified professionals within the petroleum industry and shall take into account:
(i) the specialised nature of work to be performed by the

Tenure, Remuneration and Conditions of Service.

staff

(ii) the need

10

ensure financial sufficiency of the Directorate; and

(iii) the salaries paid in the private sector to individuals with equivalent responsibilities, expertise and skills.
Pensions.

25.-(1) Service in the Directorate shall be approved service for the

purpose of the Pensions Reform Act Cap. P4, Laws of the Federation of Nigeria 2004, and accordingly, officers and other persons employed in the Directorate shall be entitled to pensions and other benefits as are prescribed in the Pensions Reform Act CAP P4, Laws of the Federation of Nigeria 2004. (2) Subsection (I) of this section does not prohibit the Directorate from

Z7
28 ]9

:D
31

C48322OO8

No.

Petroleum Industry appointing a person to any office on terms that preclude the grant of a pension

2 3 4 5 6 7
Financial Provisions.

or other retirement benefits in respect of that office." (3) In the application of the provisions of the Pensions Reform Act 2004 to the Directorate, any power exercisable under that Act by a minister or other authority of the Federal Government, other than the power to make regulations, is hereby vested in and shall be exercisable by the Directorate and not by any other person or authority. 26.-( 1) The Directorate shall, not later than September in each year, present to the Minister, a budgetshowingthe expectedincomeand the expenditure which the Directorate proposes to expend in respect of the next succeeding financial year. (2) The Directorate may during a financial year prepare and present to

8 9 10 11 12

13 the Minister a supplementary budget relating to expenditures which were 14 15 16 17 18 19

Funding.

inadequately represented in the annual budget due to unforeseen circumstances. (3) The Directorate may vary a budget prepared under this section inso!ar as such variation does not increase the total amount of the expenditure provided for in the original budget. (4) The financial year of the Directorate shall be for a pertodof twelve calendar months commencing on the I st of January in each year, 27.-( 1)The Directorate shall establish and maintain a fund which shall consist of:
(a)

Xl 21 22 Z3
24

such money as may, from time to time, be appropriated to the

Directorate by the Federal, State or Local Government;

(b) a portion offiscalised crude and or fiscalised natural gas set aside for

25 26 27 28
29 ])

the use of the Directorate in accordance with the provisions of ~ection28 of this Act;
(c)

money raised for the purposes of the Directorate b~ way of gifts,

loans and grants-in-aid;

(d) (e)

subscriptions, fees and charges payable to the Directorate; and ali other monies that may, from time to time, accrue to the Directorate.

31

(2) The Directorate shall, from lime to time, apply the proceeds of the

Petroleum Industry 1 2
3

2008 No. C4833

fund established pursuant to subsection (I) of this section:

(a) to the costs of administration of the Directorate;
(b)

to the payment of salaries, wages, fees or other remuneration or

4 5 6 7 8 9 10 11 12

allowances, pensions and other retirement benefits payable to staff of the Directorate or employees; (c) for maintenance of any property acquired or vested in the Directorate;
(d)

tor the purposesof investment,as prescribedby the TrusteesInvestments

Act CAP T22 Laws of the Federation of Nigeria, or any other relevant statute; and
(e)

in connection with all or any of the functions of the Directorate as

specified under this Act. 28.-(1) A portion of fiscalised crude or fiscalised natural gas, as the
Funding the Institutions.

13 case may be and as agreed under the terms of this section, shall be paid by 14 every company engaged in petroleum operations in the upstream sector of the 15 petroleum industry, into an account of the Directorate designated for the sole 16 purpose of collecting the said fiscalised crude or fiscalised natural gas, for the 17 use of, and shared by18 19
(a)

the Directorate;

(b) the Inspectorate;

(c)

20 21 22 23 24 25 26 'lJ 28

the Agency;

(d) the Centre; and

(e)

the Frontier Service;

in accordance with the amounts necessary to fulfil their function and as required by the budgets of each of these Institutions. (2) The exact percentage of fiscalised crude or fiscalised natural gas, as the case may be, shall be as contained in guidelines that shall be issued by the Minister on the advice of the Directorate, three months before the end of the financialyear preceeding the year in whichthe said guidelineswill be applicable, and shall be an amount that is(a) (b)

19
Xl
31

not greater than 2%; and at least the value of the combined total budgets of the Directorate, the

C 4834 2008 No. Inspectorate. 2 3 4 5 6 7 8 9

Insurance Provisions.

Petroleum Industry
the Agency, the Centre, and the Prontier Service.

(3) Subject to the terms of subsection (1) of this section. the Directorate shall pay the portions of fiscalised crude oil and fiscalised natural gas belonging to the Directorate, the Inspectorate, the Agency, the Centre and the Frontier of the financial year. funds shall be

Service within thirty days from the commencement

(4) At the end of the financial year, any unencumbered returned by the Directorate, the Inspectorate.

the Agency, the Centre and the shall retutn the said

Frontier Service to the Directorate, amounts io the Federal Treasury.

and the Directorate

10 11 12 13 l4

29. In order to accelerate the expansion of the Nigerian insurance and capital market, the Directorate shall support policies that would make it

mandatory for operators in the petroleum industry in Nigeria to first utilize the Nigerian insurance and capital markets before resorting to the international market, for the purpose of insuring their assets and raising capital.

Power 10 Accept Gins.

15 16 17 18 19 Xl 21

30.-(1) the Directorate may accept gifts of money or other property

upon such terms arid conditions, if any, as may be specified by the person or organisation making the gift provided such gifts are not mconsistettt with the

objectives and functions of the Directorate under this Act. (2) Nothing in subsection (1) of this section or in this Act shall. be construed to allow the Director-General for their personal use. 31. The Directorate may, with the consent of the Minister of Finance. borrow money as may be required by the Directorate for the exercise of Its and other staff of the Directorate to accept glfts

Borrowing Powers.

22 23 24 25

functions under this Act, oil such terms and conditions as the Minister may determine. 32. The Directorate expenditure shall keep proper accounts of its income and

Accounts and Audits.

lJj Tl 28
'19

in respect of each year and shall cause its accounts to he audited

within six months after the end of each year by auditors appointed in accordance with guidelines published by the Auditor-General for the Federation.

A"I1U,I1 Reports.

:?()

33. The Dlrectorate shall prepare and SUbmit to the Minister not later
{han the month of July in each year a report in such form as the Minister may

31

Petroleum Industry

2008 No. C4835

direct, on the activities of the Directorate during the immediately preceding 2 3 4 5 6 7 8 9 10 11 12 13 year, and shall include in such report a copy of the audited accounts of the Directorate for the year and the Auditor-General's report thereon.
Exemption rmlll Income

34.-1) All income derived by the Directorate from the sources specified in section 27(1) of this Act shall be exempt from income tax. l2) Where conttlbutions to the fund of the Directorate are made by a

'r.o

per.~oo subject to tax under the provisions of any law in force in Nigeria, all such contributions shall be tax deductible 35.-(1) expiration No suit shall be commenced against the Directorate before the
Notice.

of a period of three months after written notice of intention to

commence the suit shall have been served on the Directorate by the intending plaintiff or his agent. (2) The notice shall clearly state the:
(a) cause of action; (b) particulars of the claim; (c) name, address for service and place of abode of the intending plaintiff;

14
15

16 17 18 19

and (d) relief Claimed by the plaintiff. 36. The notice referred to in section 35(2) and any summons, notice or other document required or authorised to be served on the Directorate under the provisions of this Act or any other enactment or law, may be served by:
(a) delivering

!)
21

22
23
24

the same to the Director General or any Director of the

Directorate;

or

(b) sending it by registered post addressed to the Director General at the

25

head office of the Directorate.

26
Tl 28 ~ 37.-(1)

Chapterlll-

The NigerianPetroleumInspectorate
by this Act the Nigerian Petroleum
Establishment

There is established

of the

Inspectorate ("the Inspectorate") which shall be a body corporate with perpetual succession and a common seal. (2) The Inspectorate shall have power to acquire, hold and dispose of property, sue and be sued in its own name and SUbject to this Act, perform all

Nigerian

Petroleum
Inspectorate.

:n
31

C 4S36 2008 No.

Petroleum Industry
acts that corporate bodies may perform by law.

2 3 4
Objects of the Inspectorate.

(3) The Inspectorate shall be successor to the assets and liabilities of the Petroleum Inspectorate of the Nigerian National Petroleum Corporation and the Department of PetroleumResources of the Ministry of Petroleum Resources. 38. The objects of the Inspectorate shall be to(a)

5 6 7
8

ensure the efficient, safe, effective and sustainable tnfrastructural

development of all sectors of the petroleum industry;

(b)

promote the healthy, safe and efficient conduct of all operations!n all

9 10 II 12 13
14

sectors of the petroleum industry in an environmentally acceptable manner;

(c)

organise and regulate the technicalactivities ofthe Nigerian petroleum

industry;
(d)

ensure the efficient development of the transportation and distribution

network infrastructure for downstream gas and downstream products;

(e)

ensure the maintenance of standards and specifications which apply to

15
Functions of tl" Inspectorate.

the upstream petroleum industry. 39. The functions of the Inspectorate shall be to(a)

16
17

enforce and administer policies, laws and regulations relating to

18
19

technical aspects of petroleum industry operations;

(b)

ensure and enforce compliance with the terms and conditions of all

Xl 21 Z2 23 24 25 2h

licences and leases issued in respect of the exploration end production of petroleum in Nigeria;
(c)

ensure and enforce the compliance of all permits issued by the

Inspectorate
(d)

enforce approved regulations and standards relating to operations of

the upstream petroleum sector, including oil and gas evaluation and management, upstreamgas gathering, g~streatment and processingand flares elimination;
(e)

n
28 29 30 31

at ~ll time~ keep a register of all licences and leases issrle'dby the

Inspectorate and any renewals, amendments, suspensions or revocations thereof;

(j) carry out enquiries, tests, audits or investigations and take such other

Petroleum Industry

2008 No. C 4837

steps as may be necessary to monitor the activities of licencees or lessees 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Z3

]A.

and to secure and enforce compliance with licence or lease terms and conditions; (g) set and establishstandards relatingto technicalaspectsof the petroleum industry, including environmental standard'>,which shall be established in collaborationwith the Federal Ministry of Environmentor any other relevant agency;
(11) ensure adherence of all operators and companies involved in any

operations pertaining to the petroleum industry to environmental standards that may be established by the government;
(i) establish. monitor and regulate safety measures relating to the

management of petroleum reserves and installations as well as exploration, development and production activities within the onshore arid offshore territory of Nigeria, including the Exclusive Economic Zone, where applicable; V) undertake evaluation of national reserves and reservoir management studies;
(k)

administer all licences and leases in the upstream petroleum industry

that may be granted by the Minister to any company. in accordance with prescribed terms; (I) conduct regular audits of the operations of operators and companies engaged in all aspects relating to exploration, production and development of crude oil and natural gas, including oil service companies, in order to ensure compliance with Nigerian Content requirements;
(m)

25
2fj

maintain a petroleum industry data bank comprising all data acquired

by or given to the Inspectorate in the exercise of its statutory functions;

(n)

'IT 28 29
))

compute, determine, assess and ensure payment of royalties, rentals,

tees, and other charges as stipulated in this Act and any regulations made hereunder;
(0) establish, monitor and regulate technical, health. environmental and

31

safety measures relating to the managementof downstream assets, including

C4838 ZOO3 NQ.

Petroleum industry
but not limited to refineries, petrochemical plants, petroleum depots and

2
3

pipelines, and downstream gas plants;

(P) supervise and ensure accurate calibration and certification of equipment

4 5
6 7 8 9 10 II 12
13

used for fiscal measures in the industry;

(q) monitor and specify technical and safety controls on wholesale marketing, retail marketing, and bunkering of petroleum products;
(r) inspect the metering of pumps and any other facilities at downstream

retail outlets to ensure compliance with safety standards as prescribed by the Inspectorate;
(s) publish reports and statistics on activities in the Nigerian petroleum

industry and related matters that may be required, growth ofthe industry;

in the interests of the

(I) advise the Minister on fiscal and other issues to enhance the operations

/4 15 16 17 18 19 20 21 22 23 24 25

of the petroleum sector and improve the benefits to Government from the sector;
(u) issue Clean Certificates of Inspection at the oil terminals to exporters

of crude oil, natural gas, liquefied natural gas and all petroleum products. upon satisfaction that the requirements as to quality, quantity and price have been complied with;
(v) issue permits, licences and any other authorisations

necessary for all

technical activities connected with(i) petroleum exploration and production; (ii) downstream gas; (iii) downstream products;
(iv) refining;

26

(v) storage;
(vi) retail outlets; (vii) transportation; (viii) distribution; (ix) processing of pet role urn products for import and export; (x) design and construction of all facilities including those for gas and

n
28
19 II
31

Petroleum Industry
petrochemicals,

2008 No. C 4839

and for the processing of petroleum and its derivatives;

2 3 4 5
6

(w) to monitor and ensure the quality and process of conversion or blending

of whatever material by whatever method to fuels, blo-fuels or derivatives, for automotive use in Nigeria;
(x) set standards for the design, procurement, construction, operation and

maintenance

of all plants installations and facilities that pertain to the

1
8
9

petroleum industry;
(y) establish special laboratories

with capabilities for data storage and

testing, quality assurance and certification of crude oil, 'gas and petroleum products and their derivatives, whether for the domestic market or for export; (z) perfonn technical evaluation and reviews required to evaluate and decide on submissions operators=
(00) keep records, data and reports obtained and classifying such records,

10 11 12 13 14 15 16 17 18 19

made to the Inspectorate by petroleum

industry

data or reports as may be required under any statute and giving any directive to any person, company or entity in respect thereof;
(ab) ensure the promotion of the safe, orderly and optimal

development of

the petroleum industry in the overall interest of the people of Nigeria;

(ae) undertake by itself or

through qualified expertise any of the foregoing

Xl
21 22
13

and such other activities as are necessary or expedient for giving full effect to the provisions of {his Chapter.

40. The Inspectorate shall have power to-.

(a) enforce the provisions of(i) this Chapter and any regulations made thereunder;
(if) any enactments prescribing activities of the petroleum

Powers of the

rnspectorate.

24 25 ]I,
TI

industry

made prior to this Chapter and any regulations made in pursuance of powers given under them; and
(Ui) any technical

211.
29

regulations referring to, or formerly administered

by the Department of Petroleum Resources of the Ministry of Petroleum Resources or the former Petroleum Inspectorate of the Nigerian National

3l
31

Petroleum Corporation.

C 4840 2008 No.

Petroleum Industry
(b) order the sealing up of any premises whatsoever, including anYifacility

1
2

or plant for the transporting, processing, manufacturing, storing, dispensing, distributing or sale of crude oil, gas, petroleum products or.its derivatives, where there has been a contravention of this Act or any.other related law;
(c) in respect ofthe petroleum industry and as and when necessary, issue

3 4
5

6
7

technical guidelines on the generation,

use, storage and, ~ransportation of

radioactive sources and materials, in line with directives,fmf11 the Nigerian Nuclear Regulatory Authority;
(d) set standards and enforce the application of new technologies

8
9

in the

10 11
12
Governing Hoard.

petroleum industry;
(e) do such other things as are necessary and expedient for the effective

and fuli discharge of any of its functions under this Parr, 41.-(1) There is established for the Inspectorate a Governing Board

13 14 15 16
17

(vthe Governing Boar which shall consist of(a) a Chairman to be appointed by the President; (b) one representative

of the Nigerian Petroleum Directorate np~ below

the rank 0 Director;

(c) one representative (d) one; representative

18 19
Xl'

of the Petroleum Products Regulatory Authority: of Petroleum and Natural. Gas Senior Staff

Association of Nigeria;
(e) five persons to be

21 22 23 24
25

appointed by the Prestdentcn

the recommendation

of the Minister being persons who by reason of their abij-ity, experience and specialized knowledge of the petroleum industry are capable of making useful contributions t work of the Inspectorate;

if) three Directors who are full time staff of the Inspectorate, to be
appointed to the Board by the President; and
(g) the Director-General

26 TI 28 29

of tneInspectorate.

(2) The persons.appolnred pursuant to paragraphs (a) (e) and

if) of S;Pbsection

(1) of this section shall hold their membership of the Inspectorate for ~~r years

~ subject to reappointment for another.period of four.years only on s~Fh terms 31

and conditions as may be specified in their letters of appointment.

Petroleum Industry (3) Appointments to the Board shall be part- time. 2 3 4 5 6 7 8 9

2008 No. (;4841

(4) The proceedings of the Board of the Inspectorate and other ancillary mauers shall be regulated by the-second schedule to this Act. 42. The Governing Board shall ensure that the Inspectorate performs its statUtoryfunction contained in this Act. 43.-(1) There shall be an officer of the Inspectorate lobe known as the Director-General, shall be appointed by the President. (2) The Director-General shall be a person with cognate experience. (3) The Director-General shall be the chief executive and accounting Functions of
the Governing Board. The Director General.

10 officer of the Inspectorate and shall be responsible for running the day-to-day II 12 affairs of the Inspectorate (4) The Director-General shall have the status of a permanent secretary

13 of the civil service the Federal Republic of Nigeria. 14 (5) The Director.. General shall perform such functions as the Board may

15 determine. 16 17 18 19 :ID 21 22 44.-( 1) The Director General shall hold office for five years in the first instance with the possibility of renewal for another period of five years only,
and on such terms and condition as may be specified in his or her letter of
Tenure. Remuneration

,,'

Conditions of
Service of the Director General.

appointment. (2) The remuneration and conditions of service of the Director General shall be at a level sufficient to attract qualified professionals within the oil industry. No person shall be appointed as Director- General or member of the

Z34S. 24 25
LJj

Disqualification.

Governing Board unless he or she(a) (b)

is a Nigerian citizen; has not, in terms of the laws in force in any country(i)

Tl

been adjudged or declared bankrupt or insolvent; or

10,

28 'E ?ll
31

(U)made an assignment

or arrangement or composition with his

creditors which has not been rescinded or set aside;

(iii) been declared to be of unsound mind;
(iv)

been convicted of an offence involving fraud or dishonesty;

C 4842 2008 No.

Petroleum Industry
(v) been disqualified by a competent authority from carrying out any

2 3
4
vacation of

assignment, responsibility or function in his or her professional capacity.

(c) has not been disqualified

by the Securities Exchange Commission

from holding a board appointment in any public-company.

5 6
7

46. The office of the Director -General or member of the G9V~f1'!lg Board shall become vacant(a) three months after giving notice in writing to the President-of hJS.Pf

Office and
Terrninutinn

8
9

her resignation;
(b)

ifhe or she becomes disqualified under the provisions of Section 45 of

10
11

this chapter; and

(c) on the expiration of his or her appointment.

12 13
14
15

47. The President shall require the Director General or member of the
Governing Board to vacate his or her office if he or she(a) has committed an act of gross misconduct; (b) has failed to comply

with the terms and conditions of his or her office

16
17 18

as fixed by this Act;

(c) suffers from any mental, physical or legal disability which renders

him or her incapable of executing his or her duties efficiently as a.member:

19
Xl 21
Remuneration

48. Upon the vacancy of a member's office, the President shall l\P~R~,a
candidate to fill the vacancy in accordance with the terms of section 41 of this Act. 49.-(1) Members shall be paid from the funds of the Inspectorare-.
(0) such remuneration as the Board may

22
Z3

uf Member, orme Board.

tromume

to time determine. 'in

24 25
']fj

accordance with the guidelines of the federal government; and

(b) any such allowances as the Board may determine from time to time to

meet any reasonable expenses incurred by such members 'in connection with the business of the Inspectorate. (2) While making such determinations. regard to:
(a) the specialised nature of the work 10be performed by the Inspectorate: (b) the need to ensure the financial self-sufficiency

n
28 29 30
31

the Inspectorate.shall

have due

of the members; and


2
3 4 5 6 7 8 50.-(1)

Petroleum Industry

2008 No. C 4843

(c) allowances paid in the private sector to board members with equivalent

responsibiluies. expertise and skills.

The Inspectorate shall appoint a Secretary who shall keep the Secretary.

corporate records and the common seal of the Inspectorate and undertake such other functions as the Director General and the Inspectorate may from time to time direct. (2) The Secretary shall be a Jawyer with a minimum of 10 years post qualification experience.

9
10 II 12 13 14 15 16 17 18 19 Xl 21 22 Z3

51.-(1)

The Inspectorate may, from time to time, appoint such

Otherstafr.

professionals experienced in the petroleum industry and other persons as staff of the Inspectorate Act. (2) Staff of the Inspectorate appointed under subsection (1) of this section shall be appointed on such terms and conditions as the Inspectorate may prescribe. (3) Staff of the Inspectorate shall be public officers as defined in the Constitution of the Federal Republic of Nigeria 1999. (4) For the purpose of this section, appointment shall include secondmenr, transfer and contract appointments. 52. The remuneration, Inspectorate tenure and conditions of service of staff of the Remuneration.
(0

assist it in the performance of its functions under this

shall be at a level sufficient to attract qualified professionals

within the petroleum industry and shall take into account(a) the specialised nature of work to be performed by the staff; (b) the need to ensure financial sufficiency of the Inspectorate;

and

24
25 26 'Il 28 29 30 31

(c) the salaries paid in the private sector to individuals with equivalent

responsibilities, 53.-(1)

expertise and skills. Pensions

Service in the Inspectorate shall be approved service for the

purpose of tile Pensions Reform Act, Cap. P4 Laws of the Federation of Nigeria 2004 and accordingly, officers and other persons employed in the Inspectorate shall be entitled to pensions and other benefits as prescribed in the Pensions Reform Act, Cap. P4 Laws of the Federation of Nigeria 2004. (2) Subsection (I) of this section shall not prohibit the Inspectorate from

C 4844 2008 No.

1 2 3 4 5 6

appointing a person to any office on terms that preclude the grant ofa pension or other retirement benefits in respect of that office.
(3) In the application of the Pensions Reform Act, Cap. P4 Federation of Nigeria 2004 to the Inspectorate,

Laws

of the

any power exercisablelnider

the Act by a Minister or other authority of the Government of the Federation; other than the power to make regulations is hereby vested in and shall be'

7 8 9 10
11 12 13 14
Financial

exercisable

by

the Inspectorate and not by any other person-or autherity.

(4) Subjectto the PensionsReformAct, Cap. P4 Law'sl'if'tbe'FedetatiOn

of Nigeria 2004 and notwithstanding the provisions of this section, the Inspectorate shall continue to fulfil all obligations in resp 1xt of pensions schemeo!l({(rWflkh' the Petroleum Inspectorate of the Nigerian National Petroleum' Corporation or the Department of Petroleum Resources of the Ministry of Petroleum Resources was obliged in respect of its employees, prior to the minster of assets to the Inspectorate. 54.-(1) The Inspectorate shall, not later than September in-each year,

15 16 17 18 19 20 21 22 23 24 25 26 Tl

Provisions of
'he Inspectorate.

present to the Minister, a budget showing theexpected

Income 'lind ex~iture

which the Inspectorate proposes to expend in respect of the succeeding financial year insofar as the amount so budgeted does not exceed the total emoura acdi1able to the Inspectorate from its sources of funding in any financial year. (2) The Inspectorate may during a financial year prepare andpresetlt the Minister, a supplementary budget relating to expenditures to

whiCh IWere

inadequately represented iii the annual budget due to unforeseenclrcumstances. (3) The Inspectorate may vary a budget prepared under this section insofar as such variation does not increase the total 'amount of theexpenditure for in the original budget. (4) The financial year of the Inspectorate shall be for-a period of twelve calendar months commencing on the 1 st of January in each year. ' ' 55.-(1) consist of(a) such monies as may

provided

Funding.

28 '19 :.0 31

The Inspectorate'sball

establish and maintain iUUoo",,"ehlshail

be-appropriated to the Inspectorate from time to

time by the National Assembly for the purposes of this Act;

Petroleum Industry
(b)

2008 No. C 4845

a portion of fiscalised crude oil andflscalised natural gas, to be paid

,2 3. 4 5 6 7 8 9
10

to the Inspectorate from the Directorate in accordance with the budget of the Inspectorate and the provisions of section 28 of this Act;
(c) penalties and charges that the Minister may approve to be imposed

from time to time on petroleum producers as well as contractors and other companies operating in the petroleum industry;
(d)

fees paid in respect

Ill'

services performed by the Inspectorate as

contained in regulations made by the Minister on the recommendationof the Inspectorate;

(e)

income received from publications produced by the Inspectorate;

11 12 13 14
15

if) fees for reviews of environmental impact assessment reports and

environmental evaluation reports and other related activities; (g) fees for services rendered to non-petroleumproducing companies and service companies and for other services performed generally;
(h) such money as may be received by the Inspectorate either in the

16 17 18 19 :ID
,21

.course of its operations, in relation tothe exerciseof its powers and functions under this Act or in respect of any property vested in the Inspectorate. (2) The Inspectorate shall apply the ~roceeds of the fund established pursuant to subsection (1) of this section(a) (b)

to meet the administrative and operating costs of the Inspectorate; to tbe payment of;,
(j)

22 23 24 25 26
II

salaries;

(ii) fees or other remunerations or allowances; and

. (iii) pensions and other retirement benefits payable to members of the Inspectorate or its employees;
(c) for the maintenance of property acquired by, or vested in the

Inspectorate: (d) fur purposes of investment; as prescribed by the Trustee Investments Act, Cap. T22 of the Laws of the Federation of Nigeria 2004 or any other relevant statute; and
(e)

28
]9

.~ 31

in connection with carrying out its functions under this Act,

C 4846 200ll No.

Power (0 Accept Grants.

Petroleum Industry
1 56. The Inspectorate inay accept grants of money or other property upon such terms and conditions,

if any, as may be specifiedby

the person or

3
4
Borrowing Powers.

organisation making the grant, provided such grants are' riot tnconslstenr with
the objectives and functions of the Inspectorate under this Act. 57. The Inspectorate may, with the consent of, or in accordance with the general authority given by the Minister of Finance, botrowsuch sums of money

5 6

7
8
Annual Budget.

as the Inspectorate may require in the exercise of its functions under this Act or its subsidiary legislation. 58. The annual budget of the Inspectorate shall

be approved by the Governing

10 Board.
Account and Audit.

11 12 13 14

~59. The Inspectorate

shall keep proper accounts of its income and

expenditure in respect of each year and shall cause its accounts to be audited within six months after the end of each year by auditors appointed in accordance with guidelines published by the Auditor-General of the Federation.

Mid-year Annual

and

15 16 17 18 19 Xl 21 22 23

60.-(1)The Inspectorate shall submit to the National Assembly and the President a mid-year report of its operations and finances not-later than 31 st July of each year and an annual report of its operations, performance and

Reports.

audited financial report of the preceding year not later than 31st July of the following year. (2) A summary of the annual report and audited financial report of the Inspectorate shall be published in not less than three widely circulating newspapers in every geo-political zone of the country for public noiice not later than 31 st of July of each year. 61.-(1) Court processes, proceedings or suits, whether civil or criminal, for and against the Inspectorates shallbe attended,to'andhandletl by the

Restrictions
on Legal

24 25 '2fj Tl 28 '19 :D 31

Proceedings.

Inspectorate, except where it is otherwise provided by any enactment in force that empowers the Attorney-General process, proceeding or suit. (2) Any suit or proceedings against the Inspectorate, a member of the of the Federation toiflrett the ~k1 court

Governing Board or any employee of the Inspectorate for anyact, omission or default in respect of its functions and powers under this Act or any other

Petroleum Industry

2008' No. C4847

enactment shall be brought within twelve months after the act, negtecror

2 3
4

default complained of or in the case of a continuance of damage or injury,

within twelve months after such damage or injury may have ceased. (3) No suit shall commence against the Inspectorate before the-expiration of a period of one month after written notice of intention to commence the suit shall have been served upon the Inspectorate by the intending plaintiff or his agent. (4) The notice shall clearly and explicitly state(a) the cause of action; (b) the particulars of the claim; (e) the name, place of abode and address for service of the intending

5
6 7 S
'9

10
11

plaintiff; and (d)the relief which is being claimed.

12

13
14

62. The notice referred to in section 61(2) of this Act and any other
process required or authorized to be served upon the Inspectorate under the provisions of this Act or any other enactment may be served by(a) delivering

Service of Documents.

15
16 17 18

the same to the Director General or any other principal

officer of the Inspectorate; or (b) sending it by registered post addressed to the Director General atthe head office of the Inspectorate.

19 -2) 21 22
23

63. The Inspectorate shall have power to investigate any person -or
organisation in relation to any of its functions or powers under this Act and in order to ascertain any violation of the provisions of this Act.
64.-( 1) For tlie effective conduct of its functions the Inspectorate shall

Special
Powers.

Special Units, etc.

24

have the following special units(a) Investigation Unit; and (b) Prosecution Unit.

25 26
1J

(2) Notwithstanding

the provisions of-subsection (1) of this section, the

28 29
3)

Inspectorate may set up technical committees to assist it in the performance of 'its functions under this Act. 65..;...( 1)The Investigation Unit shall, while ensuring [hat due process is folJowedDuties of the Special Units.

31

C4848 2008"No.

Petroleum Industry
(a) investigate and prosecute offences under this Act;

2
3 4

(b) collaborate with other government agencies and

personsjn relation to

the detection or prosecution of offences underthis

Act;

(e) maintain surveillance on oil and gas installations, premises and vessels where it has reason to believe that illegal petroleum operations are going
OIr, (d) have power to search, seize, detain and recommend for prosecution,

5 6
7 8

any person suspected to have engaged or be engaged in illegal activities in relation to petroleum or any petroleum product or in relation to any provision of this Act or any other enactment Inspectorate.
(2) The Prosecution Unit shall(a) prosecute offenders under this Act; (b) support the Investigation Unit with legal advice arn:1 assistance whore

9 10
11

administered

or enforced

by

.tbe

12
!3 14

15
16 17
18

required;
(e) conduct such legal proceedings

as may be necessary towards the

enforcement of this Act;

(d) perform such other duties as the Inspectorate

may refer to it fr.om

19
Power of

time to time. 66. For the purposes of this Act an officer of the Investigation Unit shall with a warrant obtained from a Federal High Court judge(a) enter and search any premises or carrier including, vchil;.l,f!~ any or

X! 21

Searchand Arrest with

Warrant.

22
23 24 25 2Jj T! 28

other instrumentalities whatsoever which he has reason to believe is connected with the commission of an offence;
(b) arrest any person whom he reasonably believes to have committee.an

offence in respect of matters under the authority of the Inspectorate;

(c) seize any item or substance which he reasonably

believes to have

been used in the commission of an offence under this Act. 67.-( 1) Every member of the GoverningBoardand every employee . f o the Inspectorate shall be indemnified out of the assets of the Inspectorate against any liability incurred in defending any proceeding against the laapectorate,

Indcmnityof
Governing

29 30 31

Boardand Employees,

Petroleum Industry

2IDl No; C4849

1 ; whether civil or criminal, if such proceedings are brought against the person in 2 3 4 5 6 7 8 9 10 11 12 13 his or her capacity as a member of the Governing Board or employee. (2) Notwithstanding the provisions of subsection (I )of this section the Inspectorate shall not indemnify any member oftlte Governing Board or employee of the Inspectorate for any liability incurred as a result of the wilful negligence of the member or employee, as the case may be. 68.-(1) The Inspectorate shall have the power to resolve disputes between persons who are subject to this Chapter and between any such persons and other persons regarding any matter-under this Chapter with de exception of matters;
(a) regulated by the Authority; or (b) specifically and primarily governed by any other enactment in force
Power 10

Resolve Disputes.

and regulated by any other organ established for that purpose. (2) No dispute shall be referred to the Inspectorate by any person unless

14
15 16 17 18 19

,n attempt has been made by Ihe parties concerned to resolve the dispute
through negotiation. (3) The Inspectorate shan convene to resolve a dispute if it is satisfied that(a) an agreement may not be reached, or will not be reached between the parties to the dispute within a reasonable time.
(b) the notification of the dispute is not trivial, frivolous, Of vexatious.

:aJ
21
22 23 24 25 26 Tl 28 19
l)

and
(e) the resolution of the dispute would promote the objectives of this Act

and any subsidiary legislation.

(4) If one of the parties to the dispute has provided an undertaking that is

relevant to the subject matter of the dispute and the Inspectorate,

and has

registered the undertaking, the parties may adopt the conditions of the undertaking for the purposes of resolving the dispute. 69.-(1) Where a party to a dispute in respect of a matter regulated by the Inspectorate so desires, that party shall write to notify (he Inspectorate as to the existence of the dispute and to request the intervention of the Inspectorate. (2) The Inspectorate may intervene to resolve a dispute under this Act
Notification of disputes.

31

C 4850 2008 No.

Petroleum industry
only if it is notified in writing of the dispute and requested by eitheror both

2 3 4
5 6

parties to intervene.
(3) The Inspectorate shall publish guidelines setting out the principles and procedures that it may take into account in resolving disputes or aelass.of disputes under this chapter. (4) Upon receipt of the notification of the dispute referred to in subsectien

7 8
Resolunon of
Disputes.

(1) of this section, the Inspectorate shall, as soon as practicable; convene to

resolve the dispute. 70.-(1) In carrying out its functions under subsection (1) of it his Section,

10 11 12 13
14 15

the Inspectorate(a) shall always be guided by the objective of establishing

a sustaired

dispute-resolution

process that is fair, just, economical and effective;

(b) shall at all times, endeavour to act according to the ethics of justice

and the merits of each case; and

of the Inspectorate reasons and

(c) shall not be bound by technicalities, legal form or rules orevidenee. (2) The terms and conditions of any determination

16
17

under this Act shall be in writing and shall state the Inspectorate's the Inspectorate

18
19

shall provide the parties to the dispute with a copy of its

decision as soon as practicable. (3) The costs of the Inspectorate in making a determination shall be paid in accordance with terms and conditions agreed by the parties prior to me

Xl 21 22
Arbitration
3JloJ

commencement of the dispute resolution process. 71.-(1) For the purpose of the resolution of disputes the lnspectorate

23
24

Mediation

may act either as an arbitrator or mediator, except in disputes in which the Inspectorate is a party. (2) When acting as an arbitrator the Inspectorate shall issue a decision on the matter. (3) The Inspectorate may if it so wishes, appoint a person acceptable to all the parties to act as mediator or arbitrator on its behalf in respect of any dispute before it and the decision of the arbitrator shall be regarded as being the decision of the Inspectorate.

25 26
27

28 29 30 31

Petroleum Industry

2008

l'!0' C<l851

(4) Any decision of the Inspectorate shall be binding on the parties to the 2 3 4 5 6 7 8 9 dispute. (5) In disputes in which the Inspectorate is a party, the relevantprovisions ofthe Arbitration and ConciliationAct, Cap A19 of the Laws of the Federation of Nigeria 2004 shall apply. 72.~(1) An aggrieved person shall have a right of appeal to the Federal High Court for a judicial review ,'I'" ic:~tions f law and process pertaining to o a determination or other action otthe Inspectorate. (2) Any determination or other action of the inspectorate. that is the
Judicial Review.

10 subject matter of the application for judicial review shall subsist and remain 11 binding and valid until it is expressly reversed in a finaljudgement or order of 12 the Federal High Court. 13 73.~(1) The Inspectorate shall keep a register containing all decisions it
Register of Decisions.

14 makes for the purpose of the resolution of disputes. 15

16 17 18

(2) The-register shall contain-,

(a)

the names of the parties to the dispute;

(b) a general description of the matter pertaining 10the decision; and

(c)

the date of the decision.

Enforcement of Decisions.

19 20 21 22
23

74.-(1) A decision made by the Inspectorate under this chapter may be

enforced by the Court as if the decision is a judgement of such Court. (2) No certificate under subsection (1) of this Section is required if the enforcement action is taken by the Inspectorate under this Section.
Chapter IV ~ The Petroleum Products Regulatory Authority 75.-(1) There is established under this Act the Petroleum Products
Establishment and Scope of the Authority.

24 2S
"2Jj Tl

Regulatory Authority, ("the Authority") which shall be a body corporate with perpetual succession and a common seal. (2)The Authorityshallhavepower to acquire,holdand disposeof property, sue and be sued in its own name and subject to this Act perform all acts that corporate bodies may perform by law. (3) The Authority shall be responsible for the regulation of commercial aspects of the downstream petroleum industry in Nigeria, including all

28 29
)J

31

c 4$Z

.ZllQ8 !I/o. I 2

Petroteum lndustry
commercial aspects relating to downstream petrOleuin}1rodUciS'andidownstream natural gas. 76. The objects of the Authority shall be(a)

Objects.

3 4 5
6

to promote the implementation of national commercial policies for

the downstreampetroleum industry;

(b) to promote

the efficient,

effective and sustaiuabtecommerctal

7 8
9

development and operation of the downstream petroleum iridu'$tly;

(e) to promote the efficient commercial development and Operation offhe

transportation network and gas sectors;

(d)

and

distribution

network

for the downstream products

10 11 12
13

to encourage and facilitate investments in the dowIIStream'pl!troleum

industry;
(e)
(0

organise and regulate' commercial activities of the downstream

14
15

petroleum industry;

if) to promote, where appropriate;' competitive! markets for gas and gas
services in the downstream petroleum industry;
(g) (h)
',I

16 17 18 19 2ll 21 22 23 24
Functions.

to promote the supply of gasand' petroleum products thr'oUihout Nigeria; to promote conditions that will enable petroleumproducts and gas

transportation, equitable

supply and distribution attivitleS''io be canliec:t out on an the rights and inthtests' ofncensees,

basis while protecting

customers and other stakeholders;

(I)

to regulate the prices of downstream gas and petroleiimproducts; security of gas supply, marker development and the

(j) to promote

development of competition. -',

77.-(1) The functions of the Authority shall be'-'
(a)

25 26 27 28 29 lJ
31

to regulate and co-ordinate the commercial activities ofdi~'ddwnstream

petroleum sector in Nigeria in a non-discriminatory and transparent manner;

(b)

the regulation of commercial refining actlvtrfes which include:

(i) establishment of methodology' for calculating peb-oledrtfproducts

prices; and
(ii) setting benchmark prices for petroleum products;

Petroteum tndustry
(c) to regulate on bulk storage and transportation

2008 No. C 48S3 and to se~ rules for the

2 3 4

common carrier systems for crude oil, petroleum products, transportation pipelines and regional storage depots; (d) issue and regulate commercial licences and any other authorisations necessary for al\ commercial activities connected with-

5 6
7

;) downstream gas;
(ii) downstream product
(iiI) refining: (iv) storage; (,v) retail outlets;

,8 9
10 11 12 1.1 14 15 16 17 18 19 3) 21 22

(VI) transportation;
(vii) transmission;

l viiI) distribution;
(ix) processing of petroleum and gas products for import and export. (e) enforce compliance

with the terms and conditions of commercial

licences issued by the Authority; (j) keep a register of aU licences issued and any renewals, amendments, suspensions or revocations thereof; (g) carry out enquiries, audits or investigations and take such other steps as may be necessary to monitor the activities of licensees and to secure and enforce compliance with licence terms and conditions;
(h) ensure security of fuel supply, market development and the development

23
24 25 26

of competition; (i) ensure the provision of third party access to the downstream products transportation and distribution networks; (;) at such time as the Authority declares the need to have arisen, to develop market rules for trading In wholesale gas, following consultation with relevant stakeholders; ,(k) establish customer protection measures in accordance with the

'IT
28 29 Xl 31

provisions of this Act;

(l) undertake

consultation

with customers,

licensees

and industry

------~-C 4854 2008 No.

I

Petroleum Industry
participants affected
by

or with an interest in those

'mitS decisions that have

have

2 3
4 5 6 7

the potential to affect them and consider any responses to the c::onsultation;
(m) publish those decisions,

directions

or detertriinatiOrlSthat

implications for customers and industry participants together with the reasons for the decision, direction or determination;
(n)

promote the interests of customers whilst also taking into account the

ability of licensees to effectively finance their licenced activities, provided

that the Authority shall not be liable for any difficulties arising out of the inefficient or negligent operation of licenced ectlvines by licensees;
(0)

8
9

10
II

promote the principles of sustainable resource and lnfrastructural through the efficient supply and use' of downstream gas and

development

12 13
14

petroleum products;
(P) promote

competition and private sector participation, when and where

feasible;
(q) (r)

15 16 17 18 19
;!)

make sure that all economical and practical demands for 'gas are met. In respect of downstream products:
(i)

to set rules for the administration of the open access regime to

regulate and administer the open access to transportatlonabd;bUfk storage facilities;

(it) to establish methodology for bulk transportatlonarsfstorage (iii) to regulate and ensure the supply, distribution.

tariffs

21 22 23
24 25

marketing and

retail of petroleum products;

(iv)

to determine annual tarriffs for the common cal'1ierpipe1ine systems

and open access depot system in accordance with tariff setting formulae;
(s)

to administer and monitor the 'national operating and strategic stocks

26
27 28 29 JO

as set by the Minister;

(t)

to monitor and enforce the actual application of'Petrolel.trti product

prices;
(u)

to monitor market behaviour

including

th~' deverepmenr

and

maintenance of competitive markets in the downstream petroleum sector;

(v)

31

to arrest situations of abuse of domi'nanrpower arid restrictive business

Petroleum Industry
1 2 3 4 5 6 7 S practices in the downstream petroleum sector;
(w) to enforce consumer

2008 No. C'48S5

rights in relation to petroleum products and

services; and
(x) to establish appropriate dispute settlement mechanism relating to the

commercial

rights and obligations

of operators

and consumers

in the

downstream petroleum sector; (2) In furtherance of the functions stated in subsection (1) of this section, the Authority shall:
(a) establish parameters

9
10 11 12 13 14 15 16 17

and codes of conduct for all operators in the

downstream petroleum sector;

(b) monitor the financial viability of all operators

in the downstream

petroleum sector;
(e) promote transparency within the Authority and amongst the operators;

(d) develop and maintain a data base on the downstream petroleum sector particularly such data relating to the construction, conversion and operation of petroleum pipelines, loading and storage facilities and make such

information public;

18
19 Xl 21 22 23

(e) advise government and other agencies on commercial matters and

policies relating to prices of petroleum products; and

if) undertake such related activities as are necessary for the efficient
execution of its objects. 78. In order to fulfil its functions under this Act. the Authority 'h,1I have the power:
(a) to modify, extend, renew, suspend and revoke any licence issued by it
Powers of the Authority.

]A.
25 2h

pursuant to the provisions of this Chapter; (b) to make recommendations to the Minister for the issuance, amendment or revocation' of any regulations relevant to the provisions or requirements of this Act;
(e) to monitor and impose pricing restrictions and the application of pricing

Z7
2B 'J9

:.0
31

methodologies by licensees in accordance with the provisions of this Act; (d) subject to paragraph (e) of this section, to request and obtain any

C 4856 2008 No.

Petroleum Industry
information or any document concerning licensed activities from any licensee

2 3
4

notwithstanding

that they may contain business secrets, provided that any

such information or documents shall be restricted to those which a company

can be compelled 10produce as evidence in a civil proceeding in a court of law;
(e)

5
6 7

where it considers

it

to be in the public interest-

(i) publish information provided by licensees; and (ii) require licensees to publish certain information;
(j)

8
9

to impose and enforce relevant licence conditions and to enforce UJe

10 11 12 13 14 15 16
17

specific requirements of the Act;

(g) (0 institute legal proceedings against licensees for failure to comply with licence conditions or other requirements (h) subject

of the Act;

to the provisions

of this Act, to issue legally binding

determinations

in respect of any dispute brought before it-

(i) to enforce the provisions of(f) any enactments prescribing activities of the downsneam petroleum

industry made prior to the commencement

of this Act; by the

18 19
Governing Boaru of the Authority.

(ii) any regulations referring to, or formerly administered Petroleum Products Pricing and Regulatory Agency ..

20 21
Z2 of--

79.-(1) The Authority shall have a Governing Board which shallconsist

(a) a non executive Chairman appointed by the President: (b) one representative (c) one representative (d) one representative

23 24 25 26 V 1B 29 30 31

of the Nigerian Petroleum Directorate; of the Nigerian Petroleum Inspectorate of the National Union of Petroleum and Natural

Gas Workers;
(e) five persons to be appointed by the President on the recommendation

of the Minister being persons who by reason of their ability, experience and specialized knowledge of the petroleum industry are capable of making useful contributions to the work ofthe Authority;
(j) three Directors who are fJJll-time members of tbe.Authonty,
,

to be

Petroleum Industry appointed to the Board by the President;; 2 3 4 5 6 7 8

9

200S No. C 4857

(g) the Director General of the Authority; (2) The persons appointed pursuant to paragraphs (a) and if> of subsection I of this section shall hold their membership of the Authority for four years subject to re-appointment for another period of four years only on such terms and conditions as may be specified in their letters of appointment. (3)Members of the GoverningBoardshallbe personsof cognateexperience in the areas of~
(a)

logistics, refinery, bulk transportation and storage and distrihution

10 11 12

and marketing of petroleum products; and

(b)

accountancy, administration, economics, finance or law.

(4) The proceedings of the Board of the Authority and other ancillary

13 matters shall be regulated by the Third Schedule to thisAct. 14 15 16 17 80.-(1) There shall be an officer of the Authority to be known as the Director-General, who shall be appointed by the President. (2) The Director-General shall be a person with cognate experience. (3) The Director-General shall be the chief executive and accounting
DirectorGeneral.

18 officer of the Authority and shall be responsible for the day-to-day management 19 of the affairs of the Authority. Xl 21 (4) The Director-General shall have the status of a permanent secretary of the civil service of the Federal Republic of Nigeria. (5) The Director-General shall perform such functions as the Board may

n
24 25

Z3 determine. 81.-(1) The Director-General shall hold office for five years in the first instance which may he renewed for another period of five years only on such
Tenure,
Remuneration and Conditions of Service of the DirectorGeneral.

'1fJ terms and conditions as may be specified in his Of her letter of appointment.

n
28 29
J.)

(2) The remuneration and conditions of service of the Director-General shallbe at a level sufficientto attract qualifiedprofessionalswithinthe petroleum industry. 82. No person shall be appointed as Director-General or member of the Governing Board unless he or she-

Disqualifcation,

31

C4858 2008 No.

(a)

Petroleum Industry
is a Nigerian citizen;

2 3 4

(b) has not, in terms of the laws in force in any country: (i) been adjudged or declared bankrupt or insolvent; or (ij) made an assignment to, or arrangement or composition wlth.hls creditors which has not been rescinded or set aside; (iii) been declared to be of unsound mind;
(iv) (v)

5
6 7

been convicted of an offence involving fraud or dishonesty; been disqualified by a competent authority from carrying out any

8
9 10 11
Vacation uf Office am] Termination.

assignment, responsibility or function in his or her professional capacity.

(c) has hot been disqualified

by the Securities Bxchenge Commission

from holding a board appointment in any public company.

12
13

83. The office of the Director General or member of the Goventtng

Board shall become vacant(a) three months after giving notice in writing to the President of

14
15 16 17

his or

her resignation; (b) if he or she becomes disqualified under the provisions of Section 82 of this Act;
(c) on the expiration of his or her appointment.

18 19
z) 21 22

84. The President shall require the Director General or member of the
Governing Board to vacate his or her office if he or she(a) has committed an act of gross misconduct;

(b) has failed to comply with the terms and conditions of his or her office as contained in this Act;
(c) suffers from any mental, physical or legal disability which renders

23 24
25

him or her incapable of executing his or her duties efficiently as a member;

26

85. Upon the vacancy of a member's office, the President shaUappoint a

1:7 candidate to fill the vacancy in accordance with the terms of section 19 of this 28
Rcmuuerariun of Memllers of the Board.

Act. 86.-(1) Members shall be paid from the funds of the Authotity-.

Z) I)

(0) such remuneration as the Authority may from time to time derermiee: (b) any such allowances as the Authority

3]

may determine from time- to

Petroleum Industry
1

200lI No. C4859

time to meet any reasonable expenses incurred by such members in connection with the business of the Authority. (1) While making such determinations the Authority shall have due regard to(a) the specialised nature of the work to be performed by the Authority;

2
3

4
S 6 7 8 9 10 11 \2 13 14 15 16 17 18 19 :D 21 22 23 24 25 1fj II 28 29 ~ 31

(1))the need to ensure the financial self-sufficiency ofthe Authority;

(c) allowances paid in the private sector to board members with equivalent

responsibilities. 81.-(1)

expertise and skills. Secretary.

The Authority shall appoint a Secretary who shall keep the

corporate records of the Authority and undertake such other functions as the Director General and the Authority may from time to time direct. (2) The Secretary shall be a lawyer with a minimum of 10 years post qualification experience. (3) The Secretary shall be the legal adviser of the Authority.

88.-0) The Authority may, from time to time, appoint such professionals
and persons experienced in the petroleum industry as staff of the Authority to assist it in the performance of its functions under this Act. (2) Staff of the Authority appointed under subsection (1) of this section shall be appointed on such terms and conditions of service as the Authority may prescribe. (3) Staff of the Authority shall be public officers as defined in the Constitution of the Federal Republic of Nigeria, 1999. (4) For the purpose of this section, appointment shall include secondment. transfer and contract appointments. 89. The remuneration, tenure and conditions of service of staff of the

Other staff.

Remuneration.

Authority shall be at a level sufficient to attract qualified professionals within the petroleum industry and shall take into account(I) the specialised nature of work to be performed by the staff;

(ji) the need to ensure financial sufficiency of the Authority; and (iii) the salaries paid in the private sector to individuals with equivalent responsibilities, expertise and skills.

-------,~..----.
C 4860 2008 No.
Pensions.

Petroleum Industry
90.-(1) Service in the Authority shall be approved service for the purpose

2 3

of the Pensions Reform Act Cap. P4 Laws of the Federation of Nigeria 2004
and accordingly. officers and other persons employed in the Authority shall be entitled to pensions, and other benefits as prescribed Act, Cap. P4 Laws of the Federation of Nigeria 2004.

4
5

in the Pensions Reform

6 7
8 9 10 11 12 13 14 15 16 17
Financial Provisions.

(2) Subsection (1) of this section shall not prohibit the Authority from
appointing a person to any office on terms that preclude the grant of a pension, gratuity or other retirement benefits in respect of that office. (3) In the application of the provisions of the Pensions Reform Act, Cap. P4 Laws of the Federation of Nigeria 2004. to the Authority, any power

exercisable under that Act by a Minister or other agency is hereby vested in the Authority and shall be exercised by the Authority and not by. any other person. 91. The Authority may request for the services of any experienced staff of any relevant agency hitherto operating in the downstream petroleum sector to be transferred to the Authority if in its opinion such services cannot be obtained elsewhere in the country, and the person shall have the right to' refuse or accede
[0

this request. 92.-(1) The Authority shall, not later than September in each year,

18 19 20 21 22 23 24 25 26 27 28 29 3)

present to the Minister, a budget showing the expenditures which the Authority proposes to expend in respect of the next succeeding financial year, Insofar as the amount so budgeted does not exceed the total amount accruable to the Authority from its sources of funding in any financial year. (2) The Authority may during a financial year prepare and present to the Minister, a supplementary budget relating to expenditures which were

inadequately represented in the annual budget due to unforeseen-circumstances. (3) The A urhority may vary a budget prepared under this section insofar as such variation does not increase the total amount of the expenditure provided for in the original budget. (4) The financial year of the Authority shall be for a period of twelve calendar months commencing on the Ist.of January.ineach.year: 93. The Authority shall maintain a fund fromwhichbeththe capital and

Funds.

31

Petroleum Industry

2008 No. C4861

recurrent expenditure of the Authority shall be defrayed and which shall consist 2 3 4
5

of(a) fees, charges and other income accruing to the Authority from things

done by it in terms of this Act;

(b) an administrative

charge of 0.3 % of the price of a litre of annual

6 7 8
9

average consumption of white products per day to be inserted into the template;
(c) administrative

charges to be decided by {he Authority in respect of

liquefied petroleum gas, compressed natural gas and any other fuel;
(d) fees and charges paid in respect of any services performed

by the

10 II 12 13 14 15 16 17 18 19 XI 21

Authority including charges for mediation, arbitration, administrative and other services that the Authority may render in the course of the discharge of its functions;
(c) rents from the Authority's

property;

(j) penalties and fines that may be imposed by the Authority upon any company or individual in the course of discharge of its functions; (g) loans and grants- in-aid from national, bilateral and multilateral agencies;
(h) such other money as may be received by the Authority in the course of

its operations or in relation to the exercise of its powers and functions under this Act. (2) The Authority shall apply the proceeds of the fund established pursuant to subsection (1) of this section:
(a) to meet the administration (b) to the payment of-

22
Z3

and operating costs of the Authority;

24
25 2fj Tl

(i) salaries: (ii) fees or other remunerations or allowances; and (iii) pensions and other retirement benefits payable to members of the Authority or its employees;
(c) for the maintenance of property acquired by, or vested in the Authority; (d) for purposes of investment; as prescribed by the Trustee Investments

28
'E

1)
31

Act, Cap. 722 of the Laws of the Federation of Nigeria 2004, or any other relevant statute; and

C4862 2008 No.

Petroleum Industry
(e) in connection with carrying out its functions under this Act.

Power to

2
3 4

94. The Authority may accept grants of money or other property. upon
such terms and conditions as may be specified by the person or organisation making the grants provided such terms and conditions are consistent with the

Accept Grams.

5
Borrowing
Powers.

objectives and functions of the Authority under this Act. 95. The Authority may with the consent of, or in accordance with the general authority given by the Minister of Finance. borrow such sums of money as the Authority may require in the exercise of its functions under this Act or
its subsidiary legislation. 96.-{1) The Authority shall keep proper accounts and 'other records relating to such accounts in respect of all of the Authority's activities, funds ardproperty including such particular accounts and records as may be required. (2)The Authority shall not later than six months after the financial year prepare and submit to the Auditor-General of the Federation, a statement of

6 7 8
9

Accounts,

10 11 12 13 14 15 16 17 18 19

Reports and
Audit.

accounts in respect of that particular financial year. (3) The Authority shall present a half yearly report of all its activities including decisions, procedures, regulations and licences to the Minister.

(4) A summary of the reports mentioned In subsections (1) to (3) of this section shall be published annually on the website of the Authority and in at least two newspapers of nationwide circulation in Nigeria for public notice no later than the 31st of July of each year provided such publication shall exclude contldential data pertaining to national security, commercial sensitivity or personnel privacy. (5) Further to the provisions of this section, there shall always be a presumption in favour of releasing information to the public, which the Authority must rebut by showing good reasons for withholding such information from the public. 97. The Authority shall appoint an auditor in accordance with the guidelines for the appointment of auditors issued by the Auditor-General of the Federation. 98.-(1) The Authority shall ensure that all its decisions and orders-

:xl
21 22 23 24 2S '2h T7
Procedures on

28

Decisions.
Orders, Public Hearing and related matters

29 Xl 31

(a) contain an explanation or the basis for the decision or order; ,(b) are properly recorded in writing and other appropriate

permanent

forms;

Petroleum Industry
(c) are accessible to the public at reasonable times and places.

2008 No. C4863

2 3 4 5 6 7 8 9 [0 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 'lfj 2J 28
?)

(2) The Authority shall issue written reasons in respect of any decisions or orders affecting the existing rights and duties of any person. (3) The Authority may issue written reasons in respect of any other decision or order as the Authority deems necessary. (4) The Authority may make interim orders pending the final disposition of a matter before it. 99.-(1)The Authority may hold a hearing of any matter which under this Act or any other enactment it is required or permitted to conduct or on which it is required or permitted to take any action. (2)The Authority shall hold public hearings on manors regulated hy the Authority, which the Authority determines to be of sufficient interest to the public.
(3) Where the Authority

is required to or otherwise decides to hold a

hearing, all persons having interest in such matter shall as far as is practicable be notified of the questions in issue and given adequate opportunities representations. to make

100. Where any matter arises, entailing the consideration

of any

professional or technical question, the Authority may consult such persons as may be competent to advise thereon. 101.-(1) Where any question of law arises from an order or decision ofthe Authority, it may on its own volition or at the request of any person so affected hy such order, refer such question for the decision of the Federal High Court. (2) Where a question has been referred under subsection (I) of this section, the Authority shall state the question in (he form of an originating summons and file same with the Registrar of the Federal High Court. 102.-(1) Authority shall have the power to resolve disputes betweenThe
(a) persons whose activities are regulated by the Authority; and (b) between such persons and other parties
Power (0 Resolve Disputes.

regarding any matter under (his Chapter and Chapter VIII of this Part, and in respect of any subsidiary legislation made by the Minister in respect of activities of the Authority or the Petroleum Equalisation Fund.

30 31

C4864 2008 No.

Petroleum Industry
(2) No dispute shall be referred to the Authority unless-

(a)

an attempt has been made by the parties concerned to resolve the

3 4 5 6 7
8

dispute through negotiation;

(b) a resolution cannot be reached under any other relevant or applicable

dispute resolution procedure prescrihed by this part, including but not limited to those pertaining to the wholesale market and the network code; and
(c) both parties are granted the opportunity

to present their respective

cases 10 the Authority. (3) For purpose of the resolution of disputes the Authority may act either as an arbitrator or mediator. (4) When acting as an arbitrator the Authority shall issue a determination on the mailer.
(5) The Authority may appoint a person acceptable to all parties to act as

9 10 11 12 13 14 15 16
Pnhlirtuinn of Guidelines for DisllUlC Re,ohllinn

mediator or arbitrator on its behalf in respect of any dispute before it and the decision of the mediator or arhitrator shall be regarded as being the determination

of the Authority.
103.-(1) The Authority may publish guidelines setting out the principles that it may take into account in resolving disputes.
(2) The Authority

17 18 19
2D that-

shall convene to resolve a dispute if it is satisfied

21
22 23

(a) an agreement

may not or will not be reached between the parties to

the dispute within a reasonable time; and

(b) the resolution of the dispute would promote the objects of this part or

24
25 7fi

any of its subsidiary legislation enacted under this Act pertaining to the downstream petroleum industry. (3) The Authority shall he entitled to convene to resolve a dispute at its headquarters or at any other place in Nigeria.
10 the Minister to issue

27
28 29

(4) The Authority may make recommendations

regulations for the discharge of the functions and for the conduct of the proceedings of the Authority, including but not limited to procedures for participation in the proceedings of dispute resolution between licensees, customers, wholesale

JJ 31

Petroleum Industry
1 2 3 4 5 6 7 8 9 10 It 12 13
14

200S No. C 4865

customers and any other persons. 104.-(1) Subject to any guidelines that may be issued by the Authority Terms and Conditions for the Resolution of Disputes.

under this Chapter, the Authority or, if the Authority deems fit, an arbitrator, may resolve the dispute in accordance with the Arbitration and Conciliation Act. Cap A 18, Laws of the Federation of Nigeria 2004, (2) The Authority may require either party to the dispute to pay any costs incurred by the Authority in appointing an arbitrator. (3) The Authority, in carrying out its functions under subsection (I) of this section, shall be guided by the objective of establishing a dispute resolution process that is fair, just economical and effective and shall at alltimcs act in accordance with to the ethics of justice and the merits of each case. (4) The determination of the Authority shall-

(a) be properly recorded in writing; (b) state the basis or bases for the determination;

and

15 16 17 18 19
:J)

(c) be provided to the parties to the dispute as soon as practicable.

105.-(1)

The Authority shall register aU determinations

thatit makes

pursuant to this Act. (2) The register referred to in this section shall contatn-.
(a) the names of the parties to the dispute; (b) a general description

Registration of Determinations.

of the mailer pertaining to the determination;

21

and
(c) the date of the determination.

22
23 24 25

106. Subject to the agreement of the parties, a determination

of the

Enforcement

Authority may be enforced by the Federal High Court as if the determination is a judgment of such court. 107.-(1) An aggrieved person shall have a right of appeal to the Federal

"r

Determinations.

Judicial
Review.

High Court for ajudicial review of questions of law and process pertaining to 28 "E :J) 31 a determination or other action of the Authority.

(2) Any determination or other action of the Authority that is Ihc subject matter of the application for judicial review shall subsist and remain binding and valid until it is expressly reversed in a tina! judgement or order of the

C 4866 2008 No.

Federal High Court.
Referrals of Questions of
I.JW to the

Petroleum Industry

2
3 4 5 6 7 8

108.-(l)
determination

If any question of law arises during a proceeding

for a

of the Authority, the Authority may request any person directly

Federal High Court.

affected by such proceeding to refer that question for the decision of the Federal HighCourt. (2) Where a question has been reserved in accordance with the provisions

of subsection (1) of this section, it shall be stated in the form of a special case
and filed with the Registrar cf the Federal High Court. 109.-0) Any suit or proceedings against the Authority, a member of the

S\li[~

Lillli[,lIion "r against thr Authority, its t\g~I1[s.

Cit

9 10 11 12 13 14 15 16 17 18 19 20 21 Z2 23

Governing Board or any employee

of the

Authority for any act, omission or

default in respect of its functions and powers under this Act or any other enactment shall be brought within twelve months after the act, neglect or of damage or injury,

default complained of or in the case of a continuance

within twelve months after such damage or injury may have ceased. (2) No suit shall be commenced against the Authority before the expiration of a period of one month after written notice of intention to commence the suit has been served upon the Authority by the intending plaintiff or his agent. (3) The notice shall clearly and explicitly state(a) the cause of action; (b) the particulars

of the claim; and place of abode of the intending

(c) the name, address of service,

plaintiff; and (d) the relief which he or she claims. 110. Any summons, notice or other document required or authorised to be served upon the Authority under the provisions of this Act or any cther enacrmem or law may he served by delivering the same to the Director General of the Authority or the Secretary to the Authority at the head office of the Authority. It 1.-(1) Where a judgment of the Court awards any sums of money

Service of Notice Oil the AUlhority

24 25
"]fj

n
Judgmellt ,Ig~in>[ the Authorit),

28
z;}

against the Authority, the said amounrs shall be paid from the general reserve funds of the Authority. (2) Where {he Authority has filed a notice of appeal, the provisions of

Xl 31

Petroleum Industry
1 2 3 4 5 6 7 8

2008 No. C 4867

subsection (1) of this section shall be subject to any directions that may be given by the court.

112. Every employee,

agent, or auditor

of the Authority

shall be

Indemnity.

indemnified by the Authority against any liability incurred by him or her in defending any proceedings whether civil or criminal, if any such proceeding is brought against him or her in his or her capacity as employee, agent, auditor or employee. Chapter V 113.-(1) Management The National Petroleum Assets Management Agency a National Petroleum Assets
Establishment of the Nalional Petroleum Assets Management Agency.

9
10 11

There is hereby established

Agency (vrhe Agency") which shall he a body corporate with

perpetual succession and a common seal. (2) The Agency shall have power to acquire, hold and dispose of property, sue and be sued in its own name and subject to this Act perform all acts that corporate bodies may perform by law. 114.-(1) The Agency shall be in charge of monitoring and approving petroleum industry of Nigeria with the objective of

12 13
14 IS

Objects.

16 17
18

costs in the upstream

maximising the total revenue accruing to the government from the upstream petroleum industry in Nigeria. (2) The Agency shall ensure that all operations in the upstream petroleum industry achieve the objective of realising or achieving optimal financial returns. 115. The functions of the Agency shall be(a) to approve commercial
puncuons.

19 J) 21 22
23 24 2S
)5

and cost elements of all field development

programmes in the upstream industry in Nigeria; (b) to superintend and oversee the activities of all operators to which this chapter applies in the upstream petroleum industry in all areas pertaining to cost control and in pursuance of this, to approve commercial aspects of work programmes and field development plans for all operators in the upstream oil industry, including the National Oil Company;
(c) through the monitoring of costs, encourage and stimulate the activities

T7 28

29 l)
3[

of all operators in the upstream petroleum industry so as to(i) ensure that national reserve objectives are maintained;

I'

C 4868 2008 No.

Petroleum Industry
(ii) increase national production capacity in accordance with targets

set by the Directorate; (ijj) promote

3
4

increased Nigerian content by utilising indigenous

technological capabilities in engineering and construction in all areas of

5
6 7 8

the Nigerian petroleum industry;

(iv) promote technology transfer into the country;
(v) promote the increased participation

of Nigerians in accordance

with targets set by the Directorate; (vi) facilitate and promote harmony and maximum cooperation between operators in the upstream petroleum industry and the communkies residing
or

9 10 11
12

working in areas where petroleum is produced.

(d) to provide regular cost information to the Directorate for the purpose

13 14

of allocating petroleum quotas to cost effective operators.

(e) to develop cost benchmarks for the evaluation of opportunities

in the

15
16 17 18

upstream petroleum industry.

if> to receive

and dispose of petroleum accruing to the federal-government of tax oil

which is produced under production sharing contracts.consisting and royalty oil but not profit oil;

19
2D
Powers Agency.

(g) to liaise with the Federal Inland Revenue Service on cost deductions

under the relevant provisions of this Act and any other law in force. 116. The Agency shall have the power to(a) enforce

or the

21 22
23 24 25 26 Tl 28

the provisions

of this Chapter and any regulations

made

thereunder; (b) enter into contracts with any person which in the opinion.of.the Agency will facilitate the discharge or .exercise of its duties or powers under this Chapter;
(c) do such other things as are necessary and expedient for-the effective

and full discharge of its functions under this Chapter. 117.-(1) There is established for the Agency a Governing Board (vthe:

Governing Board of (he Agency.

?;J 30 31

Board"), which shall consist of(a) anon executive Chairman appointed by the President;

Petroleum Industry 1
(b) one representative (e) one representative (d) one representative

2008 No. C4869

Of the National Petroleum Directorate; of the Nigerian Petroleum Inspectorate; of the Federal Inland Revenue Service;

2
3

(e) five persons to be appointed by the President on the recommendation of the Minister being persons who by reason of their ability, experience and specialized knowledge of the petroleum industry are capable of making useful contributions to the work of the Agency; (j) three Directors who are full time staff of the Agency, to be appointed to the Board by the President; and
(g) the Director-General

5
6 7

8 9 10
11

of the Agency;

(2) The persons appointed pursuant to subsections (a) (e) and

if> of this

12 B 14
15 16 17 18 19 Xl
21

section shall hold their membership of the Agency for four years subject to reappointment for another period of four years only on such terms and conditions as may be specified in their letters of appointment. (3)The proceedings of the Board of the Agency and other ancillary matters shall be regulated by the Fourth schedule to this Act. 118.-(1) The Board shall ensure that the Agency carries into effect its Functions and Remuneration.

statutory functions as contained in this Act. (2) Members of the Board shall be paid from the funds of the Agency(a) such remuneration

as the Agency may from time to time determine;

(b) any such allowances as the Agency may determine from time 10 time

22 23 24 25

to meet any reasonable expenses incurred by such members in connection with the business of the Agency. (3) In determining remunerations and allowances in accordance with

subsection (2) of rhis section, the Agency shall have due regard to(a) the specialised nature of the work to be performed by the Agency;

26
T1

(b) the need 10 ensure the financial self-sufficiency of the Agency;

(e) allowances paid in the private sector to board members with equivalent

28 ;9 ~ 31

responsibilities, 119.-(1) Director-General,

expertise and skills.

The DirectorGeneral of the
Agency.

There shall be an officer of the Agency to be known as the who shall he appointed by the President and shall he-

C 4870 2008 No.

Petroleum Industry
(a) a person with cognate knowledge and experience in matters pertaining

'2
3

to the petroleum industry; and

(b) the

chief executive and accounting officer of the Agency and responsible

for running the day-to-day affairs of the Agency.

5 6
['enure.

(2) The Director-General shall have the status ofa permanent secretary of the civil service of the Federal Republic of Nigeria.
120.-(\) The Director-General shall hold office for five years in the

7 8

Remuneration
and

first instance, which may be renewed for another period of five years only on

L'ondinons of Service or the Director General

9
10 II 12

such terms and conditions as may be specified in his or her letter of eppointmenr.
(2) The remuneration and conditions of service of the Director-General shall be at a level sufficient to attract qualified professionals within the petroleum industry. 121. No person shall be appointed as Director-General Board unless he or she(0) is a Nigerian citizen; (h) has not, in accordance with the terms of laws in force in any country

[)iS~U;llitiGll;(m

13 14
15 16

or member of the

17 18 19 ]) 21 22 23 24 25

within which he or she has been working or residing: (i) been adjudged or declared bankrupt or insolvent; (ii) made an assignment to, or arrangement or composition with his

creditors which has not been rescinded or set aside; (iii) been declared to he of unsound mind; (Iv) been convicted of an offence involving fraud or dishonesty; or (v) been banned or disqualified by a competent authority from carrying out any assignment, responsibility or function in his or her professional capacity.
(c) has not been disqualified

26
Tl
Vacation of

by the Securities Exchange Commission

from holding a board appointment in any public company. 122. The office of the Director General or member of the Board shall become vacant:
(a) three months after giving notice in writing to the President of his or

28
z)

Oftlcc and
Termination.

30 31

her resignation; or

Petroleum Industry

2008 No. C 4871

(b) if he or she becomes disqualified under the provisions of section 121

2 3
,~
5
6

of this Act;
(c) on the expiration of his or her appointment.

123. "lhc President

HOJ""
"1

Sh,11

require

till!

Director General 0,' member ortne

';c:

vacate hb or her off'

i<li 11:l~ (;\llilll~i1!cd an act oreross

1111,,,OILtil:,t,

7 8

(b) has failed to comply with the terms and conditions of his or her office

as fixed by this Act;

(c) suffers from any mental, physical or legal disability which renders

9
10 11 12 13 14 15 16 17 18 19 X) 21 22 23 24 25 2fj

him or her incapable of executing his or her duties efficiently as

it

member;

124. Where there is a vacancy on the Board, the candidate to fill the said vacancy shall be appointed in accordance with the provisions of sections 117 and 121 of this chapter. 125.-( 1) The Agency shall appoint a Secretary who shall keep the corporate records and common seal of the Agency and undertake such other functions as the Director General and the Agency may from time" to time direct. (2) The Secretary shall he a lawyer with a minimum of 10 years post qualification experience. 126.-(1) The Agency may, from time to time, appoint such professionals
Other S~<:retary

staff

experienced in the petroleum industry and other persons as staff of the Agency to assist it in tr performance of its functions under this Act. (2) Stall of the Agency appointed under subsection (1) of this section shall he appointed on such term.'>and conditions as the Agency may prescribe under guidelines to be issued by the Minister. (3) Staff of the Agency shall be public officers as defined in the 1999 Constitution of the Federal Republic of Nigeria. (4) For the purpose of this section, appointment shall include secondment. transfer and contract appointments. 127. The remuneration. tenure and conditions of service of staff of the
Remuneration.

n
28 19
J)

Agency shall be at a level sufficient to attract qualified professionals within the petroleum industry and shall take into account=

31

C 4872 2008 No.

Petroleum lndustry
(i) the specialised nature of work to be performed by the staff;

2 3
4
P,;nsi(1I1S.

(ii) the need to ensure financial self-sufficiency

of the Agency; and

(iii) the salaries paid in the private sector to individuals with equivalent responsibu uies, expertise and skills. 128.~(1) Service in the Agency shall be approved service for the purpose of Nigeria 2004

5 6 7 8 9 10 11 12
13

of the Pensions Reform Act Cap. P4 Laws of the Federation

and accordingly.

officers and other persons employed in the Agency shall be

entitled to pensions, gratuity and other benefits as prescribed in the Pensions Reform Act. (2) Subsection (I) of this section does not prohibit the Agency from appointing a person to any office on terms that preclude the grant ofa pension, gratuity or other retirement benefits in respect of that office.
(3) In the application

of the Pensions Reform Act to the Agency, any of the

14
15 16 17
fill:mcial Provisions

power exercisable Government

under the Act by a Minister or other authority

of the Federation,

other than the power to make regulations is

hereby vested in and shall be exercisable by the Agency and not by any other person or authority. 129.-(I)The Agency shall. not later than September in each year, present

18 19 Xl
21

to the Minister, a budget showing the proposed expenditure of the Agency in

respect of the next succeeding financial year insofar as the amount so budgeted does not exceed the total amount accruabte to the Agency from its sources of funding in any financial year.
(2) The Agency may during a financial year prepare and present to the

22
23 24 25 2Ii

Minister,

a supplementary

budget

relating

to expenditures

which were

inadequately represented in the annual budget due to unforeseen circumstances. (3) The Agency may vary a budget prepared under this section insofar as

n
2R

such variation docs not increase the total amount of the expenditure provided for in the original budget. (4) The financial year of the Agency shall he for a period of twelve calendar months commencing on the Ist of ianuary in each year.

29
'Il

Petroleum Indus/I)'
130.-(\) 2 consist of(0) such monies as may he appropriated

2008 No. C 4873

Fueds ofthe
Agency.

The Agency shall establish

and maintain a fund which shall

3
4-

to the Agency from time \(' time

.\C\,

by the National

Assembtv

1,,<,

(he:

purposes (,I' thi"

6 7 k

the Agency by the Dirccmrute and

tilt:

ill clCCOI\J:IllL'Cwith \.IWi,; :"',' ,)i ",,: 2k ofthi-, ,\u; and

rC~pt'Cl

:\'_'l

provisions otsccuon

Ie)

fees and cn.ugcs paid ill

M :U1~\:,":i-, ices performed

by

the

10 1\

may render in the course of the discharge of its functions, such tees and charges to be decided in accordance with regulations in accordance with the terms of this Act. (2) The Agency shall apply the proceeds ofthe fund established pursuant to subsection (1) of this sccrlon-.
(a) to meet the administration (b) to the payment of(1')

issues hy the Minister

12
13 14 15

and operating costs of the Agency;

16
17

salaries;

18
19 2D

(ii) fees or other remunerations or allowances; and (iii) pensions, gratuities and other retiring benefits payable to members of the Agency or its employees;
(c) for the maintenance of property acquired by, or vested

21
22 Z3

in the Agency,

(d) for purposes of investment; as prescribed hy the Trustee Investments Act, Cap. 722 Laws of the federation of Nigeria 2004, or any other relevant statute; and
(e) in connection with carrying out its functions under this Act.

24 25
26 TJ 28 29 :.l) 31

131.-(1) The Agency may accept grants of money or other property upon
such terms and conditions, if any, as may be specified by the person or

Powerto
An:~r! Grants.

organisation making the grants provided such grants <Irenot inconsistent with the objectives ,111d functions of the Agency under this Act. (2) Nothing in subsection (I) of this section or in this Act shall he construed to allow the Director-General and other staff of the Agency to accept grants for

,.. - . .

"

..

'~ -

C 4874 2008 No.

their personal use.
Uorrowing
P,)WCf,

Petroleum Industry

2 3 4

132. The Agency may, with the consent of the Minister of Finance and

the approval of the Governing Board, horrow money required in the exercise of its functions on such terms and conditions as the Governing Board, may prescribe. 133. The Agency shall keep proper accounts of its income and expenditure in respect of each year and shall cause its accounts to be audited within six months after the end of each year by auditors appointed in accordance with guidelines published by the Auditor-General of the Federation.

Accounts anJ Audits.

5 6 7 8

Annual
Reports.

9
10 11 12 13

134. The Agency shall prepare and submit to the Minister nor later than the month of July in each year a report in such form as the Minister may direct, on the activities of the Agency during the immediately preceding year, and shall include in such report a copy of the audited accounts of the Agency for the year and the Auditor-General's 135.-(1) report thereon.

Legal I'nK"t'edings.

14

No suit shall be commenced against the Agency before the

15
16 17 18 19

expiration of a period of one month after written notice of intention to commence the suit shall have been served on the Agency by the intending plaintiff or his agent. (2) The notice shall clearly state the(a) cause of action; (b) particulars

20
21

of the claim;

(c) name, place of abode and address for service of the intending plaintiff;

22
23 24 25 26 T7

aoo
(d) relief claimed by the plaintiff. (3)The notice referred to in subsection (1)of this section and any summons, notice or other document required or authorised to be served on the Agency under the provisions of this Act or any other enactment or law, may be served by(a) delivering

28
29 Xl
3J

the same to the Director General or any other principal

officer of the Agency; or

(h) sending if by registered post addressed to the Director General at the

head office of the Agency.

Petroleum Industry Chapter VI ~ Nigerian National Petroleum Company Limited

2008 No. C4875

2
3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 3) 21

136.~(1)

The Nigerian National Petroleum Company Limited ("The shall be a limited liability company and shall he the National

The National Oil Company.

National Oil Company"), successor company

to the assets and liabilities of the Nigerian

Petroleum Corporation ("the Corporation"). (2) If, incorporated,

00

the effective date the National Oil Company has not been

within three months of the said effective date, the government

through the Oil and Gas Sector Reform Implementation Committee shall cause the National Oil Company to be incorporated. (3) The tenure of the initial Board of Directors of the National Oil Company and subsequent appointments to the Board shall be determined in accordance with the provisions of the Articles of Association of the National Oil Company. (4) Ownership of the National Oil Company shall he vested solely in the Federal Government of Nigeria at the time of incorporation. (5) Notwithstanding the provisions of subsection (4) of this section the

government may at any lime after two years from the date of incorporation of the National Oil Company, decide to divest itself of any amount of shares in the National Oil Company for sale to the Nigerian public on the Nigerian Stock Exchange. 137 ,~(1) On the effective date, if the National Oil Company has heen incorporated before the said effective date, or no later than one month after the date of incorporation of the National Oil Company, the assets and liabilities of the former Corporation shall he transferred to the National Oil Company. (2) The assets and liabilities of the Corporation shall on the transfer date he deemed to be the assets and liabilities of the National Oil Company, and the Natiof!al Oil Company shall without further assUJance be entitled to enforce or d'fe~[[ Corntit' obligations for or against the Transfer of asset, and liabilities.

22
23 24 25 26 Tl 28 2'!

C0f:.~.

ation as if the National Oil

were the original party to such obli. For the avoidance of doubt, all bo:

- s. hypothecations, securities,

(,Sj

Jl 31

deeds,~~ontracts, instruments, documents and W~king arrangements subsisting immeftelY "'c before the transfer date and to WI~ the Corporation was a party

C 4876 2008 No.

Petroleum Industry
shall, on and after that date, bc as fully effective and enforceable against or in

2 3 4
_1

favour of the National Oil Company as if, instead of the Corporation, the National Oil Company had been named therein. (4) Any pendingactionor proceedingbrought by or againstthe Corporation .nunediately before the transfer date may be enforced or continued by or against the National Oil Company in the same way as if this Act had not been passed. (5) Notwithstanding the provision of subsection (4) of this section(a)

6 7 S 9 10 11
12

an action or proceeding shall not be commenced against the National

Oil Company in respect of any employee, asset, liability, right or obligation if the time for commencing the action or proceeding would have expired, had the transfer not been made:
(b) the transfer of assets and liabilities to the National Oil Company

J3 14 15 16 17
Uuanuuees subsist. to

shall not be deemed to create any new cause of action in favour of a (i) holder of a debt instrument issued by the Corporation before the

transfer date; or
(ii) party to a contract with the Corporation that was entered into

before the transfer date. 138, Any guarantee given by the Federal Government of Nigeria or any person in respect of any debt or obligation of the Corporation, and which was effective immediately before the transfer of assets and liabilities of the Corporation to the National Oil Company shall remain fully effective against the Government in relation to the repayment of a debt or performance of an obligation by the National Oil Company. 139.-(1) With effect from the transfer date, the employees of the

18 19 20 21 22 23

Transfer

or

24 25 26
Tl

,;mploy~~s
,mti cnndinons

Corporation shall be deemed to be employees of the National Oil Company on terms no less favourable than those enjoyed immediately prior to such transfer, and service with {he National Oil Company shall be deemed to be service qualifying for employment-related-entitlements as may be specified under any relevant enactment. (2) The National Oil Company shall continue to fulfil all statutory obligations in respect of pension schemes to which the Corporation was obliged

r s"n';",;

28 29 30 31

Petroleum Industry

2008 No. C4fm

in respect of its employees, prior to the transfer of assets to the National Oil 2 3 4 Company.

140.-0) The Minister shall by notice published in the Gazette record

satisfaction that the assets and liabilities of the Corporation have been transferred; to the National Oil Company in accordance with the provisions of this part of this Act. 141. Subject to the provisions of this and other relevant laws, members of the board of the National Oil Company shall be guaranteed the authnrity and resources to fulfil their duties in a protesstonai and objective manner without tnterterencc. The
Bllanl

5
6 7 8 9

to
II 12 13 14 15 16

142.-(1) The Board of the National Oil Company shall consist of

Nigerians(a) who have distinguished

Composition
of tht Board.

themselves in their various capacities,

(b) who have unblemished records of honesty and integrity, and (c) who will be able to exercise independence and objectivity with respect

to the affairs of the National Oil Company.

'7
18 19 20 21 22 23 24 25

143.-( I) Members of the Board shall within the first three months develop
a formal and transparent committees of the Board. (2) Further to subsection (I) of this section, the mandate, composition and working procedures of committees of the Board shall be well defined ami disclosed by the Board to the National Oil Company and stakeholders. (3) Where possible, the Boards shall assign non-executive board members capable of exercising independent judgement 10tasks where there is a potential for conflict of interest, including hut not limited to(a) ensuring the integrity of financial and non-financial reporting; (b) nominations of board members and key executives; and (c) Board remuneration.

Board

Committees

board nomination and selection process for the

26
Yl

28 29 )) 31

144.Board members shall discharge their responsibilities in accordance

with the best standards, practices and principles of corporate governance and their actions shall be transparent and fully explained to affected stakeholders

C4878 2008 No.

Petroteumlndustry
and where necessary, to the general public.

Rl'sponsihililies of rhc Board

2
3

145. The Board of the National Oil Company shall at all times.'f'

responsible for the

qr~tl""i,.."lfjrh,'

he National Oil Company

hv ! he

shareholders

for the

,c ,

"
7
8 9

noard: and (b) be accountable to the National Oil Company and the shareholders. (c) act in good faith and on a fully informed

basis, and exercise due

diligence and care in the best interests of the National Oil Company, the shareholders and We sustainable development of Nigeria.
(d) while recognizing

iO 11 12 13 14 15
Functions uf Till' Board.

that Board decisions differently,

may affect the various to treat different

shareholders

and stakeholders

endeavour

shareholders and stakeholders fairly and equally, as the case may be.
(e) apply high ethical standards in performing

its duties to the National

Oil Company, taking into account the interests of its stakeholders. 146. The functions of the Board shall include(a) reviewing and guiding corporate strategy, major plans of action, risk policy,

16 17 18 19 Xl 21 22
23

annual budgets and business plans; setting performance objectives;

monitoring implementation and corporate performance; and overseeing major capital expenditures, acquisitions and divestitures.

(b) monitoring the effectiveness of the National Oil Company's governance

practices and making changes as required.

(c) selecting, compensating,

monitoring and, when necessary, replacing

24 25 26
TI

management executives and overseeing succession planning.

(d) aligning key executive and board remuneration

with the longer term and stakeholders.

interests of the National Oil Company, its shareholders

(e) monitoring and managing potential conflicts of interest of management,

2B

board members and shareholders,

including misuse of corporate assets and

19
30

abuse in related National Oil Company transactions.

(j) ensuring the integrity of the National Oil Company's

accounting and audit, and that

~l

financial

reponing

systems,

including

the independent

Petroleum Industry
1 2 3 4 5 6 7 8 9
10

2008 No. C 4879

appropriate systems of control are in place, in particular, systems for risk management, financial and operational control, and compliance with the Jaw and relevant standards.
(g)

overseeing the process of disclosure and communications to

shareholders and the public. 147.-(1) Shareholders of the National Oil Company shall be entitled to full disclosure about the National Oil Company, whichdisclosure shall include, but not be limited to, material information on(a) the financial and operating results of the National Oil Company. (b) National Oil Company objectives. (c) major share ownership and voting rights. (d) remunerationpolicy for members ofthe board and key executives, and
Rights of
Shareholders.

11 12 13 14 IS

informationabout board members(includ!ngtheirqualifications.the selectjon process, other National Oil Company directorships) and whether they are regarded as independent by the board.
(e) related National Oil Company transactions.

16
17
18 19

if) foreseeable risk factors in National Oil Company activities.

(g)

issues regarding employees and other stakeholders.

(h) governance structures and policies, in particular, the content of any

JJ 21 22 23 24 25
'2h

other corporate governance code or policy and the process by which it is implemented. (2) Information relating to the operations and activities of the National Oil Company shall be prepared and disclosed in accordance with high quality international standards of accountingand financialand non-financialdisclosure requirements. (3) An annual audit of me National Oil Company shallbe conductedby an independent, competent, experienced and qualified auditor that shall be accountable to the shareholders and shall provide an external and objective assurance to the board and shareholders that the financial statements fairly represent the financial position and performance of the National Oil Company in all material respects.

zj 28 19 3) 31

C 4880 2008 No.

Petroleum Industry
(4) External auditors shall be accountable to the shareholders and shall

2
3

owe a duty to the National Oil Company to exercise due professional care-in the conduct of the audit.

4
Establishment of the Nigerian Petroleum Research

Chapter VI! - The Nigerian Petroleum Research Centre

148.-(1) There is established a body to be known as the Nig'erianPetroleUm

5
6 7 8 9

Research Centre ("the Centre") which shall be a body corporate With perpetual succession and a common seal. (2) The Centre shall have power to acquire, hold and dispOSe ofptOperty, sue and be sued in its own name and subject to"this Act perform all acts that corporate bodies may perform by law. (3) The corporate headquarters of the Centre shall be in Port Harcourt

Centre.

10
l1

12 13
Functions of the Centre.

with offices in such other'place as the Supervisory Council may dttennine with the approval of the Minister.

14 15 16 17 18
19 2)

149.The functions of the Centre shall be to(a) carry out research in aU .areas pertaining to the pettoleum.incusrry. . , but primarily in the areas of exploration and production with the primary focus on the need to develop.-. (I) new technologies; and
(U) design capabilities suitable for the

and'prccess technology,

needs of Nigeri~;

(b) carry out research and advise the Minister and the

Directorate on
as the case

21
22

matters relating to exploration and production outside Nigeria! (c) advise the Minister, the Directorate and the Inspectorate, may be, on(j) the technical evaluation of any acreages whatsoever; (il) the value of any licences or leases, particularly during t'he bidding

23
24 25 26 T! 28 19 3)

round process. (d) collahorate with the Inspectorate and undertake analyses and

rebe

evaluation of any data and information that may be provided by operators;

(e) domesticate and acquire patents on any new technclogleethatmay

discovered or invented and market these new technologies to any person, subject to the approval of the Minister;

31

Petroleum Industry 1 2 3 4 5 6
7

2008 No. C4881

ifJ undertakeroutineanalysesandconsultanciesforall customers/operators

on a commercial basis; (g) organise training courses, workshops, seminars and conferences for the purpose of promoting the functions of the Centre, capacity building, increasing Nigerian content and sensitising the government and people of Nigeria on issues relating to the" petroleum industry:
(h)

collect and collate independent data from Research Institutes and

8 9 10 11 12 13
14

Universities locally and abroad; (I) operate data prying services for other regulatoryagencies, government and potential investors in return for fees chargeable at commercial rates;

V) collate and review all literature and data on the industry emanating
from universities and research institutes at home and abroad and downsize these into a data bank;
(k) operate a comprehensive data bank, including seismic data, which

15 16 17 18
19

data shall be made available to the Directorate and the Inspectorate on request, and to operators (includingthe NationalOil Company) on purchase; (I) carry out environmental impact assessments of any projects in the petroleum industry for any person in return for fees at commercial rates;
(m)

advise govemmem on policy formulation on all issuesthat are relevant

2D
2\

to increase Nigerian Content levels in the Nigerian petroleum industry;

(n)

collaborate with other research institutes within and outsidethe country

22 23 24 25 26
Tl

on activities.of common interest;

(0)

carry out research or investigation into the availability of local raw

materials for use in the petroleum industry; (p) carry out research on engineering activities as they relate to the petroleum industry and for operators, either jointly or in collaboration:
(q)

where necessary and as requested by the Directorate

10

Of

I,

2S 29
~)

Inspectorate,

collect samples at \vell_sites and to carry out analyses,

either independently or jointly with operators o f the licence or lease, as the

"SO mav be:
(r" fi \ r-years

3i

after acquisition, obtain from the operator all seismic data

C 4882 2008 No.

1

Petroleum Industry
obtained from any licence or lease in Nigeria; and
(s)

2
Powers of tile
Centre.

do any other matters incidental to the functions listed in this section.

3 4 5
6

ISO. The Centre shall have:

(a) power to charge fees at commercial rates for its services to any

government or person;
(b) access to licence, lease, or contract areas, well-sites, storage depots, refineries and any other places where activities relating ladle petroleum

8
9
Supervisory

industry are-carried out, for purposes of collecting samples for independent analyses and for the Centre's research. 151.-(1) There is established for the Centre a SupervlsoryCounciJ ("the

10 11 12

Council.

Supervisory O:J~ncil") which shall consist of:

(a)

e Chalrman to be appointed by the President;

13
14
15

(b)

one representative not below the rank of a Director from the:

(iI). Nigerian

.-(,) Nig~'ii!f1'-Pdrol~~ Inspecrctate

Petroleum Directorate

16
17 18

(iii) Ministry of Science and Technology;

(iv)

Petroleum Technology Development Fund; of the Nigerian National Petroleum Compatiy

(c) one representative

19
2)

Limited not below the rank of a General Manager;

(d) one

representative of oil exploration and production companies operating

21 22 23 24 25 26
Tl

in Nigeria;
(e)

two petroleum sclenusts appointed on the recommendation

of the

Council of Registered Engineers of Nigeria and the Council of Nigerian Mining and Geosciences Society;

if) one representative of the Nigerian Academy of Sciences;

(g)

three Directors who are full time staff of the Inspectorate, to be

appointed to the Board by the President; and

(h)

28 29 30 31

the Director-General of the Centre. of the Supervisory Council shall be a person

(2) The Chairman

knowledgeable in the petroleum industry with cognate experience of not less than 15 years.

Petroleum Industry
(3) A person appointed under subsection (1) (a), (d), 2 3 4 5 6 7 8 9 10
(e)

2008 No. C,..qll3 and (j) of this

section shall hold office for four years in the first instance subject 10 reappointment for another period of four years only. (4) Members of the Supervisory Council shall be paid such remuneration and allowances as may be determined from time to time by the Minister. (5) The proceedingsof the SupervisoryCounciland other ancillary matters shall be regulated by the Fifth schedule to this Act. 152.-(1) The Supervisory Council shall be responsible for determining the overall policy and programmes of the Centre and for ensuring the implementationof suchpoliciesand programmesin accordancewith the functions
Powers of lhe Supervisory Council.

11 of the Centre. 12 (2) Without prejudice to subsection (1) of this section, the Supervisory

13 Council shall14
15
(a)

approve the research and training,progr~.mmesof tire Centre; .

(b) determine the fees to be paid for research, consulting, training and

16 17 18 19 Xl 21 22 23 24 25 26
Tl

other services that maybe offered by the Centre;

(c)

promote any .other activity that in the opinion of the Supervisory

Council will help to acbieve the objectives of the Centre. 153.-(1) There shall be an officer of the Centre to be known as the
DirectorGeneral of the Centre.

Director-General, who shall be appointed by the President. (2) The Director-General shall be an accomplishedresearcher of national and international repute in the field of engineering, physical sciences or geosciences, with a minimumof fifteenyears cognate knowledgeand experience in matters pertaining to the petroleum industry. (3) The Director-General shall be the chief executive and accounting officer of the Centre and shall be responsible for running the day-to-day affairs of the Centre. (4) The Director General shall have the status ofa permanent secretary of the civil service of the Federal Republic of Nigeria. 154.-(1) The Director-General shall hold office for five years in the first instance subject to re-appointmentfor another period of five years only, on

28 29
:J)

31

Tenure, Remuneration and conditions of Service.

---~-C 4884 2008 No.

1

Petroleum Industry
such terms and conditions as maybe determined by the Minister or as specified

2 3 4
5

in his or her letter of appointment. (2) The remuneration and conditions of service of ithe Director-General shall be at a level sufficient to attract qualified professionals within research 'centres operated by upstream companies operating within the oil industry and shall be determined in accordance with guidelines prescribed by the Minister. 155. No person shall be appointed as Director General
Supervisory Council unless he Of she(a) is a Nigerian citizen; (b) has not, in terms of the laws in force in any country(i) been adjudged or declared bankrupt or insolvent; or (it) made an assignment to, or arrangement on compassion with his creditors which has not been rescinded or set aside; (iii) been declared to be of unsound mind; (iv) been convicted of an offence involving fraud or dishonesty; or
(v) been disqualified by a competent authority from~arryi.g
Of

6
Disqualification.

7 8 9
10 11

member of the

12
13

14 15 16

out any

17
18

assignment, responsibility or function in his or her,professional capacity.

(e) has not been disqualified

by the Securities Exchange Commission

19
Vacation of Office and Termination.

from holding a board appointment in any public company. 156. The office of the Director General or member. of the. Supervisory Council shall become vacant: (a) three months after giving notice in writing to the President of his Dr her resignation;
(b)

20

21 22
23
24

if he or she becomes disqualified under the provistoeeof.Section

155

25 26 27

of this Act; or
(c) on the expiration of his or her appointment.

157.~(l) The President shall require the Director General orenember of

the Supervisory Councuro vacate his or her office if-he or sne-,

;'a i
.
-"

::1" ccmmtueo an art of cross misconduct:

(0

,I>, he" railed

comnlv witu the teems and conditions of his or her office

as contained in [his Act:

Petroleum Industry

No. C4885

(c) suffers from any mental, physical or legal disability which renders 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 him or her incapable of executing his or her duties efficiently as a member;

158. Upon the vacancy ofa member's office, the President shall subject
to section 151, appoint a-candidate to fill the vacancy.

159.-(1) There shall also be appointed by the Supervisory Council,

Directors who shall assist the Director-General the responsibilities of the Centre. in managing and discharging

Directors of the Centre.

(2) The persons to be appointed Directors shall be accomplished researchers of national and international repute in the field of physical sciences, engineering or geosciences with demonstrable knowledge and experience in matters

pertaining to the oil and gas industry. (3) The remuneration, tenure and conditions of service of the Directors within the oil

shall beat a level sufficient to attract qualified professionals

industry and shall be determined in accordance with guidelines prescribed by the Minister.

160.-(1) The Centre may, from time to time, appoint suchprofessionals

experienced in the petroleum industry and other persons as staff of the Centre to assist it in the performance of its functions under this Act.

Other staff.

(2) Staff of the Centre appointed under subsection (1) of tbis section shall be appointed on such terms and conditions as,the Centre may prescribe. (3) Staff of the Centre shall be public officers as defined in the Constitution of the Federal Republic of Nigeria, 1999. (4) For the purpose of this section, appointment shall include secondment, transfer and contract appointments.

:xl
21 22 23 ]A. 25
'}fj

161. The tenure, remuneration and conditions of service of staff of the

Centre shall be at a level sufficient to attract qualified professionals within the oil industry and shall be determined in accordance with guidelines prescribed by the Minister on the recommendations of the Supervisory Council.

Tenure. Remuneration
and Conditions of

TI 28 2} ]) 31

Service.

162. The Centre shall provide and maintain a library comprising books,
publications and other educational materials as may be approved by the

Provision of

library
facilities.

Supervisory Council for the advancement-of knowledge of petroleum matters,

C 4886 2008 No.

Petroleum Industry
for research purposes, and for other purposes concerned with the objects and

2
Pensions.

functions of the Centre.

3 4 5 6 7
8

163.-(l) Service in the Centre shall be approved service forlhe purpose

of the Pension Reforms Act Cap P4, Laws of the Federation of Nigeria, 2004 and accordingly, officers and other persons employed in the Centre shall be entitled to pensions, and other benefits as prescribed in the Pension Reforms Act, Cap. P4, Laws of the Federation of Nigeria, 2004
(2) Subsectioo (1) of this _00 doesnot prohibit the Cenloerom_inting f

9 10 11 U

a person to any office on terms that preclude tbegrant of a pension or other retirement benefits in respect of that office. (3) In the application of the Pension Reforms Act Cap P4. ~. Federation of Nigeria, 2004 to the Centre.
all}'

of the

power exercisable under the

13 Act by a Minister or other authority of the Government of the Fe.1erat:ion. other

14 IS
Financial Provisions of the Centre.

than the power to make regulations is hereby vested in and IIhall ~ eJCelCilable by the Centre and not by any other person or authority. 1~.-(1)he Centre shall, not later than September in each year. present T

16 17 18 19 Xl 21 22 23 24 2S 26
Zl

to the Minister,

a budget showing the proposed income and..expclxUw.e of the

Centre in respect of the next succeeding financial year, insofar as QJe I.11lOUItt so budgeted does not exceed the total amount accruable to the Centre from its sources of funding in any financial year. (2) The Centre may during a financial year prepare and present to the Minister, a supplementary budget relating to expenditures wbich were

inadequately represented in the annual budget due to unforeseen otrcumsrances. (3) The Centre may vary a budget prepared under this section insofar as such variation does not increase the total amount of the expenditure provided for in the original budget. (4) The financial year of the Centre shall be for a period of twelve calendar months commencing on the 1st of January in each year or such other period as the Senate may decide. 165.-(1) The Centre shall maintain a fund from-which both the capital and recurrent expenditure of the Centre shall be defrayed and which shall

28
'19
Funds of the

)) 31

Centre.

Petroleum Industry
1 2

consiet or-.
(a) an amount of fiscallzed crude from the account of the Directorate

3
4

specifically set aside for the collection of fiscalized crude on behalf of the Institutions t!tat is sufficient to fund the complete budget, or an authorized portion of the ~udget of the Centre, in accordance with the provisions of this Act;
(b) money appropriated for that purpose from time to time by the National

---

5
6 7

8
9 10 11 12 13 14 IS 16 17 18 19 Xl 21 22 23 24 25 26 Tl 28 '19 30 31

Assembly; and
(c) fees paid in respect of services rendered by the Centre. (2,) The Centre shall apply proceeds of the fund established pursuant to

subsection (1) of this section towards the disbursement of all its expenditure, including the day-to-day administration of its operations and the performance of its functions under this Act. 166. The Centre may accept gifts of money or otberpropeny, upon such
Power tu accept girts.

terms and conditions as may be specified by the person or organisation making tne gift provided such terms and conditions are consistent with the objectives and functions of the Centre under this Act. 167. The Centre may, with the consent of the Minister and the approval of the Supervisory Council, borrow money requiredin the exercise oflrs functions on such terms and conditions as the Supervisory Council may prescribe. 168. The annual budget of the Centre shall be considered by the Supervisory Council and thereafter placed before the Minister for approval. 169. The Cenae shall keep proper accounts of its income and expenditure in respect of each year and shall cause its accounts to be audited within six months after the end of eac.h year hy auditors appointed in accordance guidelines published by the Auditor-General of the Federation. 170.":"'""""(1) The Centre shall submit to the President, a mid-year report of .its.operations and finances not later than 31 st July of each year and an annual report Q[-itsoperations, performance and audited financial report of the preceding year I).Otlater than 31st July of the following year.
(2) A summary of the annual report and audited financial report of the
Mid-year ami Annual Reports. Account ami Audit. Annual Budgd. Borrowing powers.

with

C488S 2008 No.

Petroleum Industry
Centre shall be published in the website of the Centre and in not less-rhanthree

2 3
Restrictions

widely circulating newspapers in every geopolitical zone of the country for public notice nut later than 31st July of each year. 171.-(1) Supervisory Any suit or proceedings against the Centre, a-member of the

4 5 6 7

011Legal
Proceedings

Councilor any employee of the Centre for any act, omission or

default in respect of Its functions and powers under th'is Act or .any other enactment shall be brought within twelve months after the act, neglect or

8 9
10 11

default complained of, or in the case of a continuance of damage or injury, within twelve months after such damage or injury may have ceased. (2) No suit shall commence against the Centre before the expiration of a period of one month after written notice of intention to commence the suirsheu have been served upon the Centre by the intending plaintiff or his agers. (3) The notice shall clearly and explicitly state(a) the cause of action; (b) the particulars

12 13
14

15
16 17

of the claim;

(c) the name, place of abode and address for service of the inteMing plaintiff; and
(d) the reliefwhich

18
Service of
Documents,

is being claimed.

19

172. The notice referred to in section 171(2) of this Act and any other process required or authorized to be served upon the Centre underthe prov;sions of this Act or any other enactment may be served by(a) delivering the same to the Director General or any other

2J) 21 22 23

IDif'ettOf of

the Centre; or

24
25
lndemniry of Supervisory

(b) sending it by registered post addressed to the Director General at the

head office of the Centre. 173.-(l) Every member of the Supervisory Council and every-employee

26
27

Council and
Employees.

for the time being of the Centre shall be indemnified out of the 'assets of the Centre against any liability incurred in defending any proceeding against the Centre. whether civil or criminal, if such proceedings are brought'againsnthe person in his or her capacity as a member of the Supervisory Council or employee. (2) Notwithstanding the provisions of subsection (1) of this section. the

28 29

:n
31

Petroleum Industry 1 2 3
4

200Il No. C 4889

Centre shall not indemnify any member of the Supervisory Councilor employee. of the Centre for any liability incurred as a result of the wilful negligence of the member or employee, as the case may be.

Chapter VIII - Nauonat Frontier Exploration Service

174.-(1)There is established by this Act the National Frontier Exploration Service ("the Frontier Service") which shall be a body corporate with perpetual succession and a common seal. (2) The Frontier Service shall have power to acquire, hold and dispose of property, sue and be sued in its own name. (3) The Frontier Service shall be an institution with all the capacities and powers of a corporate body under the laws of the Federal Republic of Nigeria. 175.-(1) The Objects ofthe Frontier Service shall be_
(a) to promote efficient, sustainable exploration of hydrocarbons
Objects or the Frontier Service. Estabhsnment

5 6
7

or the
National Frontier

Expluratiun
Service.

8
9

10 11 12 !3 14
15

in the

frontier basins of Nigeria;

(b) evaluate all unassigned concessions in Nigeria and (c) undertake

16
17

activities

stimulate exploration

interest

of local and

18 19 ~ 21 22 23 2A 25 26 27 28 29
'J)

international oil Companies towards increasing Nigeria's oil and gas reserves. 176.-(1) 'The functions of the Frontier Service shall be-to=
(a) regulate petroleum
Functions 01 the Frunuer Service,

exploration activities inaU unassigned frontier

acreages in-Nigeria held by the Directorate.

(b) identify opportunities

and increase information about the petroleum

resource base within all frontier acreages in Nigeria, in a cost effective manner and with demonstrable technical and operational excellence.
(c) develop exploration

strategies and portfolio management

for the

exploration of the unassigned frontier acreages in Nigeria

(d) promote and stimulate the interest of petroleum

exploration

and

production Nigeria.

companies in all unassigned frontier exploration acreages in

(e) provide exploration related services to Government and its Agencies on request.

31

-----------,
C 4890 2008 No.

Petroleum Industry
(f) undertake any studies and analyses on all unasslgnedfeeeder-aereages

in Nigeria including(i) aeromagnetic and gravity data interpretation; (ii) sedimentological studies of any wells previously drilled in ,the

3
4 5 6 7 8 9 10 II 12 13 14

frontier acreages using old and newly generated data; (iii) high resolution biostratigraphic any photocaralogues ; (iv) sequence stratigraphic analysis, petrophysical analysis, petroleum geochemical enalyls and any other analysis;
(v) petrophysical

analysis and the pzeparerioa-of

and dipmerer sedimentology studies;

(vi) petrography and mineralogical studies; (vii) digitization of all well logs; (viii) scanning, vecrortzatlon and workstation seismic sections;
(ix) transcriptions

interpretation

of any

15
,16
Power,

of magnetic seismic tapes;

(x) basin modelling. 177. The Frontier Service shall have the power(a) to enter Into contracts with any person which in the opinion of

17 18 19 Xl 21 22
23

rne

Frontier Service will facilitate the discharge or.exerctse powers under this Chapter:
(b) to charge fees at commercial rates for its services

et.lts

duties or

to-any-government

or person;
(c) enter any licence, lease, contract, or permit areas within the frontier

24 25 26
27

acreages, including well-sites, storage depots, refineries and.any emer plates where activities relating to the petroleum industry are carried out, for the purposes of collecting data and samples in pursuance of the functions of the Frontier Service.
(d) do such other things as are necessary and

28
29
The Go~erning BnanJ or [he !'ronlier Service

expedlent-torzte.effecttse
.u.

and full discharge of its functions under this Chapter. 178.-(1)

30 31

There is established for-the Frontier Service a Governing Board

("the Board") which shall consist of:

Petroleum Industry
a non-executive Chairman, appointed by the President2
3 (a) a Director-Genera];

2IMIl No. C 4111>1

and

(b) the Directors of the Service.

(2)The proceedings of the Board of the Frontier Service and other ancillary matters shall be regulated hy Schedule to this Act.
i 79.-(1)

5
6
7

There shall h<':'''1officer of the Frontier Service to be known as who sl1",i 1)0;appointed by the President. shall be a person with cognate knowledge and

DirectarGeneral.

the Director-General,

8 9

(2) The Director-General

experience in the petroleum industry and who is able to show impartiality and objectivity without any conflict of interest in the petroleum industry. (3) The Director-General shall be the chief executive and accounting

10
11

12 13
14

officer of the Frontier Service and shan be responsible for running the day-today affairs of the Frontier Service. (4) The Director-General shall have the status of a permanent secretary

15
16 17

of the civil service of the Federal Republic of Nigeria 180.-(1) The Director-General shall hold office for five years in the
Tenj.lre:"

Remuneration

first instance which may be renewed for another period of five years only on such terms and conditions as may be specified in the leiter of appointment. (2) The remuneration, tenure and conditions of service of the Directorwithin

18
19

and Conditions of Frontier

~rvice.

Xl 21
22 23 24 2'i 26 'I1 28
'E}

General shall be at a level sufficient to attract qualified professionals the petroleum industry.

181.-( 1)There shall be appointed, Directors who shall assist the DirectorGeneral in managing and discharging the responsibilities of the Frontier Service. (2) The persons to be appointed Directors shall be suitably qualified by havirrg extensive technical or managerial knowledge of the petroleum industry and shalt be chosen through a prescribed and transparent recruitment process. (3) The remuneration, tenure and conditions of service of the Directors

Directors.

shall be at a level sufficient to attract qualified professionals within the petroleum industry.

J)

182. No person shall be appointed a Director-General or Director unless

he or she-

Disqualiticatioo.

31

C 4892 2008 No.

Petroleum Industry
(a) is a Nigerian citizen;

2 3

(b) has not, in terms of the laws in force in any coumry-. (i) been adjudged or declared bankrupt or insolvent; or (if) made an assignment to, or arrangement or composition with his or her creditors which has not been rescinded or set aside; (iii) been declared to be of unsound mind; (iv) been convicted of an offence involving fraud or dishonesty;
(v) been disqualified by a competent authority from-carrying

4
5 6 7 8 9 10 11
Vacation of

out any

assignment, responsibility or function in his or her professional.capacity. (c) has not been disqualified by the Securities Exchange Commission from holding a board appointment in any, public company 183. The office of the Director-General shall become vacant-

12 13 14 15 16 17 18 19

omce and
Termination.

(0) three months after giving notice in writing to the President of his or

her resignation; (b) if he or she becomes disqualified under the provisions of Sec lion 181 of this Act; or
(c) on the expiration of his or her appointment.
,I

184. The President shall require the Director-General.tc her office if he or she(a) has committed an act of gross misconduct;

vacate his or

Xl
21 22

(b) has failed to comply with the terms and conditions of his orher office

as fixed by this Act; (c) suffers from any mental. physical or legal disa,bmij' which renders him or her incapable of executing his or her duties efflcieetly. 185. Upon.the vacancy of the Director-General's office, .tbe.Presldent fill

23
24 25 2fj Zl
The Secretary

shall. subject to the provisions of sections 5 and 6, appoint acandid~:to the vacancy. .86.-(1)

28 29

The Board of the Frontier Service shall appoint a Secretary

or the
Frontier

who shall keep its corporate records and undertake such other functio,~ as the and the Frontier Service may from rime.to time direct.

Service.

30_ Director-General 31

(2) The Secretary shall be a lawyer with a minimum of 10 years JX1~qual.if:ieation

Petroleum Industry
experience. 2 3 4 5 6 7 8 9 187.-(1)

200Il No. C 4893

Every member of the Board and every employee of the Frontier

Service shall be indemnified out of the assets of the Frontier Service against any liability incurred in defending any proceeding against the Frontier Service, whether civil or criminal, if such proceedings are brought against the person in his or her capacity as a member of the Governing Board or employee. (2) Notwithstanding the provisions of subsection (1) of this section the

Indemnity of Governing Board and Employees.

Frontier Service shall not indemnify any member of the Governing Board or employee for any liability incurred as a result of the negligence of the member or employee, as the case may be. 188.-(1) The Frontier Service may, from time to time, appoint such
Other Staff.

10
II

12 13 14 15 16 17 18 19

experienced professionals as members of staff to assist it in the performance of its functions under this Act. (2) Staff of the Frontier Service appointed under subsection (1) of this section shall be appointed on such tenus and conditions of service as the may prescribed by the Board. (3) Staff of the Frontier Service shall be public officers as defined in the Constitution of the Federal Republic of Nigeria 1999. (4) For the purpose of this section, appointment shall include secondment, transfer and contract appointments 189. The tenure, remuneration, and conditions of service of the staff of
Tenure, Remuneration Conditions of Service.

Xl
21 22

the Frontier Service shall beat a level sufficient to attract qualified professionals within the petroleum industry and the following shall be taken into account(i) the specialised nature of work to be performed by the staff; (ii) the need to ensure financial sufficiency of the Frontier Service; and (iii) the salaries paid in the private sector to individuals with equivalent responsibilities, 190.-(1) expertise and skills.

,,'"

ZJ
24 25 26
Tl 28 'E

service in the Frontier Service shall be approved service for

Pensions.

the purpose of the Pensions Reform Act Cap. P4, Laws of the Federation of Nigeria 2004, and accordingly, officers and other persons employed in the

:n
31

Frontier Service shall be entitled to pensions and other benefits as are prescribed

C 4894 2008 No.

Petroieumlndustry
in the Pensions Reform Act CAP P4, Laws of the Federation of Nigeria 2004.

2 3 4 5 6 7 8 9
Financial Provisions.

(2) Subsection (1) of this section does not prohibit the Service from appointing a person to aey office on terms that preclude the grant of.a pension or other retirement benefits in respect of that office. (3) In the application of the provisions of the Pensions-Reform Act 2004

to the Service, any power exercisable under that Act by a minister or other "authority of the Federal Government, other than the power to make regulations is hereby vested in and shall be exercisable by the Frontier Service and not by any other person or authority" 191.-(1) The Frontier Service shall, nottater than Septemser Jn each

10 II 12 13 14 15 16 17 18 19 :;D 21

year, present to the Minister, a budget showing the expected lneeme and the expenditure which the Service proposes to expend in respect

of

the next

succeeding financial year" (2) The Frontier Service may during a financial year prepare and present to the Minister a supplementary budget relating to expenditures which were"

inadequately represented in the annual budget due to.untoreseen'ctrcumsreeces. (3) The Frontier Service may vary a budget prepared under this section insofar as such variation does not increase the total amount of the expenditure provided for in the original budget. (4) The financial year of the Frontier Service shalt be for aporiod twelve calendar months commencing on the 1 st of January iii eaCh year. 192.-(1) shall consist of(a) such money as may, from time to time, be

of

Funding.

22 )3

The Frontier Service shall establish and maintain

a fund wllich

24
25
26

apprcpriated.ro the Frontier

Service by the Federal, State or Local Government;

(b) a portion of fiscalised crude and or flscalisednaturalgas

set aside for

n
28
19

the use of the Frontier Service in accordance with the provisions-ofeectton 28 of this Act;
(c) money raised for the purposes of the Frontier Service by way of gifts,

30
31

loans and grants-in-aid;

(d) subscriptions,

fees and charges payable ro the Prontier Service; and

Petroleum Industry

2008 No. C 4895

(e) all other monies that may, from time to lime, accrue to the Frontier

2 3 4 S
6

Service. (2) The Frontier Service shall. from time to time, apply the proceeds of the fund established pursuant to subsection (1) of this section(a) to the costs of administration (b) to the payment of salaries,

of the Frontier Service; wages, fees or other remuneration or

7 8 9 10 II 12 13

allowances, pensions and other retirement benefits payable to staff of the Frontier Service or employees;

193.-(1) The Frontier Service may accept gifts of money or other property
upon such terms ami conditions, if any, as may he specified by the person or organisation making the gift provided such gifts are not inconsistent with the objectives and functions of the Frontier Service under this Act. (2) Nothing in subsection (I) of this section or in this Act shall be construed or any other staff of the Frontier Service to

Power to

Accept Girt~.

14 to allow the Director-General

15 16 17 18 19 Xl 21

accept gifts for their personal use.

194. The Frontier Service may, with the consent ofthe Minister ofPlnance,
borrow money as may be required for the exercise of its functions under this Act, on such terms and conditions as the Minister may determine.

Borrowing P()w~n;

195. The Frontier Service shall keep proper accounts of it::;income and
expenditure in respect of each year and shall cause its accounts to be audited within six months after the end of each year by auditors appointed in accordance with guidelines published by the Auditor-General for the Federation.

Accounts and Audits

22
23 24 25 26 TJ 28 29 3) 31

196. The Frontier Service shall prepare and submit to the Minister not
later than the month ofJuly in each year a report in such form as the Minister may direct, on the activities of the Frontier Service during the immediately preceding year, and shall include in such report a copy of the audited accounts tor the year and the Auditor -General 's report thereon.

Annual
Reports.

197. All income derived by the Frontier Service from the sources specified
in section 192 of this Act shall be exempt from income tax and all contributions to the fund of the Service made by persons subject to the payment of tax shall he tax deductible.

Exemption from Income

Tax

C 4896 2008 No.

Restrictions
on Legal Proceedings awl Notice of Suits

Petroleum Industry 198.-(1) Any suit or proceedings against the Frontier Service, a member

of the Governing Board or any employee of the Frontier Service for any act, omission or default in respect of its functions and powers under this Act or any other enactment shall be brought within twelve months after the act, neglect or

3
4

5
6 7 8 9

default complained of or in the case of a continuance of damage or injury,

within twelve months after such damage or injury may have ceased. (2) No suit shall be commenced against the Frontier Service before the expiration of a period of one month after written notice of intention to commence the suit shall have been served on the Frontier Service by the intending plaintiff or his agent.

10 II
12 13 14

(3) The notice shall clearly state the(a) cause of action;

(b)

particulars of the claim;

(c) name, address for service and place of abode of the intending plaintiff;
ID1d

15
16

(d) reliefs claimed by the plaintiff.

17
18

(4) The notice referred to in this Section and any summons, notice or
other document required or authorised 10 be served on the Frontier Service under the provisions of this Act or any other enactment or law, may be served by(a) delivering

19 Xl
21 22 23 24 25
Estahlishment
of the

the same to the Director-General

or any Director of the

Frontier Service; or (b) sending it by registered post addressed to the Director-General head office of the Frontier Service. Chapter IX - Petroleum Equalisation Fund 199.-( 1) There is hereby established a Fund to be known as the Petroleum Equalisation Fund (rthe Equalisation Fund") into which shall be paid(a) any net surplus revenue recovered from petroleum products marketing

at the

26 27

Equalisation funu,

28
29 30 31

companies pursuant to this Act; and

(b) such sums as may be provided

for that purpose by the Federal

Government.

Petroleum Industry
1
(2) The Equalisation

2008 No. C 4897

Fund shall be a body corporate with perpetual

2
3 4

succession and a common seal and the power to acquire, hold and dispose of property and subject to his Act perform all acts that corporate bodies may perform by law.

5
6 7

200.-0) There is established a body to be known as the Petroleum

Equalisation Fund Management Board (in this Act referred to as "the Board") which shall manage the Equalisation Fund. (2) The Board shall consist
(a) a representative

8
9

or-

Establishment of the Petroleum Equalisation Fo", Management Board.

of the National Petroleum Directorate who shall he

10
11 12

Chairman;
(b) a representative (e) a representative

of the Federal Ministry of Finance; of the Petroleum Products Distribution Authority; of National Association of Road Transport Owners; of the Major Marketers Association of Nigeria; of the Independent Petroleum Marketers Association

13
14 15 16 17 18 19
])

(d) a representative
(e) a representative

(j) a representative of Nigeria;

(g) a representative

of the Nigerian Labour Congress;

(h) three Directors who are full time staff of the Fund, to be nominated

by the staff of the Equalisation Fund; and

(i) the Executive Secretary.

21 22

(3) The Chairman shall hold office for four years subject to re-appointment for another period of four years only on such terms and conditions as may he specified in his or her letter of appointment. (4) Membership of the Board shall be part-lime. (5) The provisions of the sixth schedule to this Act shall have effect with

23
24 25

'1fJ respect to the composition ofme Board and other matters contained therein.

n
28 ]9 :.:0

201. The Board shail(a) determine the method by which net surplus revenue shall he collected

Functions of
1i1~

aoaru.

from petroleum products marketing companies; (IJ) recover such net surplus revenues from the S31eof petroleum products from petroleum products marketing companies, as shall be prescribed 3S

31

c 4898

2008 No.
such by the Authority;

Petroleum Industry

2 3
4

(c) inspect and inquire about any activity relating to the movement or

storage of petroleum products and to that extent, to inspect books and facilities, take measurements, and inquire into the correctness ofinfonnation in support ofclalms for reimbursement.
202. The Board shall-

provided

5
Powers pi the Hoard.

6 7

(a) receive any net surplus revenue recovered from petroleum products

8
9

marketing companies pursuant to this Chapter;

(b) receive any such sums as may be provided

for the purpose of the

10
II

Equalisation Fund by the federal Government of Nigeria;

(c) hold tho Equalisation

fund in safe custody and in trust, for the

12
!3 14 15 16 17 18 19 2fJ

reimbursement

of petroleum products marketing companies suffering loss

solely and exclusively as a result of the sale by them of petroleum products at uniform benchmark prices throughout the country, being benchmark prices set by the Authority pursuant to this Act;
(d) make payment of all disbursements of the Equalisation Furx:lauthorised

under or by virtue of this Act;

(e) account tor all moneys collected, paid or otherwise expended in relation

to the Equalisation Fund and pursuant to the provisions of this Chapter;

(j) keep proper

public accounts and records

of transactions

on the

21 22 23
24

Equal isarlon Fund;

(g) prepare in respect of each financial year a statement of accounts in

such form as the Minister may direct;

(11) ensure the proper ad ministration of the Equalisation Fund in accordance

25 26

with the provisions ofthis chapter;

(i) make rules and regulations

for carrying out the functions of the

n
28 29
3')

Equalisation Fund;
(j) do such other things as are necessary, expedient, legal,

ant in conformity
of am in

with the provisions

of this Act for the efficient performance

connection with all or any of the functions of the Board as specified under

31

this Chapter.

Petroleum Industry
203. The Equalisation Fund shall be utilized for-

2008 No. C4899

Utilisation of
the Fund.

2
3

(a) the proper administration ofthe Equalisation Fund; (b) the reimbursement

of petroleum products marketing companies for

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

any loss sustained by them solely and exclusively as a result of sales by them of petroleum products at uniform prices throughout Nigeria, being benchmark prices set by the Authority; and
(c) the management of the Board.

204.-(1)

There shall be an officer of the Fund to be known as the Executive

Executive Secretary.

Secretary, who shall be appointed by the President. (2) The Executive Secretary shall be a person with cognate experience in financial and accounting matters relevant to the petroleum industry. (3) The Executive Secretary shall be the chief executive and accounting officer of the Board and shall be responsible for running the day-to-day affairs ofthe Board. 205. The Executive Secretary shall be responsible for(a) the day to day management of the Equalisation Fund, subject to the Functions.

directives of the Board;

(b) determining the net surplus revenue recoverable from any petroleum

products marketing company and accruing to that company from the sale by it of petroleum products at such prices, as may be sold in accordance with the methodology established by the Authority;
(c) determining

22
23 24 25
]fJ

the amount of reimbursement

due to any petroleum

products marketing company which has suffered loss as a result of the operation of the enactment as aforesaid; (d) the payment of all disbursements authorized under or by virtue of this Act;
(e) accounting for all monies collected, paid or otherwise expended under

T1 28 29 30 31

this Act and publishing same in the way and manner prescribed by the Board in consultation with the Authority;

if) carrying
by the Board.

out such other functions as may, from time to time, be specified

C4900 2008 No.

Tenure, Remuneration

Petroleum Industry
206.-(1) The Executive Secretary shall hold office for five years in the

and Conditions of
Service,

2 3 4 5 6 7

first instance, which may be renewed for another period of five years, on such terms and conditions as may be specified in the letter of appointment. (2) The remuneration, tenure and conditions of service of the Executive Secretary shall be at a level sufficient to attract qualified professionals within the petroleum industry and shall be determined in accordance with guidelines prescribed by the Minister, 207. The Board may also, on the advice of the Executive Secretary, appoint as employees of the Board such number of persons as may be necessary for the administration of the Equalisation Fund, who shall be subject to the general control of the Executive Secretary and who shall perform such duties as the Executive Secretary may direct. 208. The remuneration, tenure and conditions of service of staff of the Board shall be at a level sufficient to attract qualified professionals within the petroleum industry and shall be determined in accordance with guidelines prescribed by the Minister upon the recommendation of the Board which shall take into account(a)

Other officers

or the

8 9 10 II 12

Board

RCmUllcrat;"rl_

13

14 15 16 17
18 19

the specialised nature of work to be performed by the staff;

(b) the need to ensure financial self-sufficiency of the Board; and

(c)

2J 21
D isqualiticauon.

the salaries paid in the private sector to individuals with equivalent

responsibilities, expertise and skills. 209. No person shall he appointed as a member of the Board unless he or she(a)

22 23
24 25

is a Nigerian citizen;

(b) has not, in terms of the laws in force in any country(i) been adjudged or declared bankrupt or insolvent; or
(ii)

26
Tl

made an assignment to, or arrangement or composition with his

28 29
])

creditors which has not been rescinded or set aside;

(iii) (iv)

been declared to be of unsound mind; been convicted of an offence involving fraud or dishonesty; or

31

(v) been disqualified by a competent authority from carrying out any

Petroleum Industry

2008 No. C 4901

assignment, responsibility or function in his or her professional capacity.

2 3 4
5 6 7

(c) has not been disqualified by the Securities Exchange Commission from holding a board appointment in any public company. 210. A member's office shall become vacant(a) three months after giving notice in writing to the President of his or
Vacation of omee and Termination.

her resignation;
(b) if he or she becomes disqualified under the provisions of Section 209

8 9 10
II

of this Act; or
(c) on the expiration of his or her appointment

211.-(1)

The President shall require a member to vacate his or her

office if he or she(a) has been found to have conducted himself in a manner unbecoming of

12 13 14 15 16 17 18 19 20 21
22

a member; (b) has failed to comply with the terms and conditions of his or her office as fixed by this Act; or
(c) suffers from any mental, physical or legal disability which renders

him or her incapable of executing his or her duties efficiently as a member; 212. Net surplus revenue due and payable by petroleum products marketing companies shall be payable to the Equalisation Fund in accordance With directives issued by the Board ITom time to time, and the Equalisation Fund shall have no Obligation to issue a demand notice in respect thereof nor shall the failure to issue a demand notice constitute a defence for non payment of outstanding
Collection of Net Surplus Revenue.

23 24 25 26
T1 28 213. Nothing in section 212 above shall derogate from the right of any petroleum products marketing companies maintaining storage facilities to collect bridging and equalization allowances prior to the release of petroleum products to petroleum products marketing companies and to remit same to the Board in accordance with such directives as may be issued by the Board. 214.-( 1) Petroleum products marketing companies may, as necessary,
Claims. Bridging and Equalisation Allowances.

29 ?Il 31

bring claims for the recovery of losses sustained under section 203(b) of this Chapter in the manner prescribed by the Board.

C 4902 2008 No.

Petroleum Industry
(2) Where a company brings a claim under sub-section (1) of this section,

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

the Board shall with the written request of the Executive Secretary, and with or without notice, have the right to enter upon, inspect and inquire about any activity relating to the movement or storage of petroleum products and to that event, to inspect books and facilities, take measurements, and to inquire into

the correctness of information provided in support of claims for reimbursement. (3) The Board shall have the power to(a) demand details of production,

supplies, loading and dispatches from

refining companies, import terminals and storage facilities;

(b) gain unimpeded access to information relating to petroleum product

imports, refining and sales collated and maintained by any government agercy, including third party monitoring agencies, with authority to monitor or inspect petroleum products. (4) The power provided under subsection (3) of this section is limited to refining facilities, reception terminals, storage facilities and retail outlets. (5) Decisions as to payment of claims shall be made by the Board within

17
18 19 20 21 22
Calculation of

thirty day' from the date on which the claim was first made and where the
claim is successful, payments shall be made within ten working days from the date of the said decision. (6) Where a claim is successful and the Board fails to pay the said claim to the company in accordance with the terms and conditions of this section, the Board shall pay a sum equal to ten percent of the amount due. 215. The net surplus revenue recoverable marketing from a petroleum products by reference to the

"",I", revenue
rccovetahlc.

23 24 2'; 26

company under this Act shall be calculated

volume of the affected products sold on zonal basis and to the amount by which the uniform prices at which the products were sold exceeded, or were less than, the prices of those products prevailing immediately uniform prices of the products. 216.-(1) The Board shall by notice served on Ihe petroleum products before the fixing of the

T7
28
Prescribed da[~, I'll], payment ,IIlL! I'~na](y for
IllHI-payll1tl1l,

29 30 31

marketing company concerned, specify the date. on which any surplus revenue due from that petroleum products marketing company shall be paid to the Board.

Petroleum Industry
'I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16' . 17 18 19 Xl 21 2i 23 24 2S . 26

2008 No.' C490J

(2) Ifany sum is not paid within 21 days of the specified date, a sum equal to ten per centum of the amount unpaid shall be added for each month or part of a month after the date on which payment should have been made. (3) The Board rriay for just cause, waive in whole or in part any penalty imposed under this section .. (4) Where the Board waives a penalty under the provisions of subsection (3) of this section, the Board shaJl give its reasons in writing. 217.-'(1): Service in' the Board shall be approved 'service for the purpose ofthe Pension Reforms Act Cap P4, Laws ofthe Federation of Nigeria, 2004 and accordingly, officers and other persons employed in the Board shall be Pensions.

entitled to pensions, gratuity and other benefits as prescribed in the Pension Reforms Act Cap P4, Laws of the Federation of Nigeria, 2004. (2) Subsection (1) or'this section does not prohibit the Board from appointing a person to any office on terms that preclude the grant of a pension, gratuity or other retirement benefits in respect of that office. (3) In the application of the provisions of the Pension Reforms Act Cap P4, Laws of the Federation of Nigeria 2004 to the Board, any power exercisable under that Act by a Minister or other agency is hereby vested in the Board and shall be exercised by the Board and not by any other person. 218.-(1) The Board shall, on or before the beginning ofa financial year
Financial

Provisions.

present'to the Minister, a budget showing the proposed income and expenditure of

the Board in respect of a particular financial year insofar as the amount so

budgeted does not exceed the total amount accruable to the Board from its sources of funding in any financial year. (2) The Board may during a financial year prepare and present to the Mlnlster, a supplementary budget relating to income and expenditure which in the annual budget due to unforeseen

Tl
28
'Z)

were inadequately circumstances.

represented

(3) A supplementary . budget of theBoard '(4)Th,

budget shall be deemed to be part of the annual

)) 31"

for the financial year to which it relates.

Board may my a budget prepared under 'his section msofar as

such v~fi<ltiC!ndoes not Increase 2 3 4 5

Accounts and
audit.

tn~totlt.\f!.n10untof the e~pp,pqi~UN.prov4W

for in ~!:! prig'Qll,l budget. (5) T\1~,t1n~!lcill,1 year of thy ~()an~ ~ fOT snall ~,~rjq4Qt ~}~f: ~)~r months ~OITImeJlCil}~ the 1 st of J;ml1ffrY ~~!J~qr sltf" ~~r ps::rj~ ~s on j~ Y!,:ll,f

tne Senate mydecide.

2.JSt-(I) The Board S~lt.ll eep prqp~r ~?F9Hn~ aPfl prpper k

l'"

~as ~i~s

"

.'

7
8
9

to
IJ
12

~h,~l1 ~r~R~r~ f~~t,QftiI~h ill l fi!1aPTi~1r~ijr, a s~tell1t!ilt of ~{;fO~m~~ fqrm Its Ul~ Miqi,{frfllaY ~i~t. in Sl,l~~ (2) The Board shall not illter ~n!U1_Six rp.qnt~sfrQm,t~~PR ~ Rf1PF.n~QF~1 year to whiph the accounts I'!':'M~,l;ffH~~ ffF~P.Hll~so ~fH~ t1W t Qr:lt"f1W1rs
income and ~J!:pendituI'!':nr~'Mial} rlJn~~p , .'lfl,g apj?oimeg ~ nU~Board, )V!th~IW _a,pprpViJ! pf
financial

~Pr~H,"i~t!rr
.~ r~_pqn l!R!liJl, p~~ ~ir

'*

(1)Tho~"~i!ors '~~!' on'Ql11pi"iQQ of !~f ."~i!o( lIJ! ~~!lIll\:QfIl!Wh

13

~~r,prppereaM sJ'Pmi~ m~RPllr~ lO

l4 observations illlR ecol1U!wrQ'lliops on ~IIij~~7Yl f tJl~iJF.~lJ"~ f~, llPIfP; r p D

l5
Certificate a, evidence.

and the Be a nl !>hflll forward a copy off~er~r~

to the Mi"j.~~r, , ';ii'

?'

16 17

:~f)! fPPt of an~mf in~h~ A f!~cPQm~of

the rpcords of the ,~Pilrg shill!' wh~fI s>(.;rtifi~~

18, regejVFR in 19 thereof Xl

Reponing
Obligations,

pf rhe tf!Hq gf '~JOI1~pts anq ~~ th~9s~ be, of ttw ~~h~, 9;~h!lflp~r~_Rt,jQ~-~Jrp~m may ~ i
as pri!llil t'flcje ~vil:hmfr;

an cquns

,~r!1~P~rc~Hif t

m~ pr.pthFr ~mm~

~j(.~t

fflitm

_&fcf!;fllry~ :~~

products Ill&r~~Hn!lcompany,

<!
2f 4) 24 25 26
Zl

m.-(p

AU petroleum prp~~q i'1WRfl!'f!. [~F!"lliiJjlJ\l" ~MipmllrPii

Company, ilPq j16trol~J.J111 proql!qs mark~ti~ ~pmp<!l1iesli~~'b:P,fA~~llQ aplo

later than 2) days fQllpwiq~'~f~ i",porl~\iQn, fOpOr' products imported into Nigeria to the Ef.ll!~Ji&atip!l quantities, date of delivery and place of 4isCl!.ar,ge.

~eWI! (l!1"Il\"Q!~111 R
,lQ,iru;lHde

fU9Y, s!lj:7h~~

(2) All licensed pe~rolet!fil prOdj.lRf ~tqra&~ fliciHtip~, i!lfJ\J~~m~/.st.Qp facilities belon~ing to the National Oil CQmp.lloy sha,1JOIl:~;rW0~m.~ qWS, deliver to the Board(a) (b)

28 2}
))

logs of product movements returns

into a'1P

QJ,lt

of t~!1f~pUit;~~; lind

'"

of bridging and eQllilli2;MiQo al!o~_,n~es

,?~!~ tWm
,.

3J

petroleum products marketing companies <Jnd, NITljtft:d t;pt~rJIQltr{j.

mt.u. eAllllil
=
-'-7"-"-

(3j;MarkeHHg tompariles sidtl detivef quarterly statements dfati petroleum 2' proddets lifted and discharged. including details of load and disCharge points, j aHa dates and times of suef loading arid discharging to Ui~ t3oaro. 4. (4} tn addiucn to tHe reporting obllgatidrls contained Iri Hils section, the
5 6 7 8 Executive Secretary may, with the approval of the Board-

'(aj requite 3ny petroli!itm products marketing company to furnish such

returns

and keep such records

or any other

relevant information as he or she

may determine as necessary for the proper adrritnistraticn of the provisions of thls Act;

9
U) II 12

and for examination by the Executive Secretary or whoever

to perform this function, as may appear to the
.,

(b) produce them

."

he til- she

may nutndaie

Exeeutlve Secretary necessary

for the proper

administration of the provisions

13
14

of this Act.

iii.. Dis~utes between

this

a company and the Bqualtsatlori Fuml in respect of

is 'any hl~hertrtder
16
17

Dispute Settlement.

Ad shail be referred to the Authority and shall be subject

to the'dlspu.ie resolution processes of the Authority.

Cnapter X -

the

Petroleum

technology Development Fund

F,""
Establishment of the Petroleum Technology Development
FUnd.

18 19 Xl

223.-(1)

there

is established a Fund to be known as the Petroleum

Technology Development Fund ("the Development Fuod") which shall be a body corporate with perpetual succession and a common seal. (2) the Developrnerit Fund shali have power to acquire, hold and dispose of property, sue and

11
2! 23 24

be sue'd in its own name and subject to this Act perform all
Sources of the Development
Fund.

acts that corporate bodies may perform by law. 224. There shall be paid into the Development Fund moneys comprising(a)

25
26

the balance of monetary assets outstanding at the commencement of

this Act in the accounts of the Petroleum Technology Development Fund

t7
28 29
3)

',iabli,hed by Act No25 of 1913;

(b) all sums payable to or received by the Government of the Federation

on matters conialned in terms of any agreement made by the government arid any company in relation to petroleum prospecting or mining concessions;
(c) funds and grants accruing from multilateral

31

agencies, bilateral

C 4906 2008 No.

Petroleum Industry
institutions and related sources dedicated partly or wholly fO~F developmept t/Ir
"\

.,"

','

.'

of technology, capacities and capabilities in the Nigerian~,trol~~,m~l,ldustry;

(d) fees payable for services rendered to local and forei,gn il1s~i,~tio~,

3
4 5 6 7

agencies and companies in petroleum and management services: .

(e)

..

penalty fees resulting from:

(i) non-compliance with

expatriate quota provisions in terms of number

'.

and life-span on quota position for companies operating i~ petroleum the

industry in Nigeria; (ii) violation of the Nigerian content policy of positipns occupiedby expatriates as provided by the Immigration Act, Cap 171"Laws of the
j

8
9 \0 11 12 13
14

rc

"

Federation of Nigeria, 1990 and any other relevant law for all companies operating in the petroleum industry in Nigeria.

if) any other sum, from time to time freely donated or accruing to the ..
Government technology, or the Development Fund for ,developme,nt, of petroleum capacities and capabiliti,es, ~r the traininp and Fduca~i~m
" ,J ;

15 16 17 18 19
gescrve
Account.

9f

Nigerians in the petroleum industry as the Board established under section 227 of this Chapter may direct; and
(g) moneys in the said Development

Fund together with lmerest (if any) . '"

payable in respect thereof.

2J
21

225.-( 1) The Inspectorate which is responsible for the collection of such ,I ,I ,,' ,
sums under section 224 above shall ensure the prompt payment of all such sums directly into the Development Fund's Reserve ~cc.ount with thf C~~t~l Balf of Nigeria not more than 60 days after payment has been received by tbe Inspectorate. (2) All monies stipulated, under section 224 of this Act shall , be collected '
'

22
23 24 25

26
27 2B 29

and paid into the Development Fund's Reserve Account with the Central Bank of Nigeria which shall be under the control of the Accountant General oftbe , ,:', Federation. (3) At the beginning of every financial year the Board shall. approve th~
"

30
31

Development Fund's ryogramme of Action with its Cost Imp[ica~ions following which the approved (!\nount shall be released promptly to the Development

, Petroleum Industry

2OO!l No. C 4907

Fund by the Accountant General of the Federation to cover its operations for

2 3
4 5
<5

that financial year. (4) A copy of the approved Programme of Action referred to in subsection (3)_of this section shall be submitted to the relevant committees of the National Assembly for the purpose offaciJitating their oversight functions over the Fund.

(.'D. The monies in tile Development Fund's Reserve Account not disbursed .
to.the Development Fund shall be held or invested in such manner as may be determined by the Accountant General of the Federation, after consultation with the Minister. (91 Interest accruing from the investments of the undisbursed capital shall bepaid directly to the Development Fund at the beginning of every financial year.

"
9

10
II

12
13

C!) The Development Fund shall maintain operational accounts with any bank as may from lime to time be approved by the Board. (8) The annual account of the Reserve Account with the Central Bank of Nigeria shall be prepared by the Accountant General of the Federation and submitted to the Auditor General of the Federation within seven months of the , end of the financial year to which they relate. (9)The certified annual accou.ms of theReserve Account and the audit

14
15 16 17 18 19 Xl 21 22 23 24 25 2D Tl 28 z:J )J 31

report thereon, together with a' report on the operations of the Development Fund, shall be submitted to the Federal Executive Council for its approval annually by the Minister. 226.-(1)
! '

Thefunls of the Development Fund shall be used for the purposes technicians and

of training Nigerians to qualify as graduates, professionals,

Purpose of the ncvefopmenr Fullll.

craftsmen in the fields of engineering, geology, science and management and other related fields in the petroleum industry in Nigeria or abroad; and in particular, and without prejudice 10 the generality of the foregoing, the funds shall be utilised to(a) provide scholarships and bursaries, wholly or partially in universities,

institutions, and in petroleum undertakings in Nigeria or abroad; (b), maintain, supplement, or subsidise such training ,or education as

s~eifi~ hi tHissubseetlon;
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 TI
28

,,-I

(tl make sullable endcwttients 10 ratultles ih NigilH,H 'lilfiffllIU", colleges, br ItlstihitUHis lls trla~~ apptdvet6y the ljditw;
(tl) Initiale, design dHJ illlpl.m.HI elh<tllve Irldlg~Hd\Ji ldI!ai1>h afid cap'cllJ dev'ldpli1enl

tol NIg.t1"s polloi.lim Irttlu<t;y'; " , !w! (~) coorditete wltlt ii:!st!titth cerltte!i iii Nlge'Ha' '/tiii\ a1htiltd 011 the adaptiition bf lechl1oib,gy iindlnnbvaUtiHs appr~Hl1le hiftife tiM of the
Nlgi!fldl1 petroletittt iHcllistty;
(f) use

existing bntran resoutbes develo~rtiertt fitcihHes lit N'i~el1a 'fbr art at

,>p.rtded m.HpdWer !levelbjJtllerll~l"gl'mttle 10m. il"ihllebllt litilliittt;

Where 'pplieable, 'UPPO'! skill 'c<tuI'llldnpM~Ioil\\ed etihanclhg emplbyment itt tHe-petitlieUit1ltidUstty itt k~l!Hil;
(i)
(it) peHddic!tly

Cbri1~ule, .valli Mm ul><!dlti fu!tiilil~ i N, dflllgeHd's pettblelittlltltllistty In tettfisdfskltls; Ullettll;e iitid kM\t~;m~;J; :,11),'
(i) enhance

aM develop infntstrtJcWre

iI1teniatyri1tttUillitm
, " .,.

tUiitprovid~

diUtsl!s

bfsttidy televant to the oil atia gas ii1iliistt)i;

til make available, suitable books ~titiraiding equi~ttlthtltf~~e~iah t

tertiary Itisttttitlons;
(k)

as requlred, sporisor visits to onnetds, teflfu!tres UhH~toohen1i~~t1 piartts fbi' the purpose of arfatiging any heteSsarya'tUtcHHie'iiihtff{tf!lohntl 10 establlslttnents cOhrletled With'Ihe develo~rl!eht oflhe i1e\Idfeulli'llkiustry; (D nuance participation Iii sethilliits and cotifete"c.e;s~-\l.fuh'Jte;~nttetted
with the petroleum industry Iii Nlgeha or abroad,
(nt) ptctnote in-country fabrication and

fuartufactutlrtg of eti\liptMitt used

... ,
' , ., . ,

in the Nigerian petroleum industry;

(n)

generally facllttate the attainmehi of 100 petc~tit~ij!~htn Cbfiteht in

engage in arty other actlvtty incidental

Ute j1eitdJetilri Ihcltistry;ahd

(0)

to the be{,etH~~h.t Fund's

i9
Establishment of the Boan!.

mandate as may be approved

JJ

221':'-(1) There

tfotn time to time \)ydt~'tUjlhld.;' is hereby estabihihed for the O~Vi:!ftipfu~ltUtlti, Board a
(In this

31

to be known as The Petroleum Technology Deveiopitielitt:UHdiiibatd

C~~merr~ffrr~ tq as "t~ ~Oiln:V')

(2) TO!:; ft(jarfl shaH ponsjsl Qf". ' ,-'
,

2 3
4

.'

(ff~

me, trfinist9f

of rmro!~~1P ~hf!!~TJ1~r, ~~
each of the'

(b) Dill'!representative
"

5
6 7 8 9 10
(c)

m F~qrr~ll.1inism' Finance.. Im::pmofliWd; qf (if) fr;;qera) Ministry of Education; '. .' ..

"

,'

'.,'

"

(iii) Federal Ministry of Science and Technology:

one r!<pn:s~!1I'ltiveeach of theU) r'H~niilnr~1f91~4m In.~~ct~r~fe;

UHPWplepm, Technology A.s1i~i;ltiop

"

or t:ljg~ril\;
".'
,

1J 12 13 14 15 16 17 IS
(tf)

Wi) CQl!Jl~il r ~ R7~jstt:red,p~~'n~~rs of Nig~fia;

(iy)

~~~~tlTlic l-!l1iop LJrivrr~i~i~s" *<!-ff Qf

two p~r~41l~ of prpV~I1,~!!!~rif !lP,4iqlPW!r~~eilbJrin th~ [ield of '

'.p.~n~JflYm fF~o,'m:;eso ~ t

~p~piW~~ me Rr~~i4!lm; Ilr (,l !\() Qjr~m~ we furl !.!mestaff Qffn~Inspectorate, tq be nominated who ,
,

by t~~ members qfltw ~qBilli~~tioQfJlp; and

en. !h~ px~cHliye S~crelilrY,

"

.,

'

(3) Me,~R7f&nir pf fh~ ~~)f!f~be Wm-li!nl! jJ~si~

(4) Tn!!

s~~n

I?
:!l

~~ppl.m~m~rr rPyisjpn~ set ot [n the ~v~QI4~~~dl~to mis p

Act shall h"y~ effect with respect 10 till! prQ~~in~ of tlj.~p,parp <!-~oHler IT!~Hrrs,p~maiIl~!:I herein. t

21 2!

Uidll The Beard 'ha!l(a)

Functions of
lh~ Board.

;2J
24
25

pfq,P~ gr~r~

pq!jcy ~H!q!!lirtl~rela.f!~,g to the fVI1Pionsf the o

pevetocmem F\.!J1d;
(b)

recommend annual programTfle.qf ;u:;tjQf1. till': Development Fund to fpr

2fi Z7

)!e,'4ppfQY!tffgyt~eMilliNer;'
(c) ~PRr.qv~ ~f1.~1p.R~' qffrF P~ye!opmfrt

rllnq;

28
~

(d) approve the appqimmeJlt, prPlllmi()Ilan,d discipline of management

staff 9f the peY~lopll1ent
(ff)

f~n4;

]J
31

update the President on its activities and progress through annual

a~9i~e~ repOfts;

C4910 2008 No.

Petroleum Industry if> do such other things as are necessary, expedient, legal, anairrconformity
"

'.

2 3 4 5
Disqualification.

with the provisions of this Act

for

the efficient pe'rfoflrlance of and in

connection with all or any of the functions of the Boardas specified under this Chapter. (2) The Board may delegate any of its functions to the Executive Secretary. 229. No person shall be appointed as a member of the BOard unless he or

7
8 9 10

she(a)

is a Nigerian citizen;

(b) has not, in terms of the laws in force in any country(i) been adjudged or declared bankrupt or insolvent; or (ii) made an assignment t~, arrangement or' or corrlposition with his

11 12
13 14

creditors which has not been rescinded or set aside;

(iil) been declared to be of unsound mind; (iv) been convicted of an offence involving fraud ordishJ~sty;
:.' . 'I.'

or

15 16
17

(v) been disqualified by a competent authority from carrying out any

assignment, responsibility or function in his or her p'iofessl~~l

(c) has not been disqualified

capacity.

by the Securities Exchange Commission

.'

18
vacauon of Office and Termination.

from holding a board appointment in any public company'.

,

19
')()

230. The office of the Executive Secretary Board shall become vacant-

0" member of the Governing

,I ,

,-,j

21

(a) three months of his or her giving notice in wrlti'~giothe'~~~(identof

22

his or her resignation; (b) if he or she becomes disqualified under the provisions of Section 229
J' I

23
24 25

(c) at the expiration of his or her office.

,,':, '. ,..-1

26

231. The President shall require the Executive Secretary 'or member of the Governing Board to vacate his or her office if he or
(a) has committed an act of gross misconduct; (b)

n
28 29
)J

sbe"":'

has failed to comply with the lenni and conditions 6ihi; or her office

as fixed by this Act; or (c) suffers from any mental. physical or legal disability which renders

31

1 2 3 4 5 6 7 8 9 10

Itim or her iileapable of exCQltinI;!: hb,t)rher duties efficiently as a member. 'Ul . (1) There shall be an efflcer of the Development Fund known as The Executive

the Executive Secretary who shall be appointed by the Presulem.

(2) The Executive $ecmary shall 00 ~ person with cognate knowledge and expettence in the petroleum industry and who is able to ShBWimpartiality and objectiloiity \)1ithout,anf conflict of interest in the permleum Industry. (3) The Bxeeuttve secretary, shall be the chief executive and accounting officer of the Development Fund. and s~lI be.responsible for the day-to-day affairs of the Development Fund. 133; The Executive Secretary Shall, subjeettc the direcdonof the Board, be responslble-,
(a)

Secretary,

Duties of
Executive

11
12
13

Secretary.

for-the day to day administration of the Development Fund;

(b) for keeping the books and proper records of the proceedings of the

14
15

Board;
(c)

fer-the esseasment bfcMtribqJ:ions under this Act and the collection

16 17 18
19

and payment of moneys to the Development Fund; (d) fdF payment of aU disbursements authorised under or by vinue of this Act;
(e)

fur accounting for all moeeyecollecred,

paid or otherwise expended

20 21

under this Act;

(f) for ensuring the utilisation of the fund for the pUI'pQ$eS out under set

12
23

section 226 of this Act;

(g)

,
requirements:

for ensuring a publication in the national press of a notice inviting

24 25
26

applications for scholarship under the Development Fund and giving a list of eligible courses and the minimum.edueanonal
(h)

for ensuring that successful appnearus who meet the minimum

ZI
28 19

mjuirtlments are notified in writing and their, names published in the national press:
(i) for the-administration

of the secretariat of the Board;

lJ 31

(i) for the general direction and control of all other employees of the

Development Band; and

C 4912 2008 No.

Petroleum Industry
(k) for the creation and modification

of organtsanonet.struemre

of the

2
3
Other Stall.

Development Fund as may be necessary to 'enhance the functions under this Act.

Development Fund's
,

~:

4 5
6 7

234.-'-(1} The Development Fund may, from time to titile,:appoint such

other category of employees as may appear to it expedient and eecessery for the proper and efficient performance of its functions under this Act:
p,

(2) Staff of the Development Fund appointed under subsection (I) of this section shall be appointed on such terms and 'conditions as Fund may prescribe. (3) Staff of the Development, Fund-shall be public.offlcets as defined in the Constitution of the Federal Republic of Nigeria 1999 .. (4) For the purpose of this secaon.nppointmenr transfer and contract appointments. shall include secondment,
r016

8 9 10
II

Development

12 13
Remuneration.

14 15

235. The remuneration, tenure and conditions of service-of-staff of the

Board shall be at a level sufflciear to attract qualified professionals petroleum industry and shall be determined in accordance within the

..

16
17

with guidelines

prescribed by the Minister upon the eecornmendation.of take into account(a) the specialised nature of work to be performed (b) the need to ensure financial self-sufficiency

the Board which shall

18 19
2)

by the staff;

ofthe Boord; and

21
22
Pensions.

(c) the salaries paid in the private sector to individuals with equivalent

responsibilities,

expertise and skills.

23 24
25 2J5 27 28

236.-( I) Service in the Development Fund shall be approved service for

the purpose of the Pension Reforms Act, Cap P4, Laws of the Pederarionof Nigeria, 2004 and accordingly, officers and other persons employed in the

Development Fund shall be entitled to pensions, and other- benefits as prescribed in the Pension Reforms Act, Cap P4; Laws of the Federatien ef Nigeria, 2004 (2) Subsection (1) of this section does not prohibit the Development Pued from appointing a person to any office on terms that preclude the grant of a pension or other retirement benefits in respect of that office;

29

'"
31

(3) In the application of the Pension Reforms Act, CapPa.Laws

of the

Petroleum Industry

2008 No. C4913

Federation of Nigeria, 2004 to the Development Fund, any power exercisable

under the Act by '3 Minister or other authority of the Government of the Federation.roraer
than the power to make regulations is hereby vested in and

,
5
6

shall be exercisable by the Development Pund and not by any other person or authority. 237.-( l) The Development Fund shall, not later than September in each a budget showing the proposed income and Fund in respect of the succeeding financial
Financial Provisions.

7 8 9 10
II

year, present to the Minister, expenditure of the Development

year insofar as the amount so budgeted does not exceed the total amount accruabie

to the Development Fund from its sources of funding in any financial year.
(2) The Development Fund may during a financial year prepare and present to. the Minister, a supplementary budget relating to income and expenditure

12 13
I'

which were inadequately represented in the annual budget due to unforeseen circumstances. (3) The Development Fund may vary a budget prepared under this section insofar as such variation does not increase the total amount of the expenditure provided for in the original budget. (4) The financial year of the Development Fund shall be for a period of twelve calendar months commencing on the 1 st of January in each year or such other time as me Senate may prescribe. 238 .'The Development Fund may accept grants of money or other property upon such terms and conditions, if any, as may be specified by the person or organisation making the grants, provided such grants are not inconsistent with the objectives and Junctions of the Development Fund under this Act. 239. The Development Fund shall keep proper accounts of its income and expenditure in respect of each year and shall cause its accounts to be audited within six months after the end of each year by auditors appointed in accordance with guidelines published by the Auditor -General of the Federation. 240.-( I) The Development Fund shall submit to the President, a midMid-year and Annual

15 16 17 18 19

:xl
21 22
23

Powerto Accept
Grants.

24 7f,
1h Tl 28 29 31

Accountami Audit.

year report of its operations and finances not later than 31 st July of each year and an annual report of its operations, performance and audited financial report

Reports.

31

C4914 _

Nb.
1

Petroleum hlduslry
of the preceding year not later than 31st July ofthefoUowing'YarJl'J" (2) A summary of the annual report and andite9' flnaneial
I!epOft

2 3 4
5

et'rhe

Development Fund shall be published

ill

the:Wl!bsite: of*.~klphJIHlt
tltwSJlatllie'S

Ftmd

and in not less than three widety crrcolating

in-C'IeI'y,~itkar .

zoneof the country for publicnoticenotlaterthan31 st July~~,-r?

6
7

(3) Further to, the provisions of this Section, ihere. slWI always te a presumption in favour of releasing lnrormat",n

to .the,J'tItri4:~rwJe"
-'I> d;!

the

8 9
Borrowing
POW~L1_

Development fund must rebut.by showing good reasobS;fotl'wid1lt~ sbeh informarionfrom the public.

10
i1 12 13

241. The Development Fund m-.y, .subjeet to.tbe appeesal ollt. 8U*rd

and with the consent of or in accordanee with ~- gerntrlll.itithQrity given by the Minister (If Finance; borrow such sums m;money as ttw~~1lt Ftibd

may require in the exercise of its functions under this Act o,:it&nmidilry legislation.
~.N''' -rr.'

14
Exemption from income TJx.

15 16

142. AllIneome

derived by the Development

Fund,from. the sousces

specified in section 2~ of this Act shan 'be exempt frori1l;inoortlld4aXiarn:r.aU

contributions to the fund of the Development Fundmaae bY'~ll$j~',to the payment of tax shall be tax deductible, (3) The Development Fund may, 3ubject to . >',1 provi'iicms ofthiliAet'atld

17 18
19

20
21

the conditions of any trust created in respect of any property, ini.le!.1r8f}orany

ofirs funds in any security prescribed by the'TrusteesJrivestmedt,J\ct,

Laws of the Federation of Nigeria, 2004 or in such other. securules.. 243.-(1) No suit shall be commenced against the,Dewe~t

Cap 1l'22

22
Legal
Proceedings.

,
Fund

23 24

before the expiration ofa period of one month after writt@BnotiDeioLihtentibn to commence the suit shall have been served upon the Development Fund byjhe intending plaintiff or his agent. (2) The notice shall clearly and explicitly state ...
(a) the cause of action; (b) the particulars of Ihe claim;

25 26
27

28 29 30
31

."
"j!

(cjthe

name, place of abode and address for service-of J~ut.intendklg

plaintiff; and

Ptltrolrum Indus,ry
(d) the relief claimed by the plaintiff. 2 (3)The ~ rewired 10in subsecuon (1) of this section and any summons,

3 -" nonce er otller document 4. , DevdoprilfifltFmid

rlt'JUirea or athol"ised t-o be served ttpon the

I!nder (he provf!i0R8 of tbis Act or 2J:I)I ther jaw may be o

5 61
7

served by(a);dtn.verIRg t1. same to the Executive Secretary or any Director of the Development und;_ F or
(b) sending

8 9
10

it by registered pest '~s6d

to the gxeceuve Secretary at

the Headquarters of the Develcpraenr Fund;

:J4di. member ef the Boar-d or the Exocuti't'e Secretary or any officer or A Indemnity.

H
12 13

employee of theFJeveiopmttU
,oev61optttent FunG against

fund' s{:laU)u:- ndemaified out of the assets of the i

an, !ial!lility ineunred by him in defending any

proceeding, whether civil or criminal, if the proceeding is brougneagelosr him tn' _~it;>" as a D1Mlber, Executive Secretary, officer or other employee of the Development Fund. W. A \Wtmber of the Blard: or any officer or employee of the Information.

14
15 16 17 1&

Development Fund; shall, mtbjel>t to the provisions of the Nigerian Extractive Industries 'Fnansparenoy Initiative Aut 2007 aad any law in force in Nigeria

19, rdatiflgorofreWOIn.'M lnfermation .....

:II 21 (a) not, for his personal gain. make use of any information which has

ocme to his knowledge in the exercise ofhis powers or is obtained by him in

the ordinary course of his duty as a member of the Board or as an officer or employee of.the Development Fund; (b) treat as confidential; any information which has come to his knowledge in me-exercise of ius powers or is obtained by him in the performance of his duties under this Act; (c) not disclose any information referred, to under paragraph (b) of this section, except-when required to do so bya court of law or in such other circumstances' as may be-prescribed by the Development Fund, from time to

22
23 24 25 1fJ 7J 28

29

Xl

rime.

C 4916 2008 No.

Petroleum Industry
PART III UPSTREAM PETROLEUM

Incorporated Joint

2 3 4 5 6 7 8 9

246.-(1).

With effectfrom the commencement

ofthis Act. the interests

Ierespeoi of, the joint

ventures.

held by-the Nigerian National Petroleum Corporation

ventures for the exploration and production of petroleum in Nigeria; shalt be vested in the National Oil Company. (2) Within twelve months from the commencemensottbaAct,
each joint

venture for the exploration and production of petroleum Iir~Nigeria shall be incorporated as a limited liability company.

(3) Each joint venture company shall be owned by.the 'parties to me

10 existing joint ventures, in proportion to their existing po.rtic~ng

11 12 13 14 15
Objective.

interests,

with the exception of the participating interests held by ~,Nigerian'National Petroleum Corporation, Company. (4) Terms and conditions of each incorporated joint ven~shaH upon by the parties. 247. The objective for the incorporation
'JI,

which shall henceforth be held by, the, <National Oil

be agreed

16 17

of joint ventures is to create

independent entities, capable of being financially self-sufficient. 248. Subjectto the provisions of this and other relevant iaw,s..-of,the State, each incorporated joint venture shall be guaranteed the authority-aildresources to fulfil their duties in a professional and objective manner without interference. 249.-(1) The Board of an incorporated joint venture shaUconsist of

Authority.

18 19 20

Composition of the Board.

21 22

Nigerians and nationals of other countries(a) who have distinguished themselves in their various capacities; (b) who have unblemished records of honesty and integrity; and (c) who will be able to exercise independence and objectiv~

23
24

25
26
Board Committees.

with respect

to the affairs of the incorporated joint venture. 250.-(1) Members of the Board of an lncorporated jemr-venrure shall

D 28 29 ]) 31

within the firstthree months develop a formal and transparent board.nominanon and selection process for the committees of the Board. (2) Further to subsection (1) of this section, the mandate, eomposnton and working procedures of committees of the Board shall be well defined and

Peiroteum lnausirv

2008 No. C 4917

disclosed by the Board to the National Oil Company, other shareholders and 2 3 4 5 stakeholders. (3) Where possible, the Boards shall assign non-executive-board members capable of exercising independent judgement to tasks where there is a potential for contlict of interest, including hut not limited to(a) ensuring the 'integrity of financial and non-financial reporting, (b) nominations of board members and key executives, and (c) board remuneration.

6
7 8 9

251.Board

members shall discharge their responsibilities in accordance practices and principles of corporate governance and

10 ,with the best-standards, 11 12 i3 14 15 16 17 18 19 20, 21 22 23 24 IS lh

their actions shall be transparent and fully explained to affected stakeholders in the industry and where necessary, to the general public. 252. The Board of an incorporated joint venture shall at all times(0) be responsible Responsibilities of the Boanj

for the strategic guidance of the incorporated joint

venture in question in accordance with the guidelines established by its shareholders;

(b) be accountable to the National Oil Company, other shareholders

and

the Nigerian public;

(c) act in good faith and on a fully informed basis, exercise-due diligence

and care in the best interests of the incorporated joint venture, its shareholders and the sustainable development of Nigeria;
(d) while recognizing

that Board decisions may affect the various differently, endeavour

\0

shareholders

and stakeholders

treat different

shareholders and stakeholders fairly and equally, as the case may be.
(e) apply high emtcal stancards in performing its duties to the incorporated

joint venture, taking into account the interests of its shareholders.

n
28 29
J)

253. The functions. of the Board of an incorporated joiur venture shall

include--.
(a) reviewing and guiding corporate strategy. major plans of action, risk

Functions of
the BllanL

policy, annual budgets and business plans; setting performance objectives; monitoring implementation and corporate performance; and overseeing major

31

. _ c __ ..

__ J. __.[

Capital expenditures, acqusulone and divestitures.

2 3
(h)

monitoring

the effectiveness

of the incorporated'jIIi.,-'~ntures

governance practlces and making l:hanjes as neride.cf.

(c) 'selecting, compensating,

4 5
6 7 8 9 '!O !! 12 !3 !4 15 !6 !7 !8
Rights of

monitoring and wtwit 1lItC~1;'WJJaci.ng

key management executives and overseeing succession ptannIDl .. , (d) aligning: key executive atU! board remunerauoe

w~

the'ion&er term and

Interests of the Incorporated Joint venture, and othCr ~tdet's stakeholders in the petroleum industry. (~)monlmrlng800 managing potential conflicts of i1'!~~,df~mettt, board members and shareholders, includintt mlsuseof ~Drpd_ abuse in related incorporated jolrtt venture traneaetitms.

urwts and

ifJ ensuring and guarantselng t~e 1l1t~8rityof thcln~~

venture's accounting Imd fi~isl audit; and that appropriate systems of control are in pl systems for risk management,

Joint

reporting systems, ilicJWIog1ft6:b$pe,ndcnt Itt particular,

financial and operatlpo.,lolifl,l:roI.

of disclosure and

and
to

compliance with the law and relevant standards. (s) overseeing

the process

commuacenons

shareholders arid the public. 154.-( I) Shareholders of an incorporated joint venture shall be entitled to full disclosure about the Incorporated Joint venture, which dise10slite shall include, but not be limited to, material intormatlon
(a) (b) (e) 00-

!9 :!1 2! 22 23 24 25 2f>

Shareholders,

the financial and operating results of the lncorporatedjolrs venture; Objectives of the incorporated joint venture; major share ownership and voting rights;

(d) members of the board and key executives, including rernuneratlcn, academic and other qualifications, the selection process, membership on the boards of other companies ami whether they are regarded as indopendel1t by the board:
(e)

i:
28
29 :l) 3!

transactions of the incorporated joint venture;

(j) foreseeable risk factors in activities of the lncorporaredjoler venture;

Petroleum Industry
(g) issues regarding employees and other stakeholders;

2008 No. C 4919

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 T! 28 29

(h) governance

structures and policies, in particular, the content of any

other corporate governance code or policy and the process by which it is implemented. (2) Information relating to the operations and activities of each incorporated joint venture shall be prepared and disclosed in accordance with high quality international standards of accounting and financial and non-financial disclosure requirements. (3) An annual audit of an incorporated joint venture shall be conducted by an independent, competent, experienced and qualified auditor that shall be and shall provide an external and objective that the financial statements fairly

accountable to the shareholders

assurance to the board and shareholders

represent the financial position and performance of the National Oil Company in all material respects. (4) External auditors shall be accountable to the shareholders and shall owe a duty to the incorporated joint venture to exercise due diligence in the conduct of the audit. 255.-(1) All acreages, and licence or lease areas in respect of the
Vesting of Acreages in the Directorate.

exploration, production and development of petroleum not previously granted prior to the commencement of this Act are hereby vested in the Directorate on

behalf of the Federal Government of Nigeria. (2) All licences and leases previously held by the Corporation, including oil prospecting licences and oil mining leases in respect of which production sharing contracts have been awarded shall henceforth be held by the Directorate on behalf of the federal government of Nigeria. 256. Upon attainment of commerciality as defined within the production sharing contracts signed between an exploration and production company and the former Corporation, the said exploration and production company shall
Production Sharing Contracts.

meet with the Directorate to discuss the tenus and conditions for the incorporation ofa company which shall manage and operate the production sharing contract.

:J)

C 4920 2008 No.

Licences. Leases and
Contracts.

Petroleum industry
257.-(1) recommendation Subject to the provisions of this Act, the Minister on the

1 2

of the Directorate may grant the following licences or leases

3 4 5
6 7 8 9 10 11 12

to the National Oil Company, or any indigenous oil company(a) a licence, to be known as a petroleum prospecting licence, to prospect for either crude oil or natural gas; and (b) a lease, to be known as a petroleum mining lease, to search for, win, work, carry away and dispose of either crude oil or natural gas. (2) Every petroleum prospecting licence or petroleum mining lease shall clearly state that it shall be in respect of either crude oil or natural gas, but not of both crude oil
OT

natural gas.

(3) Where a company having a licence or lease in respect of crude oil or natural gas, desires to also engage in operations relating to either crude oil or natural gas that is not covered under the company's existing licence, that company may apply to the Minister for the said licence or lease in respect of either crude oil or natural gas, which application shall not be unreasonably refused.

13
14

15
16

(4) Only companies incorporated under the Companies and Allied Matters

17 18

Act CAP C20 Laws otrhe Federation of Nigeria 2004, and which have complied with all the conditions Inspectorate, that may be prescribed by the Directorate and the

19
20
Power tc

as the case may be, shall be entitled to be a licensee, lessee or

contractor under the terms of this Part. 258.-(1) Where the Minister grants any licence or lease under section

enteruno
~'H\t,.act\_

21 22 23 24

256 of this Act, the National Oil Company or any indigenous oil company, by such grant and without further assurance, shall he empowered to enter into any contract for the exploration, prospecting, production and development of oil or gas, as the case may be, in respect of any licence or lease held by the National Oil Company or indigenous oil company, upon such terms and conditions as may be prescribed by the Directorate or the Inspectorate,

25
26 7J 28

as the case may be,

and with any person or company qualified under conditions prescribed by this Act. (2) The contracts referred to in subsection (1) of this section include(a) production

29
30 31

sharing contracts for the exploration,

production

and

Petroleum Industry

2008 No. C 4921

development of crude oil or natural gas, on terms under which the financial 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 risk-bearing party shall be reimbursed for costs where a discovery is made; and all parties to the contract shall be entitled to agreed pre-determined proportions of production from the relevant contract area; (b) risk service contracts for the exploration, production and development of crude oil or natural gas on terms under which the oil company contractor shall be reimbursed for costs where a discovery is made and shall be entitled to payment in cash or from crude oil or natural gas produced from (he contract area;
(c) any contract being a variation of production sharing contracts or risk

service contracts, which for the time being is an interuaticnally acceptable mode of awarding contracts for exploration and production of oil or natural gas, as the case may he.
(3) The power to enter into contracts given under this section shall not

confer the right to assign an interest in any licence or lease, except in compliance with the terms of section 275 of this Part.

259.-(1) Confidentiality clauses or other clauses contained within any

licenses, leases, agreements or contracts for the exploration and production of petroleum or in any other contract or legal instrument between the state and any company, that are for the purpose of preventing access to information and documents by third parties in respect of-(a) royalties;

Confidcnuality Clauses

(b) bonus payments of whatever sort;

(c) taxes; and (d) any other financial matters that directly affect revenues derived by

24
25 '2h Yl 28 ]9 30 31

the state from the exploration and production of petroleum, including but not limited to production costs of the operating partner, shall be null, void and of no effect. (2) Subsection (I) of this section shall not apply to proprietary industrial property rights owned by any of the parties 10 a licence, lease, agreement or contract to which the said subsection (I) applies, which shall be exempted from

---------_._.
C 4922 2008 No.

Petroleum Industry
the scope of mandatory disclosure to the extent that confidentiality in such

cases is protected by any law in force in Nigeria relating to the freedom of

information,

3 4
5 6
Petroleum
prospecting

or by any treaty obligations of Nigeria under international law .

Of

(3) The question of whether information

documents are proprietary

industrial property rights and within the ambit of subsection (2) of this section shall be decided by the Directorate and that decision shall be final.

7
8

260. The holder of a petroleum prospecting licence shall(a)

licence.

have [he exclusive right to explore and prospect for either crude oil Of

9 lO 11 12
Duration of petroleum prospecting licence.

natural gas as the case may be, within the area of his licence;
(b) have the right to carry away and dispose of crude oil or natural gas

won during prospecting operations, subject to the fulfilment of obligations imposed by or under this Act and any other enactment in force at the time. 261. A petroleum prospecting licence shall be for a duration of(a) not more than five years, including any periods of renew el, in the case

13
14

15
16

ofland and shallow waters;

(b) not more than ten years, including any periods of renewal , in tbecase

17
Petroleum mining leases.

of the inland basin and deep offshore waters. 262.-(1) A petroleum mining lease may be granted to the holder of a

18
19

petroleum prospecting licence who has(a) satisfied all the conditions imposed on the licence or otherwise imposed

:J) 21 22
23 24 25 26

on him by this Act; and

(b) made a commercial discovery of crude oil or natural gas or both.

(2) Where the licensee makes a commercial discovery in another area of the petroleum prospecting licence held by it, which is not included within the area that the license has applied for a petroleum mining licence in respect of, the said licensee may apply for not more than one additional petroleum mining lease from the same petroleum prospecting licence, which may be granted by the Minister, in accordance with written guidelines issued by the Minister on

Z7
28 19 ]) 31

the advice of the Directorate. (3) Where there is conversion of a portion of a petroleum prospecting licence to a petroleum mining lease or leases under the terms of this section.

Petroleum Industry
1

2008 No. C4923

the portion of the petroleum prospecting licence that is not covered by the petroleum mining lease or leases, as the case may be, shall automatically lapse and revert to the Directorate.

2 3
4

263. A petroleum mining lessee shall have the exclusive right to conduct
exploration and prospecting operations within the lease area and to win, get, work, store, carry away, transport, export or otherwise treat petroleum

Exclusive

Right to

5 6
7

Conduct Operations.

discovered in or under the said lease area.

8 9 10 11 12 13
14

264. A petroleum mining lease shall be for a term of not more than
twenty years, but may be renewed in accordance with this Act for further terms of not more than twenty years for each term of renewal.

Duration and Renewal.

265. The lessee ofa petroleum mining lease shall be entitled to apply in
writing to the Minister, not less than twelve months before the expiration of the lease, for a renewal of the lease either in respect of the whole of the leased area or any particular part thereof and the renewal shall be granted if the lessee has paid ali rent and royalties due in respect of and has otherwise performed all his obligations under the lease.

Conditions for renewal of lease.

15 16 17 18 19

266.-(1) Ten years after the grant of a petroleum mining lease, one-half
of the area of the lease shall he relinquished. (2) Where the holder of the petroleum mining lease is the National Oil on

RelilXlUis/unent.

~ Company or any other company owned by the state, the provisions 21

12 relinquishment contained in this Act shall not apply.

(3) The provisions on relinquishment shall not apply in relation to a lease which has been renewed under the provisions of section 265 above, or to any incorporated joint venture. (4) Any rent paid in respect of the area of the lease to be relinquished shall not be refundable, and any termination occurring in relation thereto shall otherwise be without prejudice to any obligation or liability imposed by or incurred under the lease or any contract entered in pursuance thereof before the effective date of such termination. (5) The shape and size of the area to be retained and of the area to be relinquished or surrendered shall be as approved by the Inspectorate.

23 24 25 26 27 28 29 II 31

. ----------------~.-------.
C 4924 2008 No.
Surrender licence. of

Petroleum Industry
267.-(1) Without prejudice to any provisions on relinquishment, a licensee

1 2 3 4 5 6 7

or lessee shall be entitled at any time to surrender part or whole of the licensed
or leased area provided at least three months notice in writing is given to the

Inspectorate prior to such surrender. (2) No rent paid prior to the surrender shall be refundable, but the surrender shall otherwise be without prejudice to any obligation or liability imposed by or incurred under the licence or lease before the effective date of surrender.

Way-leaves.

S
9 10
J

268. Subjectto the provisions of all the relevant laws and on such terms
and conditions as may be approved by the Inspectorate, the licensee or lessee

shall be entitled to such way-leaves for the laying, operation and maintenance of plpelines, telephone lines and the like through or across the surrendered area or areas as the licensee or lessee may reasonably require(a) for the carrying on of operations under the licence or lease; or

12

13
14 15 16 17
way-leaves reserved to tile Iuspecrorate.

(b) for inter-communication

and passage between retained areas and, in

the case of offshore licences or leases, between retained areas and onshore lands, and any such way-leaves shall form pari of or be included in the calculation of the amount of the retained areas. 269. There shall he reserved to the Inspectorate over the retained area, such way-leaves, easements or other rights as in its opinion are necessary or of pipelines, telephone

18 19 W 21 22 23 24 2S

desirable for the laying, operation and maintenance

lines and power lines; and any way-leaves or other rights so reserved shall continue for the hcnefit of any person or body to whom the Inspectorate rnay subsequently grant the same to the extent that it may so grant them pursuant to the regulations made hy the Minister for that purpose on the advice of the Inspectorate. 270.-(

Award

PruL"'_'

26

I) The grant of a petroleum prospecting licence, petroleum mining

Z7
28 29
]J

lease or contract in respect of any territory in,"under or upon the territory of Nigeria shall 'be by a bidding process with the Inspectorate, conducted
by the Directorate,

in

consultation

which bidding process

shall be open,

transparent and competitive. (2) For the avoidance of doubt, no discretionary awards shall be given

31

Petroleum Industry
under any circumstances whatsoever. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

2008 No. C4925

(3) The Minister shall direct the Directorate to call for bids in accordance with a process that shalf be made available to the general public through publications on (he website of the Inspectorate and in at least two newspapers with international and two newspapers with national coverage.
(4) The Directorate

in consultation with the Inspectorate shall establish

the technical, legal, economic and financial requirements as well as the minimum experience and capacity necessary for would be licensees, lessees, and

contractors, which shall be contained in guidelines prepared by the Directorate, and licensees, lessees and contractors shall be chosen in accordance with these guidelines. 271.-( 1) Where the allocation of a licence or lease includes the right of the Government to a participating interest in the licence or lease, the Minister may at any time exercise this right to participate in accordance with the terms of the said licence or lease.
(2) The right to participate
Right oI Participation.

referred to in subsection (I) of this section

shall only be in respect of the interest held by the company to whom the allocation was made. 272.-(1) Where an oil field within an existing licence or lease is designated Directorate,
<IS

Marginal
Ficl(js_

marginal by either the licensee, lessee, the Inspectorate or the

the Minister may direct that the said marginal field should he

awarded 10 another company other than the licensee or lessee. (2) A field that has not been operated for len years is deemed to he marginal.
(3) The award of any marginal field shall be((I) through an open and transparent process; and (b) by the Minister

25
2JS

in consultation

with the Directorate

and the

II 28 'E 30 31

Inspectorate.
(4) When an award for a marginal field has heen made, the marginal field

awardee shall enter into agreement with the holder of the licence or lease, on terms and conditions as may he agreed between the panics.
(5) The terms and conditions of any contract between a marginal field

---------"'
C 4926 2008 No.

Petroleum Industry
awardee and the holder of the licence or lease within which the marginal field

2
3 4 5

is locared-. (a) shall be in accordance with the terms and provisions of this Act, and (b) shall be communicated to the Directorate and the Inspectorate. (6) Where the holder of the licence or lease within which the marginal field is located and the marginal field awardee fail to agree on terms and

6 7 8
Marginal

conditions, the matter shall be referred to mediation or arbitration by the

Inspectorate. 273. Every five years the Directorate shall review the existing conditions for marginal field operators to ensure that they achieve an appropriate rate of return sufficient for the growth and sustenance of their operations. 274. Within six months from the commencement of this Act the Minister shall, in consultation with existing marginal field operators, initiate and

9 10 11

Field Operators.

Marginal field incentives.

12 13 14 15

implement any other necessary incentives that will achieve an appropriate rate of return for marginal field operators. 275.-(1) A licencee, lessee or contractor shall not assign his licence,

Assignment, Mergers and Acquisitions.

16 17 18 19 Xl 21 22

lease or contract, or any right, power or interest therein without the written consent of the Minister. (2) An application for assignment shall be in accordance with terms and conditions specified within this Act and any regulations made under it. (3) The Minister shall consent to an assignment if the proposed assignee is able to show to the satisfaction of the Minister that(a) the proposed assignee is a company incorporated

23
24

in Nigeria;

(b) the proposed assignee is of good reputation, or is a member ofa group

25 26 TJ 28

of companies of good reputation, or is owned by a company or companies of good reputation; and

(c) there is likely to be available to the proposed assignee (from his own

resources or through other companies in the group of which it is a member, or otherwise) sufficient technical knowledge, experience and financial satisfactory to

z:;
30 31

resources to enable it to effectively carry out a programme

the Minister in respect of operations under the licence or lease which is to

-,--

. -, be as!lgtied.

Petroleum lruiustry

2
3 4 '-5

'(4) where-a licensee, lessee, or contractor is taken over by another

company, or merges, or i1 aC\l'Uiredby another company either by acquisition or exchange of shares, it shaU be treated as-an assignment and shall be subject

to thl::terms and etmditions ofdlis Act and any regulations made under it. 2"' ...... The OOIr of a petroleum, prospecting licence or petroleum ( 1)
-mining lease may, at any time.ferminete Ministerttot less than three months-notice the licence or lease by giving to the in writing.
Termination!

6
7 8 9

(2) Any party to a contract in respect of a licence or lease may, in accordance With the terms- of the contract, terminate his interest in such contract.

IO U 12
13
1<1-

177. The M;ni5ref mayrevoke a petroleum prospecting licence or a

petroleum mining lease if the licensee or lessee(li)

is controtled directly or indirectly by a person who is a citizen of, or

Grounds for revocation of licence Of tease.

'subject of any country which is.a COll,ntry'fue laws of which do not permit citizens

" 15 16
17

of Nigeria or Nigerian companies to acquire, hold and operate

concessions on conditions which the Directorate finds to be

petroleum

reasonably comparable to the conditions upon Which such concessions are granted to subjects of the country.
(b) in the opinion of the Inspectorate

18
19

and Agency, is not conducting

20 21 2.2
23 24 25 16

operations continuously and in a vigorous and businesslike manner and in accordance with good oil field practice;
(c) 'is not fulfilling' his Or her Obligations under the special conditions of

his or 'her-licence

or lease;

'Cd) fails to pay its rent or royalties as they fall due, whether or not they have been demanded by the Inspectorate, within the period specified by or in pursuance of this Act; (e) has failed to furnish any reports on its operations that are prescribed by this Act or any other act in force within-the stipulated-time; (j) 'has obtalned or acquired the licence or lease on the basis of false representations or corrupt practices:

TT
28 19 30 , 31

(g)is owned or controlled by a former or present public officer who has

C4928 2008 No.

, Petroleum Industry
obtained the Iicence or lease through misuse of public off~~.

(h) has assigned or otherwise transferred lease to any person

Of

his interesr in:the licence or

3 4
Represematlon permitted before revocation.

company without the prior (Jansen! ohb:e:Ministor as this Act..

is required by section250 of 278.-(1)

S 6 7 8 9

Where the Minister receives information fromfile_pect~te

and the Agency of any of the acts listed in section 277 above, .dIe~inister.$ball within one month of the matter coming to its knowledge,

Inform

tm fW#llset or

lessee of the grounds on which a revocation is contemplatedaJ.l4,JlbaU invito<.the licensee or lessee to make any representation lathe Minister if-the licensee or

10
II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Zl 28
Fees, Rents and Royalties.

lessee so desires and if the Minister is satisfied with theexphmation.the

licensee or lessee may be asked to rectify the-matter complained of withip a specified period. (2) If a licensee or lessee is unable to offer-satisfactory explanation a$ is

required in subsection (1) of this section or does not rectify the mllJlI3TilwmplaiQed of within the specified period, the Minister may revoke the Iicenceer lease and such revocation shall be final. (3) For the avoidance of doubt(a) the revocation of any licence or lease in accordance wiJlltbe;provi~ns

of this Act cannot be rectified; 'and

(b) where the grounds of revocation are found to be true, ehe revocauen

shall stand. (4) Notice of revocation sent to the last known addressof.the licensee or

lessee or his legal representative in Nigeria and published In the Federal G~ shall, for all purposes, be sufficient notice of the revocation ofrhe licence or lease. (5) Revocation shall be without prejudice to any liabilities whicit,1he licensee or lessee may have incurred, or to any claim which may be made:by the Federal Government against the licensee or lessee. 279.-(1) There shall be paid in respect of licences and leases granted

29 30 31

under this Act such application fees and rents as may be contained in this Act and in any regulations made by the Minister, pursuant to this Act and on-Ule

Petroleum.industry
1 ' recommendaacn 2 of the Inspectorate.

200llNo. G4~

(2)Royalties in respect of any petroleum production obtained from any ticenceor lease area shall" be paid in accordance with the. rates prescribed
-,

3 4 5 6
7 8

within any laws and regulations in force at the time.

,
Protected Objects.

280.-(1) In the course of exploration and production activities in respect of petroleum, no person shill injurem destroy any tree or object which is(a) of commercial value;

(b) the object of veneration, to the people resident within the petroleum prospecting licence or petroleum mining lease area, as the case may be. (2) A licensee Or lessee who causes damage or injury to a tree or object of commercial value or which is the object of veneration shall pay fair and

,9
10 II

12 13 14 15

adequate compensation to the persons or communities directly affected by the said damage or injury,

281. The amount of compensation payable under section 280 shan be

determined by the Inspectorate in consultation with designated 'persons and with

16' 'representatives 17 18

which shall include a licensed valuer, in accordance

regulations prescribed under this Act.

281~-(l) here a licensee or lessee fails-to pay compensation, the license W

or lease shall be suspended until the amount awarded is.paid. ' ,,' (2)Where'the litensee.cr lessee fails to make peymem within thirty days

19
20,;,

21,
22

after the suspension of the said Iicence or lease in accordance with subsection (1) of this section, the Minister may revoke the said licence or lease ..

23
]A.

283.--(1)Every licensee or Ieseee'eagaged in petrQkum operations shall,

within three months of the commencement of this ACl, submit an environmental programme- or an environmental quality management plan which shall be

Environmental Quality Management.

25

2i:i submitted, to the Inspectorate tor approval.and which shall ~

'1'1' 28 -(a) contain the licensee's written (i') environmental policy, objectives;' and targets: and (ii)commitment and standards; '" (b) estabHsboba.s:el1oe infonnation cencer :iIII_a-ffected eavfroemeru to to comply with relevant laws, regulations, guidelines

29
3)

31,

C4930 :lOOIl No.

Petroleum Industry
determine protection, remedial measures and envlroonwntJIlllMlllfment

2
3

objectives;
(c)

investigate, assess and evaluate the Impact of the Iiceneee orJ';IIi~e'S

4
5
6

pr-oposedexplorattoo and production activities Oft:-,

(/)
(if)

me environment;

and

the socio-economicconditions orany person who ntiabtlDe di.rec~

affected by the petroleum operations;

(d)

8 9 10 11 12
J3

develop an environmental

awareness plan.descrlbleg

the manner In

which the apphceet intends to infbrm his 'Or nef!lmpioycetl

of llRy

environmental risks which may result from their work ami the OlalUieriWl which the risks mustbedealtwith in order to avoid pollutionor.thtrdeg~ of the environment; and
(e) describe the manner in which he or she intends to-

14 15 16
17

(i) modify, remedy, control or stop any action, activity" or which causes pollution or environmental degradation;

process
and

(ii) contain or remedy the cause of pollution or deg~ migrationofpPIhlt3nts; and - ,

18 19
J:)

(iii) comply with any prescribed waste standard.ctmanagemear standardser JlIIi;.Jkes.

"(i)

The 1118rwet:Prate, in consultation wid:! the Ministry Qf~~nviroDllll!:rit

. 21 22 Zl
]A

shall approve thten~ntalmanasement-programmeor:dlc,epy~nllU .. ~ . ".:

plan if(a) it~".(b) the

-,.

'

fr' itttnhe subsection (I) of this sectioJr, &Ad;

'apf>li.caRt has the capacity, or has provided for th.e capacity <to

25
1fj

rehabilitate and manaif negative impacts on .t!h envlronrseat.

{3) The Inspectorate shall not approve the environmentalmanagemeltt

programme or ffle eJll'fftlomentafmanagernent
I ._,

tl
28

.~"-t"

,pJanuhh:stit bit$~.c4.

'."

", .

. '.

:~

'

comments of the said federal or state ministries of-the environment. (4) The Inspectorate may call foradditionaHnfonnation fro11ltAt:I~

29

..,
31

or lessee and may~ct

~'

.."

that the environmental

manageBlll$iH'/3SWW '
." Ibe

envj.:roi'imenta~~.

plan in qac:stioo beadJUllted-in-Mld) lIr'1IJ

..

Inspectorate may require. 2

.3

(5) The Inspectorate may M any time after he or she has approved an
enviroomt:ntal management programme or environmentet management plan and

4
fi 6
7

after consultation with the holqer of the licence or leaseconcerned,approve an

amended environmental
programme. ~.-(1) "hen

management

plan or enviroumenta

management

considering

an environmental

management

plan or

g 9 10
II 12 13

en~ifonmental management programme. Federal Ministr,

the Inspectorate shall consult with the

Consultation with State departments.

of\he Environment and the State Miaistrjes of Environment

within which tbe licence or lease is situated and with apy other relevant bodies wjtilil1 which the licence or lease is situated. (2) The federal and

state ministries of environment, and a9Yother bodies

tilat the Inspectorate may consult, spall wbmit their written comments within tJ,lin)l AA?t~of iJ:If ~te: of request.

.14 15
16

;IS( .... Pripr ,.{I)

~Q the approval

of the environmental ~gementplan

or

Financial
provision for remediation

envirQ~nt<"!otm~gement

prograJl1!Ueby the Minister, every licencee or lessee

17

stl\l:Pltf""'.' . ~ia,1
,,~I~

prDri&;PP.to.~ Inspe~wr",,",!I:.aq;ordance
time, for tbe

of enviroamental
damage.

18 with g~dtJ'iAes ~y be is~~.d bylobeJnspectqrBte from tim~ ~Ii

19

JJ
21 22

fur1l!ont"''''''~od
(~) If ~~ ~r ~~.~.~ :envifQ~.lhe

~e~~Q.f

negative enviJl)nmelltai imP~. it cpJ:)liitioQ ~

ease.
pf il Wcel).ce lease fails to rehahiltate or manage, or .is or

sJ.lcb-r.ehiWititation or ro

ffilW:'l-8c<loy Jll:~~

impacts on

23th,e 24 15 26

l1AinjslAi:r may. upon writ~n

nonceto s4ch holder, use all

or part of me fffii.ncial provisions contemplated in subsection (1) of this section to rehabilitate or ma~geth,e negauve environmerual impact in question.

(3) The holder of iI.[icence Of tease musr annually assess his or her

IT2B
7iJ
J)

elt(~~

.. k1c~~~ ~, aJtd

b.er .financial ~sion

to the

satisfaction of the Minister. (4) Ifthe prQ.\'i~~l}co~ Mffli$tpr is q.9l~lisfl,Cd \\lith tlJe assessment in and financial

m~ ~ctiop,

tl\e h4inis~r maY~PP,Oin,t i~l}dent an

.lhefin&ncial<pf(}~S:i0n .

31

aJlje~SQl c~.I;'5~ssment ~

~.di.tennine

C 4932 2008 No.

Financial

Petroleum Industry
1 286.-(1) or lease Every Slate and every local government within vmith1rriy'llcence shall pay a sum equal to 1 % of the state's annuet derivation of the local government's annual'deriYatitJlit allceation

provision by
State and

weal
Governments.

2 3 4 5
6

is located,

allocation,andO.5%

into a Remediation Fund which shall be utilised solely and exclustvelyfer the restoration aha remediation of the environment in cases wheTetl1e HUHUtmage to the environment has been caused by sabotage. (2) The Remediation Fund shall be in the custody ofthe"l.ctorate.
(3) The Remediation Fund shall be utilized only ili'-ae(!t)nflUKle' with

7 8 9
Abandonment,

prescribed regulations made under this Act.

'

J"'\

~
and Disposal.

10
11

287.-(0 The decommissioning and abandonmentof-omhbre atidl)ffshore

petroleum installatons, structures, utilities and pipelines shall 'b!e-contmCted in accordance with good oil field practice and lnaccordance with guidelines issued by the Inspectorate,

12 13 14 15 16 17 18 19 20 21 22
23

provided that such guidelines, standatdsanc,hegumtions

shall be in line with the guidelines and standards set by the IntematioiaalMlritime Organisation with respect to offshore petroleum installations aM;tructures

(2) The Inspectorate shall by written notice, requirea;~icemee()f~essee

to commence the decommissioning and abaridbttmel1t-of1l:I)lojeet"Of1iiMina.ton. (3)A 'licensee or lessee shall by written notice to the Ih'SjJeCtohUe~;J'6queSt to commence the decommissioning and abandonment Of a:(proj\~cdJ'-tMlmat()n within its licence or lease area. (4) Upon such' a notice in subsection (2) of this secticlII'Mhere

a licensee

or lessee-intends or ought to carry out a dec(jmmissiori.trij;dMibitrlthj~nt

of
or

structuresand installations, 'such will not be carried 'oufl!file8ll::ft!1i~e

lessee submltsto the inspectorate, 'a'programme settlng out-c' (u)'an estimate of the cost of'the proposed measures;
(b) details of measures proposed

24 25 26 27 28 29
30

.:r
",II .: .

, ,;

to be taken in cerinection

with lite

"decomtniseionfng of disused installations, ,Structirit!S'and'l'l!tF'Pl~!j1as the

case may be;
(c) vivid descriptions
-!lJf: -I,:, .

of the methods to be-emoreditb'undertake with'besfoil'fielttipttaOtice.!l, ., . '.. " ;

the

work programme,

~hich shall be ii11~

31

"sustainable freld and environmentaldevelopment.

Petroleum Industry

ZOOS, No.

c~

(d) steps to be taken to ensure maintenance and safeguard where any 2 3 4 5 6 7 installations, structures or pipelines are to remain disused and in position, or are to be partly removed; (5) Upon the submissionofthe decommissioning programmeby thelicensee or lessee to the Inspectorate, consultationsshall be made with interested parties and other relevant public authorities and bodies. (6) The programme referred to in subsection(5) of this section shall not

8 .be approved unless aU relevant environmental, technical and commercial ,9 10 11

12

regulations 'or standards are met. (7) Before the Inspectorate approves an application or programme for decommissioning or abandonment, it shall ensure that(a)

considerationsand recommendationsare takenin the light of individual

13
14

circumstances;
(b) the potential for reuse of the pipeline in connection with further

15 16
17,

hydrocarbon developments is considered before decommissioning together with other existing projects.
(c)

all feasible decommissioning options have been considered and a

18 19 Xl 21 22 23 24 25 26

comparative assessment made; (d) any removal or partial removal of an installation, structure or pipeline is to be performed in a manner that guarantees sustainable environmental development; (e) any recommendation to leave an installation, structure or pipeline in place is made with regard to its likely deterioration and to the present. possible, and future effects on the environment; (8) The Inspectorate may, if it do decides, recall any previous owner of an.installationvstrucurre or pipeline to be responsible for (he costs associated

11 with the decommissioning programme.

28
'J9

(9)The Inspectorateshallensure thata listof all the petroleuminstallations, structures and pipelines onshore and offshore Nigeria and their current status is compiled and made available or accessible to the public.

:I)

C 4934 ZOOS No.

Agreement and Funding.

Petroleum!1Jd.ustry
t88.

At the comrneueement of Jjetto'leUm operatidh's~tfVe.fnSpeetorate

with

2 3
4

shall enter lnto agreement

every
of oil

licensee

or lessee

tegarding

the

abandonment and decommissioning

and

gas instalhltioHS, within their

licence 0' lease area. as the ease may be.

PART IV DoWNSTREAM LICENSING

S
6
Licencing,

Chapter I - Technical Licensing 289.-( 1) The Inspectorate sball grant all techntcalljcetees in respect of construction ilIJd Ot'~hlti6h of all

7 8 9 10
II

't\U matters relating to design, procurement,

facilities and infrastructure

in the petroleum industry tn Nigerht;';jt'lefuding

refineries, process plants, petrochemical plants,' whichsfiMl iriclude licences

to(a) establish,

12 13 14 15 16 17 18

construct and maintain it process plant;

construct, and, or maintain a

(b) establish, pipeline;

(c) establish,

petroleum transportation

construct,

and, or maintain a petroleum traJ\~ortation

network;
(d) establish, construct, and, or maintain a petroleum distribution 'network.

(2) The Inspectorate

shall grant technical

licences il1re!tpect of-the Nig'etia, including

19 "utltisatton Man chemicals used for petroleum operatlonstn 20 21 22 23

24 25

all chemicals used 'in the exploration, production, processing, -diSttit1utiol'1,and storage of petroleum products in Nigeria, (3) No person shall conduct any of the activities in stffl~tion(1) section without a technical licence issued by-the Inspectorate'. (4) Subject to a formal consultation opetatorsin process held t>etWeetl.'upstream in the case ,by lobe of this

the case of the-upstream and downstream particrpants,

26 27 28 29 ~ 31

of the downstream, stakeholders and the Inspectorate, the lilSpee~te'rtlay regulations issued pursuant to this Act, prescribe additi6nal:actj~s

undertaken only on the basis of a technical licence. (5) Any Person who(a) engages in any of the activities set out in subsection {l)wi-l:hoUt a

licence or

Petroleum Industry
(b) engages

2008 No. C 4935

in any activity that becomes subject to licensing under

subsection (2) or (3) of this section without a licence; or

(c) in applying for a licence, knowingly makes a statement which is false

3
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 :l} 21 :ll 23 24 2'5 26 Tl 28 29 :l) 31

or misleading in any material particular; shall be guilty of an offence and liable subject to regulations issued by the Minister, to a fine of thirty million naira N30,OOO,OOO to imprisonment for or a term of two years, provided that proceedings in respect of any such offence shall he commenced only by the Inspectorate and, provided further that, in addition to the fine, the Inspectorate arrangements
01,1),

after due enquiry and having made

to ensure that customers are not adversely affected, suspend or

revoke any licence issued on the basis of false Dr misreading information. 290.-(1) The Inspectorate may grant. renew. modify or extend individual Modification of Licence Applications.

technical licences issued in pursuance of Section 289. (2) An application for the grant. renewal, modi ucauon or extension of a technical licence shall he presented to the Inspectorate in the form and manner prescribed by regulations issued hy the Minister on the advice of the Inspectorate and shall he accompanied by the prescribed fee, if any, together with such

information or documents as may be prescribed in the said regulations. (3) The Inspectorate may furnish any person applying for the grant, renewal or extension of a technical licence with such non-confidential information as

the applicant may request which may facilitate the filing of the appl icarion. (4)An applicant for a technical licence who is an affiliate ora company (hat has applied for or holds any other licence in respect (If any sector of the petroleum industry in Nigeria, shall disclose such interest to the Inspectorate in its application.
(5) The Inspectorate

shall consider all information presented in respect

of an application for a technical licence, including reprcsemanons front interested parties in favour of
0]"

against the granting. extension or renewal of the Iiccnce:

and shall furnish an applicant

ror a ""mi"d

licence Willi "II such information

and any other information that may facilitate the filing of an application. (6) Where the Inspectorate has decided to grant a technical licence it

C 4936 2008 No.

Petroleum Industry
shall publish a notice of its decision in the form and in the manner prescribed in

2 3 4 5 6 7 8 9 10 II
Advertisement oj Licence Applicutions.

regulations issued by the Minister on the advice of the Inspectorate. (7) Where the Inspectorate has decided to decline an application, it shall inform the applicant of its refusal of the application and its reasons for such refusal and shall slate a reasonable period within which the applicant can make further representations in respect of the decision. (8) The Inspectorate shall

duly cOl1sid<:rally representation in respect of a refusal

(If

made by an applicant for a technical licence

a technical licence application.

(9) No further application or representation shall be made by an applicant or considered by the Inspectorate in the event that representations in respect of

a refusal of an application have been considered and rejected by the Inspectorate.

12
13 14 IS 16 17 18

291.-(1) When an application is made for a technical licence, the applicant

shall publish a notification of the application in at least two Nigerian newspapers with nationwide circulation, in the form and manner, for as many times, for

such period or periods, and in accordance with the period that may be prescribed in any regulations issued by the Minister on the advice of the Inspectorate. (2) Following the publication of the notification of the application, to the Inspectorate in the

interested parties may comment on or make representations in respect of the application

19
:l.l

within {he period of lime prescribed

Regulations, which period of time must he indicated in the published notification. (3) Following the grant or renewal of a technical licence the applicant shall puhlish the notification of the grant or renewal in the form and manner in at least two Nigerian newspapers with nationwide circulation, for as many

21
22 23 24 25 26
Licence Regulations.

times, for such period or periods and in accordance with such periods of time as may be prescribed in any regulations made by the Minister on the advice ofthe Inspectorate. 292. The Inspectorate shall make recommendations to the Minister to

Tl 28 :l-J X'! 31

issue regulations applicable to technical licensing procedures under this Act, which shall include. but shall not be limited to-,
(a) the procedure, form, criteria, timescale and fees for technical licence

applications, including any criteria for the grant of the technical licence and

Petroleum Iudustrv the grounds on which licences nllly he refused,

2 (h) the duration of technical licences ami the prcceourc.

2008 No. C 4937

form, criteria

3 4

and timescale for their renewal;

(c) the procedure,

form and timescale for publishing notification of a

5
6

technicallicence

application or renewal; form, criteria and timescale !ill" technical licence

(d) the procedure,

7 8
9

modifications.

including the process for Changing standard and special

technical licence conditions and the public consultation process required as part ofthe licence modification procedures:
(e) the procedure,

10
II 12 lJ 14 15
16

form, criteria
(11'

and timescale

for the transfer Ilr

surrender. suspension or revocation 293.-(1) Conditions included in

a technicallicence. lechnicalliCl:nll.: ivsued pursuant to

Licence Conduions.

this Part may require the licensee(a)

to compty with any directions given hy the Inspectorate in relation to

matters specified in the: technical licence;

(IJ) to undertake or refrain from undertaking anything specified in the

17 18

technical licence;
(c) to secure the approval of the Inspectorate prior to undertaking anything

19
2f) 21 22 23

specified in the technical licence;

(d) to comply with industry codes and standards;

(e) to provide information to the Inspectorate;

if) to restrict

the use ofcertain typc.~of information deemed

ttl

be sensitive

by the Inspectorate. provided that this condition is not in contravention, with any law relating to freedom of information that may he in force at the time; lq) to prepare and submit to the Inspectorate such information and periodical reports as the Inspectorate may require;
(II) to operate its technical licence and related facilities, if any, according

24
2'i 2J5 T1 28 29
J)

to the standards of a reasonable and prudent operator

in the upstream,

downstream products or gas industries, as the case may be, as specified by the Inspectorate. (2) Conditions applicable to a technicallicence may cease
10 have

31

effect

C 4938 2008 No.

Petroleum Industry
or may be modified under circumstances specified in the licence or pursuant to

2
3

the provisions of section 290 of this Act.

(3) Technical

licences granted by the Inspectorate

to licensees of the

4
5 6 7 8 9 ]() 11 12 13 14 15
16

same class shall contain similar conditions,

which shall be standard licence

conditions for that class and any differences in conditions contained in technical licences issued to licensees of the same class shall only be for objectively justifiable reasons (4) Subject
(I)

the provisions of this Act, the Inspectorate shall have the

power to include special conditions specific to a particular technical licence, provided that curh special licence conditions shall be designed to meet specific circumstances and \hall not unduly disadvantage one technical licensee in relation to another. (5) The Inspectora1l'
mil}'

specify a date after the grant of a technical

licence on which licensed activities shall commence. (6) The Inspectorate may provide that a licensed facility shall be for(0) the exclusive use of tile licensee;

17 18
19

(b) all or par! of the period of the technical licence;

(e) a specific purpose; (d) a specified geographical

area, route; or

20
[Junuiun uf

(e) any combination of the foregoing.

Licrucc

21 22 23 24 25 26

294.-(

I) A technical Jiccnce issued hy the Inspectorate pursuant to this

Chapter shall he for a period of 25 years in the first instance. (2) A technical licence may be renewed for such further periods as the Inspectorate may determine subject to the criteria and in accordance with the

procedure prescribed by regulations issued pursuant .10 this Act, provided however that anyone renewal shall not exceed twenty-five years. (3) The Inspectorate may set new or different licence conditions upon the renewal of a technical licence.

n
:~S
;"\\,igrmlcnlor

295.-(])
~ I

No licensee under [his Part shall, directly or indirectly, assign

or any rights or obligations arising from such

rranskr

or transfer its technicallicence

technical licence without the prior written consent of the Inspectorate.

Petroleum Industry

2008 No. C 4939

(2) An application for the assignment or transfer of a technical licence 2 3 4 5 6 7 8 9 10 shall be made to the Inspectorate, which may require the applicant to publish a notice of the application in such form and in the manner and within the period prescribed in regulations issued pursuant to this Act. (3) In determining whether a technical licence may be assigned or transferred, the Inspectorate shall follow the same procedures with such modifications as may he appropriate in the circumstances, apply the same rules and criteria, and consider the same issues as if the party to whom the technical licence is being assigned or transferred is itself applying for a new technical licence, and shall, in so doing, duly consider the representations made to it by

11 third parties in respect of the application. 12 (4) The Inspectorate shall, subject to subsection (3) of this section,

13 communicate its refusal or approval of an application for the assignment or 14 transfer of a technical licence in writing. 15 (5) The Inspectorate shall advise the applicantofthe reasons for its refusal

16 of an application for an assignment or a transfer of a technical licence, and 17 shall state a reasonable period of time within which further representations 18 may hr- made by the applicant or hy third parties in respect of the application. 19 (6) The Inspectorate shall grant its consent to an assignment or transfer

2D of a technical licence, subject to such conditions as it may consider appropriate. 21 22 23 24 25 26 Z7

28

296.-(1) The Inspectorate may modify, suspend or revoke any licence conditions or include additional conditions, subject to the terms of this section. (2) The Inspectorateshallnot modify, suspend,revokeor includeadditional conditions to a technical licence unless it has(a)

Amendment of Licence.

consulted with the Minister, industry participants and stakeholders,

giving reasons for the proposed modification,suspension,removalor addition and having properly considered any representationsor objections raised; and
(b) given the affected licensee written notice of its intention to do so

29
):)

together with a dratt copy of the proposed technical licence modification,

(c) given the licensee an opportunity to make written submissions to the

31

Inspectorate in respect of the proposed amendment within the time period

-------~--,-C4940 2006 No.

Petroleum Industry
specified in regulations issued pursuant to this Act which shall not be more

2 3 4 5
Contravention
~nd

than thirty days from the date of the written notice. (3) The procedure to be followed in modifying, suspending, reVoking or adding any licence conditions shall be as prescribed in the regulations issued pursuant to this Act. 297.-( contravening, 1) Where it appears to the Inspectorate that a technical licensee is has contravened, or is likely to contravene any of the conditions the Inspectorate may publish a notice in such manner

6 7
8 9

Entortcmcnr of Licence
COI]U"nlOllS.

of the technicallicence,

as it considers appropriate to draw the attention of other persons affected or likely to be affected by the contravention technical licence(a) specifying the actual or potential contravention; (b) directing the licensee to do, or not to do, such things as it may specify; (c) specifying the remedy and the period of time for compliance; (d) notifying the licensee of its intention to issue an enforcement

iO
II

or threatened contravention 'of the

12
13

14 is 16 17
18

order.

(2) The licensee and any other interested party shall be entitled-to make representations against or in support of the enforcement notice by a date specified in the notice. (3) If a licensee fails to comply with a notice served pursuant to subsection (I) of this section, the Inspectorate may issue an enforcement order. (4) Failure to comply with an enforcement order shall constitute an offence. (5) The Inspectorate may not issue an enforcement order if(a) the licensee is able to demonstrate to the satisfaction ofthe Inspectorate

19 20 21 22
2l

24 25
?h

that it is not contravening or about to contravene a condition ofa technical licence; or

(b) the licensee has ceased to contravene a condition of a technical licence

27 28
29

provided that if the earlier contravention may, at its discretion,

was deliberate, -the 'Inspectorate penalty as determined by

impose an appropriate

regulations made pursuant to this Act. (6) If the licensee fails to comply Inspectorate with the enforcement order the

20 31

may institute legal proceedings

against the licensee to ensure

Petroleum Industry compliance. 2 3 4 5 6 7 8

l)

2008 No. C 4941

(7) Appeals in respect of legal proceedings under subsection (6) of this section shall be brought before the Court of Appeal. (8) Subject to the Regulations made pursuant to this Act, the Inspectorate may adjust from time to time the penalty mentioned in subsection (5)(b) ofthis section in order to reflect current rates of inflation. 298.-(1) In accordance with any regulations issued pursuant to this Act and upon application to the Inspectorate, a licensee may apply to surrender its technical licence if~
(I) (b) Surrender Licence. of

10

the licensed activity is no longer required; ill the opinion of the licensee the licensed activity is not economically

II 12 l3 14 15 16 17 18

justifiable;
(c)

the licensee has failed to commence licensed activity within the time

frame specified in the tecltnicalIicence: or

Cd) another qualified person is willing and able to assume the rights and

obligations of the licensee concerned in accordance with the requirements and objectives of this Act; (2) A licensee applying to surrender its license shall, where applicable,

19 comply with all requirements of the law in respect of relinquishment and 20 21 22 Z3 24 25

2h

decommissioning of installations and reclamation of land. (3) Where the licensee has commenced activities and has ongoing operations, it shall, unless a shorter period is stipulated in the licence, give the Inspectorate at least twelve months notice in writing of its intention to cease its activities. 299. The Inspectorate may suspend or revoke a technical license(0)
Revocation or Suspension of Licence.

if the licensee has breached or continues to breach a condition of the

n
28 '19
J.)

license. a regulation, or a provision of this Act where such condition or provision stipulates that the said breach shall make the technical license liable to suspension or revocation, as the case may be; and
(b) if the Inspectorate has given six months notice of its intention to

31

suspend or revoke the said technical licence.

---------------'-----_.
C 4942 2008 No.
Grounds for

,- '..

"

Petroleum Industry
300. Subject to section 299 of this Act, a technical licence may be revoked-

""

Revocation of a Technical Licence.

2
3 4 5 6 7 8 9 10 II 12 13

(a)if(I) the licensee becomes insolvent or bankrupt; or (it) the licensee enters into an agreement creditors; or (iii) takes advantage of any enactment for the benefit of its debtors; or (iv)goes into liquidation, except as part of a scheme for an arrangement or amalgamation; (b) upon the transformation or dissolution of the licensee unless it is for the purpose of amalgamation or reconstruction and provided the prior consent of the Inspectorate has been obtained; or
(c) if a licensee fails to commence

or composition

with its

activities within the period of time

prescribed

in the licence.

Mandatory Rcgixrrtuion willi the Inspectorate.

14 15 16 17

301. Any person engaged in activities which are required to be licensed by [he Inspectorate pursuant to this Chapter shall register its activities with the Inspectorate and provide such information concerning the activities of the

undertaking as may be prescribed by regulations issued pursuant to this Act. 302.-(1) available The Inspectorate shall establish, maintain and 'make publicly of all technical licenses issued, revoked, suspended,

Register of ],iccnse,.

18 19 2/) 21 22 23 24 25 26

a register

surrendered or withdrawn and all modifications and exemptions granted for the purposes of this Act, (2) The officer registering the issuance of a technical licence or any

modifications or exemptions as contemplated under subsection (1) ofthis section shall require an acknowledgment modification or exemption of the receipt of a copy of the licence in such form as may be

nom the Inspectorate

prescribed by Regulations issued pursuant to th is Act. 303.-(1) All technicallicenses or exemptions granted by the Inspectorate

Preparation or Lrccnst-, .rud I) IL p! rc.uc ,

Z7
28 29

under this Chapter shall be prepared in duplicate, one copy being delivered by tile Inspectorate to the technical licensee and the other retained by the Inspectorate
[0

:x:J
31

be bound up in a book of/he appropriate series and serially numbered. (2) The Inspectorate shall not cause any technical licence to be prepared

Petroleum Industry
until the requisite fees have been paid.

zOOs No. C4943

2 3
4 5

304. The Inspectorate shall enter in the appropriate register a memorial ofthe extensions, transfers, surrenders, revocations, exemptions, forfeitures,
changes of address, changes of name or any other matter atTecring the status of or any interest in any technicallicence the date of such entry. registered under this part together with

RegiSler of Memorials.

6 7 8
9

305.The registration of any technical licence registered under this Part

shall be conclusive evidence:
(a) that the rights described therein are vested in the person named as the

Etle<'l of Registration.

10
11

licensee within the said technical license; and

(b) of the conditions and other provisions to which the licensee is subject.

12

306.-(1) The registry and the registers required under sections 301and

13 302 shall be accessible to the public.

14 15 16 (2) Upon the payment of/he prescribed fee, a memberof the public shall be entitled to obtain a certified true copy of any document or record contained in the registers referred to in sections 302 and 304 of this Act.

P!lblic A~ces~ to tlIt: Registry.

17 18 19
Xl

307.-(1) hereW
(a) any member or employee of the Inspectorate

in the course of his

duties, acquires information relating to the financial affairs of any licensee,

Disclosure of COllf/dt"ntia\ or Other Information.

or

(0 any commercial

secret; or

21

(b) any other person indirectly acquires such or other information required to be kept confidential under the provisions of this Act from any employee of the Inspectorate, he or she shall not make use of such information, nor

22 Z3
24 25 26

disclose it to any other person except under the conditions stated in subsection (2) of (his section: (2) Subsection (I) of this section shall not prohibit any licensee or person from disclosing any information required
10

TT 28
29
)J

be kept confidential-

(n) for the purpose of legal proceedings under this part or any other law;

(b) to {he extent that it may he necessary to do so for the purpose of this Act or any other law; or
(c) to another employee of the Inspectorate,

31

C4944 2008 No.

Petroleum Industry
(3) No member
Of employee

of the Inspectorate s11.all,for perscpal gain,

by

2 3 4 5
6

make use of any information acquired

him in the

COijfSP

pf his dunes for a

2!

period of five years after the date on which he ceased to be employee.

member or

(4) Any person who contravenes subsections shall be guilty of an offence and liable on conviction

(0 and (3) of this secrlon

10-

7 8 9 10 11 12
Acuvirles rcql.l'rillg a Cnmmercial Licence.

(a) the forfeiture ot'any proceeds accruing to him or her as ~ result afthe

said offence; and

(b)

a fine not exceeding NS,OOO,OOQsubject to regulations made by \fie

Of

Minister or to imprisonment for a period not exceeding two years such fine and imprisonment. Chapter fl - Commercial Licensing 308.-(1)

rc both

13 14 15
16

No person shall, except in accordance with a commercial licence

issued by the Aurhority.-;

(a) own and operate a petroleum

downstream

pipeline transportation

business,
(b) own

17 18 19 Xl 21 22 23 24
25 lb

al1l..lrun a oownsrream

petroleum rransportarion network business;

(c) undertake the supply of downstream products or natural gas; or (d)

own ~-.a

downstream products or natural gas distribution network

business. (2) No pel1l?nhaH petroleum processing engage in refining, marketing,

or operating any

or transmiaing

plant, terminal or premises without a

commercial license issued by the Authority.

(3) Subject to a formal consultation process

held between industry

participants, stakeholders and the Authority, the Authority may, by regulations

issued pursuant to this Act, prescribe additional activities to be undertaken

only on the basis of a commercial licence.

27
2B

(4) Any person who at the commencement of this Act was engaged in any activity regulated under this Act shall,

79
3:J

wutnn sixty days of the commencement

of th.is Act, apply to the Authority for the issuance of an appropriate commercial
license for the transportation, distribution or supply of gas, as the case mt\:ybe.

31

Petroleum Industry
(5) Any person who2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 2J 21 22 23 24 25 26

2008 No. C4945

(a) engages in any of the activities set out in subsection (1) and (1) of this section without a commercial license; or
(b) engages

in any activity that becomes subject to licensing under

subsection (3) or (4) ottbis section without a commercial license; or

(c) in applying for a commerciallicence,

knowingly makes a statement

which is false or misleading in any material particular: shall be guilty of an offence and liable to a fine of N30,OOO,OOOsubject to regulations made by the Minister, or if a natural person, to imprisonment for a term of two years, and, after due enquiry and arrangements to ensure that

customers will not be adversely affected, the Aumonty may, in addition, suspend or revoke the license in question. (6) Proceedings in respect of any subsection (4) of this section shall be commenced only by the Authority. (7) For the purpose of this chapter, the term "operator" shall refer to any company licensed by the Authority sector. 309.-(l) Subject to section 308 of this Part, and upon the approval of the by a qualified person and the payment of the
Transportation
Pipeline Owner. 10

operate in the downstream petroleum

Authority of an application

prescribed fee. the Authority may grant and issue to that person a transporranon pipeline owner licence with the exclusive right to own, operate and maintain a transportation pipeline within a route as defined in the licence.

(2) In considering an application for a transportation pipeline owner licence in respect ofthe downstream petroleum sector, the Authority shalt consider the economic viability of, and the potential demand for the use of a transportation pipeline. 310. The transportation pipeline owner licensee shall undertake the
Ohliga(ionsof

n
28 29
))

activities contemplated by the transportation pipeline owner licence in a manner best calculated to comply with the obligations
{a} operate and maintain economical,
(0-

'transoonacon
Pipeline

"

Owner.

sate and reliable transportation

31

infrastructure, taking into account any strategic plans that may be formulated

-.-------.~---.
C 4946 2008 No.
1 by the Authority;
(b) manage supply shortfalls and where feasible, meet requests of customers

Petroleum Industry

2
3 4

for transportation above contractual volumes;

(c) shut down its transportation

systems in emergencies

and in order to

5
6 7 8

carry out maintenance;

(d)

manage the transportation pipelines as a reasonable and prudent

operator; and
(e) do nothing that, in tIle opinion of the Authority, prevenrs, restricts or

9
Clll1uhioos
Applicable.

distorts competition. 311. In addition to such conditions as may be imposed by the Authority under the terms of this Act, a transportation pipeline owner licence slu\l[(a} not supply petroleum products or gas to customers directly on its own account;
(b) conduct its licensed activities safely and reliably incompliance

lO Ll
12

13
14

with

IS

any law then in force and prescribed pursuant to thi:; or any other Act;
(c)

health and safety regulations made

16 17
l8

have cue-regard for the effect of its licensed activities on the

environment and comply with requirements for environmental protection,

management,

19 Xl 21 22
23
Tranxpon NCIW(lrk Operator License

and restoration under this Act and any law in force at the

lime; and (d) mark, maintain and secure the boundaries

of

any pipelines and

associated infrastructure constructed under (he terms of its licence and any law then Irrtcrce.

24
25 2fj Z7 28

312.-(l}Subject

to (he provisions of section 308 of this Part, and upon

approval by the Authority of an application by a qualified person and the payment by such person of the prescribed fee, the Authority may grant and issue to that person a transportation network operator licence autl!:orizing the conduct of

activities specified in the licence, including->

(a) the conveyance of gas through the transportation

29
30 31

network; network;

(b) balancing the inputs and off takes from the transportation (c) providing third

party access to the transportation network; and

Petroleum Industry 1 2 3
4
(d) charging for the use of the transportation

2008 No. C 4947 network. network operator

(2) The Authority shall grant only one transportation licence within a geographically

defined area to a single network: operator;

provided however. that the Authority may issue similar licenses to other parties for the operation of isolated or dedicated pipelines. 313. The transportation network operator shall exercise the rights and
General Duties of a Transportation Network Operator.

5
6 7 8 9

obligations imposed on it in a manner best calculated 10(a) operate an efficient and economical transportation

network for the

safe and reliable conveyance of gas in such a manner as is designed to meet all reasonable demands for gas;
(b) operate

10 11
12 13

nominations

and balancing mechanisms and an equitable whenever technical or operational

curtailment

of gas transportation

expediencies so require;
(c) ensure equitable and transparent access to the transponation

14 15 16
17

network;

(d) establish and publish terms and conditions for aceess to the network; (e) enter into agreements with transportation pipeline owners, distributors,

and, wher~ epprspdate, wholesale customers, for connectiqrilf'~nd operation of the transportation network. 314. Subject to the provisions of this Act and to facilitate the conduct of its licensed activities, the Authority may grant to a transportation operator(a) the power to request for and obtain from all licensees, information
Powers of a Transportation Network Operator.

18 19 Xl
21 22 23

network

required to operate the nominations and balancing mechanism, to operate the network or to facilitate competition;
(b) subject to any restrictions

24
25

or conditions imposed by the Authority the right to

26
27

with respect to both the level and structure of its charges,

recover, onthe basis of an invoice, expenses reasonably incurred in undertaking its licensed activities; and
(c) the right to purchase gas for its own operations for purposes such as

28
'E
3)

testing and commissioning line fill.

of facilities, for compression purposes and for

31

-._'

------~-,-.--

C4948 2008 No.

Conditions
applicable to a Transportation Network Operator

Petroleum Industry
3H. In addition to such conditions as may be imposed

by the Authority

2
3

pursuant to this part, a Transportation Network Operator Licence may include an obligation to develop market rules in accordance with the I'rovlsiotls of this
part. 316.-(l) Subject to section 308 of this Act, and upo!! the approval by the

Licence.

4
Supply

5
6 7 8 9

Licence.

Authority of an application made by a qualified person and the payment of the prescribed fee, the Authority may grant and issue to that person a supply licence to supply gas into the downstream sector.

(2) A producer of gas intending to supply gas into the downstream sector
shall be a qualified person within the meaning of the provisions of this part and shall be entitled to apply for and be issued a supply licence by the Authority. (3) A supply licence shall authorise the licensee (vsuppler") to sell and deliver gas to purchasers of gas at any location in Nigeria.

10
II

12 13
General Duties of a Supplier.

14

317.-(1) A supplier shall undertake the activities contemplated by the

supply licence in a manner best calculated to comply with the obligations to(a) provide a reliable supply of gas to purchasers

15 16 17 18 19

on request, provided

that it is economically feasible to do so; and

(b) do nothing that, in the opinion of the Authority, may prevent. restrict

or distort competition.

Rights of a

Xl 21 22 23
U

318.-(1) Subject to the provisions of this part and iii order to facilitate
the conduct of its licensed activities, the Authority may grant to a supplier specific rights and powers which shall include(a) the right to terminate gas supply to a customer

Supplier.

in the event of non-

payment, following a ootice period and disconnection procedure specified in prescribed regulations;
(b) the right to

25
26 TI

recover from a customer, on the basis of an invoice, and

subject to any restrictions or conditions imposed by the Authority with respect to both the level and structure of a licensee's charges,
(i) all costs reasonably incurred in the supply of gas, inclusive of the

28
29

30 31

cost of gas, the cost of transportation (ii) licence fees;

and distribution of gas; and

Petroleum Industry 1 2 3 4 5 6 7 8
9
(c)

20011No, C 4949

the right to enter a premises to remove its meters, for the purpose of

reading meters, to lest metering equipment and to disconnect customers, such entry to be undertaken in accordance with a metering code which shall be issued by the Authority. (2) The sale of gas to wholesale customers by the holder of a supply licence shall be subject to tile provisions of litis Act. 3l9,-(I) In additionto suchconditionsas may be imposedby the Authority
Conditions Applicable to a Supply

pursuant to this part, a Supply Licence shall(a)

ensure a reliable and efficient supply of gas to customers on request,

Licence.

10
11

provided that it is economical to do so;

(b) request security or apply a credit scoring methodology approved by

12
13

me Authority in deciding whether supply is econornical;

(c)

subjectto safety and networkcapacityconstraints,supplygas on request

14 15
16

to a customer who is willing and able to pay for connection to the transportation network;
(d)

conduct licensed activities safely and reliably in compliance with any

17 18
19

law in force and any health and safety regulations issued pursuant to this or any other Act;
(e)

comply with customer protection measures in accordance with the

20 21 22 23 24 25 2fJ
II

provisions of of this part. 3~O.-(1) Subject to section 308 of this Act, and upon approval by the Authority of an application made by a qualified person and the payment of the prescribed tee, the Authority may grant and issue to that person a distribution licence granting the exclusive right to own and operate a distribution system and to distribute gas within a local distribution zone. (2) The holder of a distribution licence shall be entitled to apply for, hold and operate a license for the exclusive supply of gas within the local distribution zone to customers that are not wholesale customers. (3) In considering an application for a distribution licence, the Authority shall consider the economic viability of, and the potential demand for its use. (4) The geographicallimits of each local distributionzone shall be defmed
Distribution

Licence.

28 '19 )) 31

------~-.-.. . -.
C 4950 2008 No. 1
Obligations of a Distribution

Petroleum Industry
in the relevant distribution licence. 321. The holder of a distribution licence shall undertake the activities contemplated by the distribution licence in a manner best calculated to comply with the obligations(a) to develop, operate and maintain an economical distribution network for the safe and reliable conveyance of gas;
(b) to ensure a reliable and efficient distribution

2
3

Licensee,

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
2J

of gas to customers on

request, provided that it is economical to do so;

(c) subject to safety and network capacity constraints, to distribute gas on

request to any customer who is willing and able to pay for connection to the distribution network;
(d) to conduct licensed activities safely and reliably, in compliance with

any law in force and any health and safety regulations issued pursuant to this or any other Act;
(e) to connect all customers within its local distribution zone in accordance

with prescribed regulations, if it is economically

practicable to do so; of the network

if) to co-operate
code:

with the Authority in the development

(g) to offer and publish terms and conditions of access to its distribution

network as required;
(h) to comply with customer protection measures in accordance with the

21 22 Z3
Rights ufthe Distribution Licensee.

provisions of this Act; and

(i) to do nothing to prevent, restrict or distort competition.

24
25

322.-(1) Subject to the provisions of this Act and in order to facilitate

the conduct of its licensed activities, the Authority may grant the holder of a distribution licence the rtght-.

26 Z7 28
29

(a) to enter the premises of a customer in order to read meters, to test

metering equipment or to disconnect customers and remove meters;

(b) to recover, on the basis of an invoice, costs reasonably incurred in the

30 31

provision of appropriate Infrastructure, subject to any restriction or conditions imposed by the Authority with respect to both the level and structure of a

Petroleum Industry
Distributor's 2 3 4 charges.
COStS

20llS No. C 4951

(2) Reasonably incurred

referred to in subsection (I) of this section

shall include any amounts paid to the Authority as fees. 323.~( I) In addition to such conditions as may be imposed by the Authority pursuant to this Act, or that may be prescribed by regulations issued pursuant to this Act, each distribution licensee shall(0) conduct its licensed activities in accordance

5
6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Zl 28 29 l) 31

Conditions Applicable to a Distribution

Licence.

with safe and reliable

standards and in compliance with prescribed management, health, and safety regulations issued pursuant to this Act or any other Act;
(b) having due regard

to the effect of its licensed activities on the

environment,

comply with any requirements for environmental protection,

management, and restoration under this Act and any law in force;
(c) mark, maintain and secure the boundaries of the pipelines constructed

as prescribed; (d) comply with customer protection measures set out in chapter 2 of Part V of this Act. (2) The holder of a distribution license shall connect customers within its local distribution zone in the manner prescribed by regulations issued pursuant to this Act, provided that it is economical and practical to do so. (3) The Authority shall settle any disputes that may arise in relation to the distribution network. 324. The holder of a distribution licence shall consult stakeholders on proposed development projects within its local distribution zone and shall duly consider all representations 325.-(1) received. Maners Relatingto Licence
Applications.

Arrangements for Gas Distribution.

The Authority may grant, renew, modify or extend commercial

licenses issued further to Section 308 of this chapter. (2) An application for the grant, renewal, modification or extension of a commercial licence shall he presented to the Authority in the form and manner and accompanied with the prescribed fee, if any, and any other information or documents that may be prescribed under any regulations issued by the Authority. (3) The Authority may furnish any person applying for the grant, renewal

C 4952 2008 No.

Petroleum Industry
or extension of a commercial licence with such non-confidential

information as

2
3

the applicant may request which may facilitate the filing of the application. (4) An applicant for a commercial licence who is an affiliate of a body corporate that has applied for or holds any other licence shall disclose such interest to the Authority in its application. (5) The Authority shall consider all information presented in respect of an application for
OJ

4 5
6

7
8
9

commerclal Iiccnce including representations uom interested

parties in favour of or against the granting, extension or renewal of the said commercial licence: and shall furnish any applicant for a licence with any

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Advcnisemt:nl of Licence Applications.

other information that may facilitate the filing of an application. (6) Where the Authority has decided to grant a commercial licence it

shall publish a notice of its decision in the forrn and in the manner prescribed in regulations issued by thl: Minister on the recommendation of the Authority, for

the purpose of regulating the commercial aspect of downstream gas and products as (he case may be. (7) Where the Authority has decided to decline <Inapplication, it shall

inform the applicant of its refusal of the application and its reasons for such refusal, and shall state a reasonable period of time within which the applicant in respect of the application can make further representations decision. (8) The Authority shall duly consider any representation made by an in respect of the

applicant for a licence in respect of the refusal of a licence application. (9) No further application or representation shall be made by an applicant, or considered hy the Authority in the event that representations in respect ofa

refusal of an application have been considered and rejected by the Authority. 326.-(1) When an application is made for a commercial licence under

26 27
23

the provisions of this chapter, the applicant shall publish a notification of the application in at least two Nigerian newspapers with nationwide circulation, in the form and manner, for as many times, for such period or periods and in accordance with any periods of time that may be prescribed in any regulations issued by the Minister on the recommendation of the Authority.

29
JJ

31

Petroleum Industry

2008 No. C 4953

(2) Following the publication of the notification of the application, 2 3 4 5 6 7 8 9 interested parties may comment on or make representations to the Authority in respect of the application in accordance with the prescribed periods of lime in the regulations, which periods of time must be indicated in the published notification. (3) Following the grant or renewal of a commercial licence the applicant shall publish the noriflcarion of the grant or renewal in at least two Nigerian newspapers with nationwide circulation, for as many times, for such period or periods that the Authority may prescribe in accordance with the prescribed

10 regulations. 11 12 13 14
15

327.-(1) The Authority shall make recommendations to the Minister to issue regulations applicable to the commercial licensingof downstream products or gas as the case may be, which regulations shall include, but shall not be limited
10-

Licence Regulations.

(a)

the procedure, form, criteria, periods of time, and fees for licence

16 17 18 19 :l) 21 22 23 24 25
26 Tl

applications, including any criteria for the grant of the licence, and the grounds on which licenses may be refused;
(b)

the duration of licensesand the procedure, form, criteria and timescale

for their renewal;

(c)

the procedure, form and periods of time for publishing notification of

a licence application or renewal;

(d)

the procedure, form, criteria and periods of time for licence

modifications, includingthe process for changingstandard and special licence conditions and the public consultation process required as part of the licence modification procedures;
(e) the procedure, form, criteria antitimescalefor the transfer or surrender

or suspension or revocation of a licence. 328.-(1) Conditions included in a commercial licence issued pursuant to this chapter may require the licensee to(a) comply with any directionsgiven by the Authorityin-relation to matters
Licence
Conditions.

28 29
J)

31

specified in the commercial licence;

C 4954 2008 No.

(b) undertake

Petroleum Industry
or refrain from undertaking anything specified in the

commercial

licence; anything

3
4 5 6 7

(c) secure the approval of the Authority prior to undertaking

specified in the commercial licence;

(d) comply with industry codes, standards and market rules; (e) comply whh price or revenue restrictions imposed by the Authority in

accordance with the provisions of this Act;

(j)

8
9 10 Ii 12 13 14 15 16 17 18 19 2lJ 21 22 23 24 25 26

provide information to the Authority;

lISC

(y) restrict the (II) prepare

of certain types of sensitive information; true and sufficient annual

and submit to the Authority

statements of accounts for each licensed activity in such form, and containing such particulars as the Authority may require and produce such books upon the request of duly authorized officers of the Authority; (i) adhere to undertakings made within a business plan submitted as part of the commerciallicence application process; and periodical

(j) prepare and submit to the Authority such information

reports as the Authority may require;

(k) publish terms of access to its transportation

or distribution pipeline or

network as the case may be;

(f) operate its licence according to the standard of a reasonable and prudent

operator. (2) Conditions applicable to a commercial effect or may be modified under circumstances licence. (3) Commercial licenses granted by the Authority to licensees of the licence may cease to have specified in me commercial

same class shall contain similar conditions, conditions for that class.

which shall be standard licence

n
28

(4) Any differences in conditions contained in commerciallicenses

issued

29

to licensees of the same class shall only be for objectively justifiable reasons, which shall be communicated to the licensees if they so request. (5) Subject to the provisions ofthis Act, the Authority shall have the

.n
31

Petroleum Industry

2008 No. C 4955

power to include special conditions specific to a particular commercial licence

2 3
4 5 6 7 8 9

or licensee provided that such special licence conditions shall be designed to meet specific circumstances relation to another. (6) The Authority may specify a date after the grant of a commercial licence on which licensed activities shall commence. (7) The Authority may provide lhat a licensed activity shall be exclusive for all or part of the period of the licence, for a specific purpose, for a specified geographical area or route, or for any combination ofthe foregoing. 329.-(1) Subject to the approval of the Minister and at such time as the
Separation Certain Licensed Activities. of

and shall not unduly disadvantage one licensee in

10
J1

Authority determines that it is practical and necessary to facilitate competition, the Authority may introduce licence conditions, requiring the separation of licensed activities, which conditions may prohibit a licensee from also holding commercial licenses of another type. (2) Sales between a licensee and an affiliate of that commercial licensee shall be undertaken in a manner that(a) ensures that the transfer pricing between both entities is at a transparent

12 13 14 15 16 17 18
19

arms length basis; and

(b) reflects the pricing and tariff principles contained in the appropriate

Xl 21
2Z

sections of this Act. (3) No licensee shall directly or indirectly acquire an interest in, purchase, or ceberwise affiliate with another licensee or an affiliate of a licensee without the prior written consent of the AlJthority. 330. Except on the basis of objectively justifiable and identifiable
Nondiscrimination.

2l 24 2S 115 27
28

differences which shall be communicated to all customers, licensees shall not discriminate between customers or classes of customers, Of their related

undertakings, or network esers, in respect of access, tariffs, prices, conditions or standards of service, unless expressly permitted by the Authority,

29 Xl 31

331.-(1) A commercial Licence issued pursuant to this chapter shall be

valid for a period of 25 years in the first instance and may be renewed for such further periods as the Authority may determine, subject to the criteria and in

Duration of
LIcence.

C 4956 2008 No. 1 2 3 4

Assignment or

Petroleum Industry
accordance with the procedure prescribed by regulations issued pursuant to this Act, provided however that anyone extension shall not exceed twenty-five years. (2) The Authority may set new or different licence conditions upon the renewal of a commercial licence. 332.-(1) its commercial A licensee shall not, directly or indirectly, assign or transfer licence or any rights or obligations arising from such licence

5 6 7 8 9 10 1i 12 13 14 15 16 17 18 19 20 21 22 23

Transfer of
LIcence.

without the written consent of the Authority. (2) An application for the assignment or transfer of a commercial licence shall be made to the Authority, in accordance with prescribed regulations. (3) In determining transferred, whether a commercial licence maybe assigned or with such

the Authority

shall follow the same procedures,

modifications as may be appropriate in the circumstances,

and apply the same

rules and criteria and consider the same issues as if the party to whom the commercial licence is being assigned or transferred is itself applying for a new commercial licence, and shall, in so doing, duly consider the representations made to it by third parties in respect of the application. (4) Subject communicate to subsection (3) of this section, the Authority shall

its refusal or approval of an application for the assignment or to the licensee in writing.

transfer of a cornmercialltcence

(5) The Authority shall advise the applicant of the reasons for its refusal of an application for an assignment or a transfer of a commerciallicence, shall state a reasonable timescale within which further representations made by the applicant or by third parties in respect of the application. 333.-( 1) The Authority may modify, suspend or revoke any commercial and may be

Amendmcm
or LIcence.

24 25 26 Tl 28 29 :J) 31

licence conditions or include additional conditions, subject to the provisions of this Act. (2) The Authority shall not modify, suspend, revoke or include additional conditlons'to a commercial licence unless it hasindustry participants and stakeholders,

(a) consulted with the Minister,

giving reasons for the proposed modification, suspension, removal or addition and having properly considered any representations or objections' raised;

Petroleum Industry

2008 No. C 4957

(b) given the affected licensee written notice of its intention to do so

2 3 4 5 6 7 8 9 10
11

together with a draft copy of the proposed licence modification; and

(c)

given the licensee an opportunity to make written submissions to the

Authority within the time period specified in regulations issued pursuant to this Act but within thirty days from the date of the written notice. (3) The Authority shan not modify, suspend, revoke or include additional conditions to the licence conditions of any type of licence if(a)

such modification,suspension, revocationor inclusionwould adversely

interfere with the performance of contractual obligations assumed by the licensee with customers on the basis of such licence; or
(b)

result in any licensee being unduly disadvantaged in competing with

12 13 14

another licensee or licenseesof the same type or with suppliers of competing fuels, in the case of a supply licence. (4) The procedure to be followed in modifying, suspending, revoking or

15 adding any Licenceconditionsshall be as containedin the prescribed regulations. 16 (5) A licensee may appeal against a proposed licence modification subject

17 to the provisions of this chapter. 18 334.-(1) Where it appears to the Authoritythat a licenseeis contravening,

19 has contravened or is likely to contraveneany of the conditionsof the commercial 20 21 22 23 24 25

'}fj

,,'

Contravention

licence, the Authority may publish a notice in such manner as it considers appropriate to draw the attention of other persons affected or likely to be affected by the contraventionor threatenedcontraventionof the said commercial licence(a) (b) (c)

Enforcement of Licence Conditions.

specifying the actual or potential contravention; directing the licensee todo, or not to do, such thingsas it may specify; specifying the remedy and the timescale for compliance: and

Tl

(d) notifying the licensee of its intention to issue an enforcement order.

28 'E JJ 31

(2) The licensee and any other interested party shall be entitled to make representationsagainstor in support of the enforcementnotice by a date specified in the notice. (3) If a licensee fails to comply with a notice served pursuant to subsection

-----~---C 4958 2008 No.

Petroleum Industry
(1) of this section, the Authority may issue an enforcement order. Failure to

2 3 4 5 6 7 8 9
10

comply with an enforcement order shall constitute an offence. (4) The Authority shall not issue an enforcement order if(a) the licensee is able to demonstrate to the satisfaction of the Authority

that it is not contravening or about to contravene a condition of a commercial licence; or

(b) where the contravention was not intentional and deliberate, the licensee

has ceased to contravene a condition of a commercial licence . (5) Where it is found that the licensee deliberately contravened a provision of the license the Authority may, if it so wishes, impose an appropriate penalty in accordance with prescribed regulations. (6) If the licensee fails to comply with an enforcement order the Authority may institute legal proceedings against the Licensee and before the Federal High Court to ensure compliance. (7) The Authority may, subject to the regulations made pursuant to this Act, adjust from time to time the penalty mentioned in subsection (4)(b) of this section in order to reflect current rates of inflation. 335.-(1) The licensee may, in accordance with conditions prescribed by

II 12 I3 14 15 16 17
Surrender of

Licence.

18 19 >J 21
22

regulations issued pursuant to this Act, surrender the commercial licence if(a) the licensed activity is no longer required; (b) the licensed activity is not economically justifiable; (c) the licensee has failed to commence licensed activity within the time

23 24 25
26 Tl 28

frame specified in the commercial licence;

(d) another qualified person is willing and able to assume the rights and

obligations of the licensee concerned in accordance with the requirements and objectives of this chapter; and
(e) where applicable, the licensee has complied with all requirements

of

the law in respect of relinquishment and reclamation of land.

and decommisslonlngof

installations

29 30 31

(2) Where the licensee has commenced operations,

activities

and has ongoing

it shall, unless a shorter period is stipulated in the commercial

~''pelrJ)leUm [iuiustry

"'.':....... . 200B NO. '- ~""

f
3 4

'ticenC~:

giv~;:tl1eAuthbtity

at least twelve months notice in writing of its

2 .Irltention to cease its activities.

'336;TIleAuthor'ity mayafter ghiing (six) months notice of its intention,

suspend or revoke'i' commerclaltlcence

if the licensee has breachea

or continues

Revocation or Suspension of Licence.

5 ; to breach
6

a cc)nditibn of the licence or a regulation

may be revoked-

or a provision of this Pan,

where such condition or provision stipulates that a breach thereof shall make

7: the l'icence' iiable to'revocatton or 'suspension, as the case may be:

Ii
9

." 'sst: licence

(a)

Grounds roc,

if the lieensee

becomes insolvent or bankrupt or 'enters

Into an
as

the

10

agreement or composition with' its creditors or takes advantage of any for the benefit of its debtors or goes into Ilquidation.rexcept

Revocation of a Licence.

llena'ctment 12 13 14
15 16 l7

part of a scheme for an arrangement or amalgamation; (b) upori tile' transformation 'or dissolution of the company or corporation

.-unless it is for the purpose of amalgamation or reconstruction and provided

the prior consent of the Authorlty'bas been obtained; or (c) if f.-"lk:ensee fails to 'commence activities within the period of time prescribed in the licence. j38i'Any

18 19
3)

person

engaged in activities in the downstream Petroleum industry be licensed by the Authority pursuant'to this' part shall

Mandatory Registration
with the Authority.

whicha~e~dqulredto

register with the'Authori'ty and provide such information concerning th!'activities-

zr '
22
23 .

otthe undertaking as may be prescribed by regulations issued'purJsu'ant'tb this

Act. 339.-(l)The Authority shall establish, maintain

and 'make publicly

Register
Licenses.

Dr

24 25

available a register of

an commercial

licenses issued, revoked, suspended,

surrendered or withdrawn and all modific'ations and exemptions granted for the-

if}'; .. urposes Of this Act.' p

Tl

(2) The officer registering the issuance of a comrnercial Ilcence or any

:zg '~imodificat;i'6rii;'or exemption 29

l)

as contemplated

under subsecuon.G) of this section

shan -rbquirean

acknbwledgmenr

of the receipt of a copy of the licence

modification or exemption from the person accepting it in such fordt as may he prescribed by Regulations issued pursuant to this Act.

31

C 4%0 2008 No.

Preparation of Licenses and Duplicates.

Petroleum Industry 340.:-(1) All commerciallicenses orexefll-pti(m~gf~. y ~~,u,Utori1Y h

2 3

under this chapter shall be prepared in duplicate. one copy~j~~~IIY~ the Authority tp the licensee and the other

~Y

~~,ir~brt~e AU,~or;w"o be bound ,_ ,

fe,.

4
5 6
Fiscal Reliefs for a Project or Strategic National

I-!Pin E! book of the approprtare eeries and seri{lJ1Y numbered.

(2) The Authority 'hall not prepare a have peen paid,

ucence until,!he ,p""cJilltoil

7 8 9
10 11 12 13 14 15

341.-(l)Where project is approved by theFede~Ji.~,:,~~pf:as a a

project of strategic national importance, the Authority ma:~ ~c~end

to t4e

Importance.

Minister to issue regulations for appropriate fis~al reliefs to such project.(,

(2) AIJYfiscal reliefs given under subsection (1) ofthi~ l~tiqn shall ~

limited to the specific project and m~y be subject rosuch speJ::itled,C9nditioqs as may be deemed necessary. (3) Where a project that has been given fiscal relief in accordance with, the provisions of this section undergoes expansion, not be deemed to extend to such project expansion.

tnt said flscal ~J)ef shal~

Reg,i~tcr or Memorials

16 17 18 19 20 21 22

342.-(1) The Authority shall maintain a registry within which registers

of memorials of all commerciallicenses issued, by n are kept. entries of ~.

(2), The memorial of any commercia! llcense shall c9n~p extensions, transfers, surrenders, revocations, exemptions, forfel of address, changes of name or any other matter affecting the ~~ws interest in any licence gfven to the dates of such entries.

'If Dr any

by the Authority in respect ot thfs ~Q.rt:.111,~4~j~I0f1:_

Effect of Registration.

23

34J. The memorial of any commercial license, as contained jn the registry"

'-,'

24 IS
2fj

m,aintained by the Authority in accordance this Act shall be conclusive evicence-,

with l1le provisions of ~til?q 34~ of

(a) that the rights described therein are vested in the person namff'~~_

n
28 29 3)

licensee; and
(b) of the conditions and other provisions

towhich the licensee is ~u~ectJ'

so Jar as the same are required by any provision of this Act t~.~ specifiod.in the document.

Pettoleumliidustry
344.-(1) 2 3
4

The registry and the registers required under sections 339 and
,

Public Access

342 shall be readily accessible (0 (he public during (he hours and upon the days designated by the Authority,

'"""

Registry.

,til 'Upon the paYrrleni of the prescribed fee. a member of the public shan
be entitled to obtain a certified true copy of any document or record contained In tti~ registers maint~'ined by the Authority in accordance with ~heprovisions of this Act. 345.-(1) Where(a) Disclosure of Confidential or Other Intormauon.

5 6
7

8 9 10 11

any'member of the Board or employee ofthe Authority in the course

, of his' or her duties, acquires information relating to the financial affair~ of any person, or to any commercial secret, or (b) any otberperson indirectly 'acquires such or other information required to be :Rept'Confi~ential under the provisions of thi~ Act froin any member of the Board or employee of the Authority, beor she shall not for make use of such information, nor disclose
it

11 13
14 15

to any other

iii person.
17 ' 18 19

'(2) The provisions of subsection

(1)

of this section shallnot prohibit a

person front disclosing Information referred to in that subsection except=

(a) for the purpose of legal proceedings under this Act or any other law;

xi
21

or "
(b)
.. , ,

to the extent thatit may be necessary to do so for the purpose of this

' i ,
,L", '

i1
Z3 24 25 26

Act or any other law; or

(e)

to another' member 'Ofthe Board or employee oithe Authority,

(3) No member Of theB~ard or employee of the Authority shall, for personal gain; make use of any lnformatlon acquired by him in the course of his duties for a period of five years ;after the date on which he ceased to be a me'mbh of
(4)

zr
28

th~ or employee Briard

of the Authority,

Any person who contravenes (hi, section shall be guilty

of an offence
or to

29 . and Hable on conviction to the forfeiture of any proceeds accruing to him on ~ 31 account of the contravention and to a fine not exceeding "5,000,000 iiupriscnment

for a period not exceeding two years or to both fine and

...

-. -------~----~

Petroleum Industry ,
imprisonment.

2 3 4
5
Relining.

PART V ---, DOWNSTREAM PRODU?S

", .J

Chapter / - Operations, 346. In this Part, "operator" means a company workingjn*edown~

'I.

.1',

'

,_!

,..

petroleum industry .

",

,jil

6 7

347. The principal oper~tors in the f~fi,-':I~gsector o~i~~ d9,~.~~ sector shall be the refining companies.

8
9 10 11

348. Every refining company shall-

_ ,::;, I

(a) supply to the domestic market refined petroleN"'l;~o~ucts '..

'

of such

quantities as may be specified by the Authority, at the benchmar.~price set

"

,,'

by the Authority.
;(b)

12 13
14 15

undertak~ hatever investments, thatare ~ired w

'" tp I.!p:~eits refi~

it~ obliga,tions to ~e

and to increase its refining capacity in .order Authority under this section;

~9 ~l.fiJ

(c) from the inception of its licence, have opet:l, cFe~~:to,log~ti,c,sJacilities a

16
17

such as harbours, petroleum bulk storage and transportation

facili,ties ~Dd . '_., pumping installations at any refinery not operated by, or transferred to it, Jn
,

18

accordance with the terms of this part, and aq~rice~"PfroVed?r

~ ,Al;I,~;

N~ljunal Transport Logistics Company.

. :D
ZI
22

19

(d) OWnany and all depots attached ro.rhe refinery ~~~t it operates .. -'

349.'-(1) On the effective date, or no later than one month after the d3te
l' J
'

of incorporation,

the Minister shan transfer-

(a) the ownership of the product pipelines ~n~.del?o:t.~ystemp former)y

"

23
24 25

owned by the Petroleum Products Marketing Company: and

'.

(b) the ownership of the gas transportation

pipelines formerly owned /;)y , . '

the Nigerian Gas Company to a limited liability qompa,ny to be.known as Jhe

,

26 ~
28 19

..

National Transport Logistics Company. (2) The National Transport Logistics Company shall be wh~lJr ,o~~ the Nigerian state. (3) The Authority shall issue a transportation the National Transport Logistics Company. pipeline o,w?,lrr.!i~~,Jo :,

7J

11
3i

(4) The product pipelines and depot systems transferred to the National

:,

.,0"

'"

, . Petroleum-Industry
1 ,rraQ~~ort:Lpgistics

2008, No. C 4963

Company in accordance with the previsions of subsection be divided into segments and each segment concessloned

2 3
4 5

(1) of this sectionshall

o1fFto facility management

companies, who shall be selected in accordance

of the

with guidelines to be specified by the Minister on the recommendation Authority and who shall he in charge of

rbe management and operation of the

6
7 8

.s~~~ of tne.said product pipehncsnd depot systems that has been a concesioned
QUpo,/.h~!ll. (5)The gas pipeline system transferred to the National Transport Logistics,

~; .Company.in accordance with the provisions of subsection (1) of this section, 10 shall be licensed out to a gas facility, management company which shall be in

11 charge ofthe saidgas transportation pipeline system. 12 350.-(I) The Authority shall grant a facility management company only
Facility Management Companies.

131 one transportation pipeline license in respect of a geographically defined segment

14 15 of the, ~~wn~t,re~ products pipeline and depot system owned by the National as specified in Schedule of this Act. and in

Transport, Logistics Company,

16 17 18 19
2ll

accordance with agreed terms and conditions, which shall include an obligation
O;~, te, p

part of .the facility management

company to repair and maintain the

pipeline and depot system 10 which this Act applies.

,,(2) Each facility management company shall operate the regional storage
depots which are adjacent to the product pipelines network operated by it. (3) The Authority shall grant one transportation pipeline license in respect

21 22
23

of the gas transportation pipeline system, as specified in the Eighth Schedule of

this Act. (4),Transport facility management companies shall possess(a)

24 25
")f, II 28

in the case of downstream products, a storage network that has the

capacity. capabilities and geographic save to meet in a cost-effective manner the storage and depot loading and off-loading needs of oil marketing companies in the regional downstream petroleum market it serves; (b) the possession of requisite facilities at its marine jetties to meet the import reception needs of the oil marketing companies in a cost-effective manner; and

29 II 31

.-------.--.-~
C 49tl4 200lI No.
(c) in the case of gas transportation.the

capacity, 6ipa1:nliififfldgMgraphic
': t.

2 3 4 5
Open Access.

scope to meet the needs of the downstream gas market. (5) No regional stotage depot company shall

engage, dM~1ir llitJirectIy,

: ! ',~

in any other operational activity in the downstream petfoll!ulli seGtlH: 'With the exception of bulk transportation. 351.-(1)

6 7 8 9 10
II

A licensed petroleum marketing company ad! a reilhlnJ'OOmpany

shall be given access to the regulated petroleum pipelines the facility management companies-,
(a)

s:Y~tethciPt!rated by

in the manner prescribed by this .Alctand other-regulations; 'Sbidellnes

viable terms as may 'be' derel"rlU~ y the b

or directives from the Aurbcrtty: and

(b)

an such commercially

12 13 14 15 16 17 18 19

Authority from time to time. (2) A licensed petroleum marketing and refinery access to aU regulated jetties and loading facilities and

cbmpgnr !fUlWbe given

sior.t~e'~ bpentted
,;1,
j

by the facility management companies and any other lice'nsed;te~dtla1 storage depot companies(a) in

the manner prescribed

by

this Act anti other regtilatidriS artI Clitectives ' "i- ,

form the Authority; and

(b) on commercially viable terms as may be determbred tJYthe Authority

;ro
21 22 23 24 25 26
TI

from time to time. (3) Access to the petroleum pipelinessystem and' to the Jetties leading

facilities referred to in subsections (1) and (2) 6fthiss'ettiori.'sha.HHe'SubJect to(a)

the capacity in the petroleum products pipeline

sysem Which shall be

shared among licensed petroleum marketing proportion to their needs;

(b)

and retihil1g companies in

the capacity in all the jetties; import terminals, lo8ding'fililities and 1ttxJllUrectives marketing

28 29 30 31

storage depots to which this Act, reguiations,j~tiJdelines emanating thereof apply, which shall be shared among the ~ and refining companies in proportion to their needs;

(4) Where any licensed petroleum marketing company 6ndlnmg company

Petroleum'lndustry

No. CiW6S

1 2 3 4 5 6 7 8 9

isgiven conuacred capacity for a period ttl ~ set by the Authority and fails 'to
utilise all or part of the contracted capacity, the sali!. marketing' or refining company -sbJtIl forfeit such unutilised capacity where there are ether parties willing and capable of utilizing such capacity; t6) Where any licensed petroleum marketingcompany Isgiven contracted capacity in any jetty, import terminal,
Of

storage depot operated by a regional

storage depot company and.fails to utilise all or part of the contracted capacity for a period to be set by the Authority, such petroleum marketing company shall forfeit such ununlieed capacity where there are other parties willing and

10 .capabJe'ofutillsj.ngsuch capacity 11 3S2.-(1) Licensedpetroleummarketingcompaniesshallhave equalaccess

12 to alljemee leading facilitiesand storage depotsownedby the refiningcompanies 13 14 15 16,I' 17 18 19 3) 21 22 23 24 25 16 Tl 28 19

))

which are designated as regulated open access facilities by the Authority(a)

in the manner prescribed by this Act and other regulations, guidelines

cmd'dlreQtiv~srom the Authority; and f

,(b)

on oommerclally viable terms as may be determined by the Authority

from time to time. (2) Access to the jetties, loading faeinties and storage depots referred to in subsection (1) of this section shall be subject to these terms and conditions:
(a) the existing capacity in the said jetties and storage depute shall be

shared amongst licensed oil marketing and reflning companies,in proportion to their needs;
(b)

Licensed oil marketing companies that have contracted capacity in

the jetty and storage facilities of a refining company and which fail to utilise all or part of such contracted capacity for a period to be set by the Authority or more sha!l forfeit such unutlliged capacity where there are other parties willing and capable of utilising such capacity. .353.,...,(1) very licensed petroleum marketing company shalt contract E for pipeline capacity with a facility management company(a) in proportion to the petroleum marketing company's shares of the

31

domestic petroleum market;

----------,-C 4966 2008 No.

1

Petroleum Industry
(0) in the manner prescribed by this ,Act and other replatiolB,

,pidelines
:1 -:

2
3 4

and directivesfrom the Authority; and

(c) on commercially viable rerms as may be determined by thtl::Atuthority from time to time.

5 6
7 8 9

(2),Every licensed petrol~um marketing company shall6'ontract loading and storage capacity with the regional storage depet company,~
regionwhere the oil marketing company operates,. :..,~ I

in the

(a) in proportion

to the petroleum marketing company's share of the

regional petroleum products market;

(b) in the

10 II 12
13
NonDiscrimination.

manner prescribed

by

this Act apd other regulauodsJartddtfeedve8

from the Authority; and (c) on commercially viable terms as may be.determinedbythe from time to time. 354.

A1ttJlority

14 15 16 17

The National Transport Logistic Company and regiOnal storage depot

access" tariffs, prices, conditions or serviees; -exeept-cn grounds

companies shall not discriminate between customers or clasiesibt1::eustomers regarding

defined as justifiable and identifiable by the Authority. 355.-(1) Licensed petroleum marketing companies shaH bate rights of

Rights 10
Uncommitted Capacity in Private

18

19 .access to uncommitted capacity in-

Facilities.

2J 21
Ll

(a) petroleum pipelines that-are controlledby

private domestiC or foreign

.operators but deemed to be strategic to the national interest; c' (b) storage facilities that are controlled by private domestic.oe.foreign operators but deemed by the Authority-to be-strategic to,the lUtioQal interest;
{c) petroleum

Z3 24
25 26 Z1

pipelines operated, by eny of the facUity njaniWgement-

. companies. (2) The rights to uncommitted capacity in 8ubsectio~:h(1).oHhi8'Sectionshall be-

f:
-10 "

28
29
3)

(a) in the manner prescribed by this Act andother regulationsjguidelines and directives frqm the Authority; and (jJ) on commercially viable terms as.may bedetermined from time to time.

by the'Authority

31

Petroleum Industry
1 2 3
4

2008 No. C4967

I~.

356. The Transport logistic companies shall allow interconnections with the facilities of another licensee, provided that(a) the interconnection is technically feasible, and

(b) the company requesting the interconnection bears the costs of creating

5 6 7 8 9 10 11 12 l3 14 15 16 17 18 19 :ID 21 22 23 24
25

the interconnection. 357. The national transport logistic company and regional storage depot companies shall indemnify all users of their open access facilities against all losses and incidental expenses arising from the poor technical integrity of their facilities. 358.-(1) Nothing in this Act shall preclude any licensed oil marketing
Independent Pipelines and Depots,

lOOemnifJeaOOo.

company or bulk consumer of petroleum products from constructing and operating independent pipelines and depots for its exclusive usage. (2) The pipelines and depots referred to in subsection (1) of this section shall not be subject to the commercial regulation of the Authority, with the exception of section 355 which shall apply to the said pipelines and depots. (3) Notwithstanding the provisions of subsection (2) of this section, where operators of independent pipelines and depots enter into open access agreements with third parties, such pipelines and depots shall be subject to the commercial regulation and supervision of the Authority. 359.-(1) The Authority shall prescribe benchmark prices forby pipelines;

Tariff
Methodnlogy.

(a) transportation

(b) bulk storage of crude oil and petroleum products in depots designated

by the Authority as open access facilities;

(c) distribution of petroleum products; (d), marketing of petroleum products; and (e) retail.supply of petroleum products.

26 TJ 28 19 l) 31

(2) Benchmark prices for activities referred to in subsection (1) of this section shall be set according to one or more tariff methodologies adopted by the Authority for regulating prices and such tariff methodologies shaU(a) allow an operator that operates efficiently to recover the full cost of its business activities including a reasonable return on the capital invested

-----.-----C4968 2008 No.

in such business;
2 (b) provide incentives for continued improvement

Petroleum Industry

of the technical and

economic efficiency of the business;

(c) provide

4 5
6 7

incentives for the continuedimprovement

of quaUtyof services;

(d) avoid undue discrimination among categories of consumers; and

(e) gradually

reduce cross-subsidies among dtfferenr cetegories

of

consumers.

8
9

(3) In establishing tariff methodologies, the Authority shall take into account the existence of any subsidy given to the operators from which they

10 directly benefit, any favourable financing terms, and any other matter that
II impacts directly or indirectly on tariff methodologies.

12
13 14 15 16 17 18

(4) Notwithstanding subsection (2) of this section, the Atlthority shall

have the power 10 establish pricing methodologies that reflect the terms and

conditions of a contract between operators or between an operator and one or more eligible customers. (5) Prior to approving a tariff methodology the Authority Shall give notice in the official Gazette and in at least two newspapers of nationwide circulation of the proposed establishment of a pricing methodology and such notice shall(a) indicate a period within which any aggrieved

19 20
21

person may raise

objections on the proposed methodology, and

(b) the date of a public hearing the AUthority shall conduct for discussion

22 Z3 24 25 26 Tl 28 19

of that methodology. (6) Prior to the establishment shall(a) consider any representations made by applicants, operators, consumers,

of the tariff methodology', the Authority

prospective customers, consumers assoclattons. associations of prospective customers and such other persons reasonably in~'rested; and
(b) obtain evidence,

information or advice from any'petson

possessing

relevant expert knowledge. (7) The Authority shall-fix a date upon which the tariffmethedology shall

30
31

come into effec~ and it shall cause the notice of that day to be given in the

Petroleum Industry
official Gazette and published in at least one national newspaper . 2 3 4 5 6 7 8 9

2008No. C_

(8) If it appears to the Authority that a tariff methodology should be changed, it shall conduct a public hearing on the proposal to change the methodologyand give notice of it in accordance with the terms of subsection (5) of this section, indicating the period within which any persons may make representations to the Authority in connection with the proposal. (9) The Authoritymay confirmthe proposedchangesto tariff methodology after taking into account any objections or representations received in response to notices Issued under subsection (8) and shall comply with the provisions of

10 subsection(7). 11 12 l3 14 15 16 17 18 19 Xl 21 22 23 24 25
']fj

(10) Every person upon whom any duty has been imposed in connection with setting tariffs shall be so bound by the operative tariff methodologyadopted through the method prescribed in this section. (11) Every downstream operator shall display at its office a current copy of the tariff methodology applicable to such operator. (12) No downstream operator shall pass the costs of any fines or penalties incurredunder thisActor anyother lawon to theconsumersas anoperanonal cost. 360. The Authority shaJI(a)
National Strategic

administer and ensure compliance, distribution and storage of the

sroce.

national strategic stocks of petroleum products in accordance with guidelines set by the Minister on the recommendation of the Authority;
(b) determine

the amount to be charged as a levy for.the financing of the

national strategic stock, which shall form part of the retail price of each petroleum product; and
(c)

designate, in conjunction with the appropriate authorities and national

security agencies, the strategic points across the country where the national strategic stocks shall be distributed and maintained. 361. The Authority shall ensure that all oil marketingcompanies maintain operating stocks in accordance with guidelines set by the Authority. 362.-(1) The Authority shall mcntror-.
(a)
Price Monitoring. Operating Stock.

'Il

28 19 lJ 31

the prices of petroleum products applied in the domestic market to

C 4970 2008 No.

Petroleum Industry
ensure that such products are. sold at prices that do not exceed the benchmark

2 3 4
5 6

prices set by the Authority, and

(b) any activity of any operator in the downstream

sector that, in the

opinion of the Authority, is likely to adversely affect the prices of petroleum products. (2) In monitoring the prices of petroleum products, the Authority shall coordinate with the Inspectorate and other relevant authorities to(a) inspect the metering of pumps and other facilities at retail outlets to

7
8

9 10 11 12 13 14 15 16 17 18
POW~T>,

ensure they conform to the standards set by the Authority, to the extent that any distortion of such metering is likely to affect the prices of petroleum products;
(b) inspect all facilities at retail outlets to ensure that the products conform

to such quality standards as set by the Inspectorate and the Authority, to the extent that non-compliance is likely to affect the prices of petroleum products;
(c) inspect any facility used in the storage and transportation.ofeerroleum

products in whatsoever quantity, whether used legally or otherwise, to ensure that no petroleum product is transported or stored in a manner capable of creating scarcity or artificial hikes in the price of the products. 363.-(1) The Authority shall have the power to investigate any operator

19
3)

or any other person to ascertain if an offence has been, is being at is likely to be committed under the provisions of this Chapter. (2) In the exercise of the functions contained in subsection (l) of this section the Authority shall-have the power to-summon any witness to appear before it. 364.-(1) this Act may(a} e~~r'l-~ property upon which a licensed activity Any person(s) authorised by the Authority for the purposes of

21 22

23 24 25 26

;rz.
:I>
J9

is ta~ing

place at

any reasonable time and inspect any facility, equipment, machinery, book, account or other document found on that premises;
. (b) require any person to furnish the Authority with such information,

fy
3,

rerumsor other particulars as may be necessary for the proper administration

Petroleum Industry
of this Chapter. 2 3 4 5 6 7

2006 No. C 4971

(2) The Authority may require that the accuracy of any information, return or particulars furnished pursuant to subsection (I) of this section be

verified by an affidavit. (3) No information obtained by the Authority under this section of the Act and that is non-generic, confidential, personal, commercially sensitive or

proprietary in nature may be made public or otherwise disclosed to any person without the permission of the person to whom that information relates or by an order of the Federal High Court. 365. No person or company shall(a) obstruct or assault any officer of the Authority or any person authorised

8 9
lO II

Offences.

12
13

by the Authority in pursuance of the powers given to the Authority under this Act; (b) refuse any officer of the Authority access to any premises, facilities or retail outlets, or refuse to submit to a search of any, premises, facilities or retail outlets by any authorised officer or agent of the Authority; (cr.refuse to acknowledge the receipt of any summons by the Authority issued and duly delivered to any person; (d) fail to comply with any lawful demand, notice, order or requirement of an officer or authorised person of the Authority in the execution of his or her duties under this Act. 366. No person or company shall(a) engage in refining. marketing, distributing or operating any petroleum

14 15 16 17 i8 19 20 21 22 23 24 25 26 Zl

or gas processing or transmitting plant, terminal or premises without a valid license; (b) remove, destroy or damage any pipeline or other works or installations utilised for the purpose of supplying petroleum products;
(c) sell petroleum

28
29
3)

products above the benchmark prices set by [he

Authority; (d)fumish a statement or incomplete information calculared'to mislead

31

or wilfully delay or obstruct the Authority and its officers in the exercise of

C 4m2OOll No.
their duties;

Petroleum Jndustry
(e) fail to cooperate with the Authority in its investigation of any suspected

2 3 4 5 6 7
8

crime or corrupt practice;

if) discriminate among third parties in the allocation Qfcapaaity. access

to open access facilities and payment of regulated prices and tariffs.
(g) use or permit its pipelines. equipment,

or other facilities robe used

for or in relation to the commission of any criminal or ciY~Il)fflHlCt!.

367 .-(\)

Any person who violates the provisions of Section 365 and 366

9 10 IJ 12
13

of this Act sha\l(a) be liable to payment of a fine which shall be aa-preeerlbed

by the

Authority.
(b) reimburse

any affected downstream operator for UJjuries~red

as a
which of any

result of the said violation of the provisions of this Chapter,

reimbursement shall include, where applicable, th~.ep1accment

14
15

petroleum products illegally taken or of any damaged equipment. (2) Where such company or person is unable tc ,pay the-penalty or to

16 17 18 19
:ll

reimburse the downstream operator as prescribed under subsection (1) of this section, he, or in the case of a company, every officer responsible for the management of the company, shall be liable to imprisonment flQrraperiod of not

less than two years and not more than rove years.
(3) With respect to subsection (2) of this section where ancfficer proves that he had taken all reasonable precautions prevent the said violations, stipulated for such offence. 368. Where an offence has been committed under the provisions of section 365 and 366 of this Act the affected company or person shall discontinue the supply of petroleum products until any damage, alterauon.malfunction has been rectified and all safety issues have been resolved. 369. The Authority shall be responsible for the resolunon between downstream operators or between of disputes and or loss and exercised duc,'diligence 10

21 22 23 24
25

the officer shall be liable to ,pay .half the fine

26
27

1J3
Dispute

29 30 31

Scnlemcm.

downstream.consumers

downstream

operators in the downstream petroleum

sector in. ~JlCCt of all

PetroleumIndustry
I

2008 No. C491J

matters to which this Act pertains and in accordance with the provisions of this Act.

2 3 4
5 6 7

Chapter ll-

Specific Provisions Applicable to Downstream Gas

the
Network
CUJl'

370.-(1) In consultation with licensees and other stakeholders,

Authority shall establish a network code governing the operation

of the

downstream gas network; (2) The network code shall include but shall not be limited to(a) a connection policy, standard terms for connection to the transportation

g
9

network and distribution network, and a statement of the connection charging methodology;
(b) a mechanism by which users reserve capacity in the transportation

10 11 12

network or distribution network, and, in the event that at any time there is a greater demand for access than there is available capacity, a mechanism for allocating capacity between users; and
(c) the nomination of(i) the seller of the wholesale gas being conveyed;

13 14
15 16 17

(it) the purchaser of the wholesale gas being conveyed; or

(iiI) a willing third party to lake responsibility

18 19
20

for matters that may

arise with respect to gas in transit through the network, such matters to include but not be limited to the amount of gas injected into or withdrawn from the network, nominating volumes, payment for the use of the network and payment for-overruns and shortfalls of gas.
(d) requirements

21 22
23

for the provision of information to the transportation

24
25 26 Tl

network operator and the distributor about the volume, riming and flow rate

of injections into and withdrawals from the transportation

distribution network, as the case may be;

network or

(e) the structure of charges and the applicable tariffs: Charged for using the transportation network and distribution networks; if)' where required, arrangements for balancing the wholesale gas being conveyed; (g) registration arrangements;

28
'E
1)

31

C 4974 2008 No.

1 2 3 4
Wholesale Ga, Markel.

Petroleum Industry
(h) metering, allocation and settlement arrangements; (i) governance arrangements; (3) The Authority shall make copies of the network code available to interested parties upon payment of a prescribed fee.

5
6

371.-(1) Following consultations

Authority shall make recommendations

with interested

stakeholders.

the

to the Minister to issue.reguletions-. that, from time to time,

7
8
9

(a) defining (he class or classes of customers

shall constitute wholesale customers under this Act; and

(b) specifying the qualifying criteria for such classification.

10
II 12 13 14
Wholesale Customers.

(2)Regulations made under subsection (1)of this section may be.amended

as necessary to facilitate and encourage competition among suppliers, and any amendment of such regulations which results in a change in the class of customers shall not affect the rights and obligations of parties under gas supply contracts entered into prior to such amendment.

15 16

372.Wholesale customers shall be entitled to secure gas from any holder

of a licence to supply gas. 373.-(1) Where the Authority determines that there is a.need for formal arrangements for the trading of wholesale gas, the Authority may require the

Trading and Settlement of Wholesale

17 18 19 20 21 22 23 24 IS 2fj

Gas.

transportation network operator to develop arrangements for rhe safe and efficient
trading of wholesale gas. (2)In pursuance of subsection (1)of this section, the transportation network operator shall make arrangements for the trading and setuement.of wholesale

gas in consultation with industry participants and interested stakeholders and subject to the approval of the Authority. (3) The arrangements shall not be limited to(a) the designation of a market operator by the Authority 19 facilitate gas

for the trading of wholesale gas may include, but

n
28 29 30 31

trading; (b) the levying of charges on market participants to recover.rbe costs of market operation, and the level of charges to be subject to theappr.oval of the Authority;

Paroieum IMusay
1 2 3
4

2008 No. C 4'175

(c) arrangements by which the purchasers of wholesale gas have access to

offers to sell, and the sellers of wholesale gas have access to offers to purchase gas;
(d) arrangements

for settling the volumetric or monetary accounts for

purchases and sales of gas between parties; and

(e) rules of participation in the wholesale gas market including governance

6
7 8 9 10 II

arrangements for overseeing their implementation and amendment. (4) The wholesale gas trading arrangements(a) may be compulsory or-optional: and

(b) shall be incorporated into the network code developed in accordance with the provisions of section 370 ofUtis Act. (5) Once the arrangements and applicable rules have been approved, the Authority shall',(a)pubJish a notification in the form and manner prescribed by regulations issued pursuant to this Act, indicating that the wholesale gas trading

U
13 14 15 16 17 18 19 3) 21 22 23 24 25
'}fj

arrangements have-been approved and stating the date on which they will be implemented; and (b) make copies available to members of the public upon payment of the prescribed fee. 374.-(1) a transportation Any person shall be permitted access toa transportation pipeline, neewerk.or adlsmbution network, as the case may be, for the
Third Party

Access.

purpose of'having.gas tcanspcrted topoinrs of consumption, subject to compliance with the prescribed terms and conditions for access stated in the network code. (2) The Authority shall be primarily-responsible for the development of a network code that shall set out standard tenus and conditions for connection to, lXeSSand.use of the transportation and distribution networks. (3) Where a transportation main transportarionnerwork.cr or distribution pipeline is isolated from the

T1 28 'B )) 31

distribution, the Authority shall develop separate

terms of access- for such isolated transportation or distribution pipeline. 375.-(1) Third party access tothe transportation network and distribution

network shatlbe-

C 4976 2008 No.

Petroleum Industry
(a) on a non-discriminatory basis between system users with similar

2
3

characteristics;
(b) in respect of any available capacity, provided that such capacity is obt

4 5
6 7 8

subject to a previous contractual commitment;

(c) in accordance

with and governed by the terms and conditions of the

network codes approved by the Authority;

(d) on the condition that the applicant for access is or. becomes.a party to

and undertakes to comply with the applicable network code; and

(e) subject to the pricing principles in sections 377 a:nd3V"8of this part.

9 10
1l

(2) Connection agreements may be entered "into between(a) a customer and a distributor; or
, .j.'

12
13

(b) a transportation pipeline owner and a transportation network operator,

14 15 16 17
Disputes in Respect of Third Party Access.

(e) a distributor and the transportation network operator, when adjstribution

network connects to the main transportation

network, or

(d) a supplier and a transportation pipeline owner or transportation network

operator.

18 19
2J)

376.-( I) Disputes in respect of third party access shall be resolved by a

determination of the Authority. (2) Appeals against determinations made by the Authorityunconnecuon with third party access may be referred to arbitration in accordance with the procedure specified in the Arbitration and Conciliation Act Cap 19 Laws.of the Federation of Nigeria

21 22 Z3 1;1
25

vol.L

1990.

377.-(1) Where the Authority determlnes-.

(a) that a particular licensed activity is a monopoly service; or (b) that competition has not yet developed to such an extere as to protect

26
TI 28 19

the interests of customers; or

(e) that a particular licensee is a dominant provider,

then the Authority

shall have the power to regulate the prices charged or the revenues earned by licensees in respect of such activities, in a manner consistent with the Authority's duties under this Act and in accordance with the pricing principles

30 31

Petroleum Industry 1 2 3 4 5 6 7 8
9

2008 No. C 497t

set out in section 379 of this part (2) The Authority shall consult with licensees, industry participants and stakeholdersbefore undertaking apricing review or establishinga methodology for regulating prices' and revenues earned by licensees providing monopoly or dominant services. 378. In the exerciseof its powersto regulateprices charged fbr downstream gas and the revenues earned by downstream gas licensees, the Authority shall at all times be guided by the following principles(a) gas prices shall be dlsaggregated into the component elements of the
Pricing Principles.

10 11
12

supplychain, includingthe costs of wholesalegas, transportation,distribution and supply;

(b)

the prices charged for each licensed activity shall reflect the costs

13
14

incurred for the efficient provtstonot that activity;

(c) prices charged shall permit a reasonable return for licensees on their

15 16 17 18

invesunerrts;and (d) prices shall not discriminate between customers with similar characteristics, such as similar size or a similar consumption profile. 379. Subject to price or revenue regulations issued pursuant to this Act
Approval and Publication of Charging Structures.

19 all licensees in the downstream gas sector shall:J)

(a)

propose tariffs and tariff methodologies for the approval of the

21. 22 23 24 2S
'lJ5 Tl

Authority,' prior to the application of such charges;

(b) (c)

impose tariffs in accordance with such approval; and publish such tariffs in a manner that ensures that the customers of

such licensees are able'to identify and calculate the full-extent of all charges for which they will become liable. 380. Tariffs charged for'the use of the gas "transportationnetwork shall refiecl(a) efficientinvestment
Transportation Tariffs.

28.; 29
))

and capital costs;

(b)efticieot operating and maintenance.expenses:and'

(c) a reasonable return to licensees orrthelt- investments.

C 4978 200ll No.

Distribution
Tariffs.

Petroleum Industry
381. The tariff charged for the use of me gas distribution network shall reflect(a) efficient

2 3
4

investment and capital costs;

(b) efficient operating and maintenance expenses; and (c)

5
Regulation of
Customer Prices.

a reasonable return to licensees on their investments ..

6
7 8

382. Regulated customer prices shall reflect(a) the reasonable costs incurred in the purchase of wholesale gas;

(b) the transportation

(c) the distribution

tariff;
tariff, if the customer is connected loa distribution

9 10
11 12 13
Wholesale Gas Prices.

network;
(d) efficient supply charges covering billing, metering and other services relating to gas supply; and (e) a reasonable return for the supplier. 383.-(1) Notwithstanding the provisions of section 373, wholesale gas

14 15 16

supply between a supplier and a customer shall be negotiated direcdyr between the parties on an arms length basis and the gas transfer price between an upstream gas producer and a downstream purchaser shall be transparent and shall reflect the costs Of transfer between the parties, in line withfhe provisions of section 378 of this Chapter, (2) The Authority shall have power to monitor wholesale gas supply transactions in order to ensure that the transfer price between the wholesale . gas supplier and customer is undertaken on a transparent annslength basis. (3) Within 14 days of the conclusion ofa wholesale gas transaction, the supplier shall provide the Authority with information relating to the transaction including, where applicable, the cost incurred by the' gas producer
.,

17 18 19

on
21 22 23 24 2S 26 TI 28 29

in the

production and supply of the gas and all other information relevant.to the price at which the gas is sold',

'.

'

(4) The information provided to the Authority by the supplier in complIanCe with the provisions of subsection.Bj of this section shall be classified by the

~ Authority as confidential lerbfmation and may not be disclosed to any persons 31

or institutions. except the FederalInland
.;;
"

Revenue Service, for a period offlve

Petroleum Industry
1 2 3 4 S 6 7 8 9 10

2008

No.

C 4979

years commencing from the date of the submission of the information to the Authority. (5) The' supplier shall be guilty of an offence and liable to a fine not exceeding M50,OOO,OOO or sheif he
(n)

knowingly conceals information required under subsection (3) of this

section; or
(b) provides information which is false or misleading in any material

particular with respect to the information required in subsection (3) of this section. 384.-(1) A transitional pricing plan setting out temporary or transitional
Transitional Pricing Arrangements.

11 pricing arrangements that allow for a gradual transition 'towards pricing 12 arrangements that comply with the pricing principles outlined in section 378 13 shall be introduced and implemented by the Authority. 14 (2) The transitional pricing plan shall be formulated by the Authority in

15 consultation with the Ministers in charge of petroleum resources, finance, 16 17 18

19

industries and power and steel; and with gas producers, electricity producers, (he National Electricity Regulatory Authority and other key stakeholders. (3) The' transitional pricing plan shall(a)

address cross-subsidies existing within the downstream gas sector

2) 21 22 23 24 25' 26
Tl

betweencustomers, betweenclasses of customers, and betweenthe gas sector and the power and other industrial sectors at the date of the coming into force of this Act;
(b)

include, but not be limited to, such matters as:

(i) arrangements for eradicating the cross-subsidies referred to in

subsection (3) (a) oftbts section;

(ii) the prescription of the period(s) during which transitional pricing - arrangements will apply; (iii) implications for other parties and sectors; (iv) actions required to implement the plan; and (v) identification of the parties responsible for particular actions.

28
19 ])

31

(4) Where the Authority considers it necessary in order to facilitate the

---------C 4980 2008 No.

Petroleum Industry
implementation of'the transitional pricing plan, the Authority may,~ special

2 3 4 Determinatiuns. 5 6 7 8 9 LO 11

temporary I icence conditions on licensees during the transitional period, .~hich

conditions shall no! disadvantage any licensee in relation to another licensee of the same class. 385.-(1) competitive The Authority shall. investigate any case of.suspecred behaviour and make necessary antias

determmapons.jhereon

contemplated in sections 390 to 392 of this part (2) The Authority may impose penalties if the licensee is adjudged to have conducted its activitj~slin a noncompetitive manner. (2) A determination made by the Authority in respect of anYiJl1ll.1ter within, this Part shall be legally binding and subject to appeal before theFeder~fIig~ Court in the manner prescribed in this Act. 386.-( I) In order to protect the interests of customers, jhe. <'\l.I9IPrity to the Minister to issue regul a tiQRs requiring

12
r.usromer prorccncn.

13 14
15

may make recommendations

suppliers or distributors, as the case may be, and by such means ~th~regij~Jions may specify(a) to publish their terms of supply or distribution; (b) to establish or to facilitate the establishment
[,

16
17 [8

of.a

forum at which
inr

19 X}

customers are able to express their views and toraise

concerns;

(c) to formulate and adhere to such standards ofperfor~aQ5:j:;,~are,

21 22
23 24 25 26 Z1 28 29 Xl 31

its opinion, necessary to ensure the safety, [~iabjlityand

q!Jali~xqfsupply

and distribution services to customers; and set penalties for fail~re~ilOmply; Cd) to prepare performance and submit reports to the Authority indicating their.,

levels and the status of their operations in respect of licensed by regql~tjo,ns or in their'

activities, at sucb times as may be prescribed

respective licences, and at least on an annual basis; " .

(e) to develop and adhere to customer

service codes, .setting out the licensed

practices and procedures to be followed in rhe conduct ofspecltled

activities including but not limited tc practices and procedures for(i) t~~ installation, testing, maintenance and reading of merers: (ii) fault repairs and responses to customer emergencies;

Petroleum Industry
(iii) the connection and disconnection of customers;

.~: . 2008. No. C 4981

2 3
4

(iv) responding

to customer complaints and complaint resolution;

(v) billing and invoicing: (vi) the extension of payment and credit facilities; (vii) the provision of information to customers and the use and protection

5
6 7 8 9 10

'of customer information (viii) the establishment of special services for economically or socially disadvantaged customers. (2) All customer service codes shall be approved by the Authority prior topublication arid may be reviewed at intervals as maybe considered necessary

II " by the Authority. 12 13 14 15 16 17 18

19

(3) Customer codes shall he made available to all customers on request. (4) Licensees shall noti fy customers of customer service codes that must be adhered to by licerisees by advertising the availability of the customer service codes in a form and manner prescribed in regulations issued pursuant to this Act. (5) In developing customer protection regulations, the Authority shall(1I)

consult with suppliers, distributors, and interested stakeholders; and

(b) take into account existing procedures, practices and standards.

20 21 22 23 24 25
26 Tl

387. The Authority may, at its discretion and at such time or times as it deems appropriate, to designate distributors and suppliers of last resort to

Provision of Service to Customers.

provide services to customers-.

(a) in the event that an existing distributor for a local distribution zone or

a supplier becomes insolvent, or is unable to provide licensed services, or has had its licence suspended or revoked;
(b) in the evenrrhar the distributor for a local distribution zone or supplier

refuses or fails to fulfil the terms of its licence to distribute or supply gas to customers; and
(c) in such other circumstances as the Authority- may, deem appropriate;

28
]9

l) 3l

provided that any reasonable additional costs associated with the obligation to act as distributor or supplier of last resort will be recoverable through appropriate

M._

C 4982 2008 NQ,

Petroleum Industry
charging arrangements agreed with the Inspectorate.

Transfer of
Customers.

388. Where the designation of a supplier otlast resort requires the transfer of customers I'Iom one licelIsee to another, the Authority shall prepare,
Of

3 4 5 6
7

require the supplier of last resort to prepare(a) procedures

to secure the effective transfer of cusrorners: and

(b) a statement of an y costs reasonably incurred in undertaking the transfer, and such costs, if approved by the Authority, shall be recoverable by the

8
Public Service Obligations.

supplier oflast resort. 389.-(1) The Authority may, following consultations with licensees,
make reconlJ,n,.mda~,to the

9
10

customers, and other interested stakeholders,

11 Minister to issue regulations imposing public service obllgatlonson 12

B 14 in relation to matters including, but not limited
(a) security of supply;

ltcensees

rc-.

(b) economic development and the achievement of wider ec9wmic pplicy objectives;
(c) environmental

15
16

protection; and

17
Public Service Levy.

(d) health and safety.

18
19 2)

390.-(1) Where the Authority considers that it is in the wider public

interest, the Authority shall make recommendations regulations providing to the ~inister to issue in

for the recovery of any additional

cpstsjncurred

21 22
23

complying with the public service obligations, which may be imposed on customers

through a puq~ic ser,v~,:elevy,

(2) The amount of and mechanism for the collection

and remittance of

24
25
Competition and Market Reglilation.

the public service levy imposed on each customer shall be set outlAguidelines' issued pursuant to this section.

26
Zl

391.No licensee or any other person having the ability to, jgfiuence the
terms and conditions on which licensed activities are performed and.the price at which petroleum products are supplied shaIl(a) make it a condition for the provision or supply ofa pnxf;uctor service

28 29 Xl

that any person acquiring such a product or service will je required to acquire or not to acquire any other product or service either fcory tht;;1i~see

31

,
PenoleumiRduslry lor 2 3 4 fro~ any orhenteensee, pierson or entity;
(b) enter into any contract, arrangement collaboration or.understanding,

whether legally eaforceableee of tariffs,prices

net.wblch provides for or permits the fixing

or charges for the purpose of, or in such a manner as to;

5
6

manipulate market prices or the price of any procucror

seevice,

(c) engage in or conduct its activities; directly or indirectly .' for purpose

T 8 9

oftnarketsharing;
(d) permit.

allow, influence, direct or indirect excfusicn

of, or the or

imposition of anyembargsesce'boycous supplier of equipment or apparatus; or

on, another hcensee-operator

10
U 12

(eo) engage in any other conduct that the Authority deems anti-competitive, ' :391.--(1) The Authority shall have the responsibility to prevent and take action egainsr anti-competitive behaviourin the downstream gas sector; and for this purpose may(a) initiate an action
111

13
14 15,1;
16

Power of the Authority 10

Determine
Abuse of

~, , the Federal High Court for the determination of

Markel Power.

the question whether anyeondecr bya ticenseeor any other- persenoperating or mtending.tooperateln
I

17

the downstream-gas secror-, competition in

18 19
2(}

(J)

has. the purpose or efter.:' of subsranneltyfessenmg

gas sector; or
01'

any segment efthedownstream

(ii) would Jtkely result in anti-competitive

discriminatory conduct,

21 22 2324:
I

inclooing but not limited to an unlawful exercise-of market power that may prevent customers from obtaining the benefits of aproperly functioning

' and competitive downstream gas market)

:(b)

oonsider.in.ttsdeeisions

and determinations matters including but not

25 26
'Xl"

'Hmited ro=(i) license applications, (ii) the grant of; licences, licence tenns and conditions: and (iii) the regulation of-prices in respect of services in competitive markets; and.

28_.
19 l): 31.
I,

(iv)' how best to prevent or-mitigate-abuses of market power

(2)' Whore, in the opinion of the Author-itr,there

Is.or may-be, cr-rhere

c_

ZOOll No, 1 2 3 4 5 6 7 8 9 10 11 12

Peu<alt!II/rI

lndustry
uri inp~~~f. AA;~"~ Ilf

e~i$tl\i\ lik~llltPodof. al1tic~mPJltltiv,,~viouf

marJ(ln ppw~r; the Authnrity may-;

(p). issue

ce8S6 and dtJtf$1pI'dersas.msy

he

",qpirtld;.

;~"
.: '.

(b) require and compel thIJ:di&almtm: pf~.rnJlT1f!tion f!'Pm web licenseest (cj undertake inqQifi~and illvIJMisatilli1S; ,
IlL!,'

(d) levy fines which srn..llbe serour.fn n:@kltions isstlc~'pUhtlan, tp thie Act ftOI11ime to time, provided th" such fin" shall OlllIlIOI,t ofllll t annual turnover of the affected person or C~inpanyfor the p~b!jing y!!ar. (3) Notwithslfl,nding thePf1WiSio.-.sIllft~i. B~~~ottl .to)Qi~te 161'1 application by a licensee or oth~rpttf~qlwKk d\erability to inflUl.flqt;_tbe prl'
of gas in H~e downstream gas.sector I,An4WhB~,tM r\.utQor!ty.~siders thal it'

would be in the national interest Qrthat it

w~ p~ tuK:e8Sl'lFY.ttf.~e$lrv~9t
;; upc:M ~h
"!

13 promote the benefits of a properly ft.m~tional ami effeoti,,01)f~tl\le 14

15

downstream gas market, the Authority-c

(a) may giYIl: written approval wr a sp~ellClivity

"~I:

terms .-.;

16 17 18 19 3) 21 22 23 24 25

conqHiQflIl ae th~ AuthoFity shall !ll3:em' pprgpfi~te; a

(b)

ill issuingth{!: appf9vBI,may Impose sqDtt r-equire~enu!aa it deems fit

and require such ul1Pertakingli as jt d~tn$ apprQJll'ip-udr.ott1 th!:: IlPPllCilnt

a condition precedent to the !Sliuam:e pf

~ saiQ appFlJv<ll;:

(el mJlY wjthpr~w tH1 approv~lof Ill~;fi~ I$ti~itYll"AHt"lilt gnm~ sulijj:pt to s\.llGftterms !lnll ccndlnons as it,~y,in Hs ap~!di~TBtipllt' desigmt~;Ilnd Cd)SSlIe Directions to prevent or mitigate .!lny conQl\tlt ~~,slt!ttt9Fii. ( likely to lead to unlawful e.erol~ CustO!1WfS from obtaining

pf

ni~~et-

power

thll~ wU! preve.

the benefits of a propeflY~~1I

26
Tl

competitive Downstream Gas market. (4) Nothing in subsectices

en (2) and (3).pftltls

~tipn

shj(l ~

CPfill~'

28
29

to preclude at restrict the right of (fte Autllonty' Of any petsOiI to ~k injunction against any conduct prohibited 111~Ilis";h~ptar;
(j) Any person who wishes to Pfooee(ltflCQlIrt, or ~arbitnltion

3)

fur ~-.

31 enforcement

Qf any of the provisions of lhi8\J~

shall first nodlYthf;l!A.u~ .

",Petroleum Industry - ",.-,

,.,

....

,"""--)

" 1,

(6) The AuthOtity shall; 'u11tUsuch:titne' as a ,federal ilgth~y having the power tbpronauiltie arui-cemperition UfJOtl,idrhthlsteX:,in0tiitot and enfuretf compliance with \Wws'iS 'est8bllshetLand furictidnak Ilayt!. the exclusive

2 3 4

CQmpemitCe to derermitie"ptonounce

uPOJl, admini6tef; monlwt and entbrce

compliance witlt the provWonsc:lfthi~ Ad: relating to artti~ competition and

6 .'Withariy competition taWs and 'n!gi:IlationstI1atgovern or relate ttl Utedownstream

7 8 9 10 11 12 13 14 15 16 17 18 19

.gas Sector whether or not they are of a general .cr spedfre nature . (7) 111tOOexercise of its powers.bnder SUbSllCtioh (6) of this section, the Authority may consider(a) the relevant
(b)

eoenomie market;
in .the market and their

global trertds"in1he reievantecenomic market;

,te) the effect on the number:: of competitors

respeoti\ie n1arlIltt sbares;

(d)

the effect on barriers to entry into the market; in the mart(et; in the market;

(e) the effect on the range.of-services

if) theefkct

of the conductiOl11he'wst and profit-sanctures

(g) the abilitY'"f any independent licensee I'M' peratot to'tnake priceor o tariff regulating decisions; arid
(It)

any

Otbefl

matters whiohthe,Nithority,dtemstelallant...
Competition and Market Monitoring.

;n ,ZZ
2l

3911..;-( I) Tlm'Abthority sbalbhave responsibility to monitor the state of

:~12L the gas market sc.as->

(a)

to determine whether the downstream 'gas sector is ready tor an

increased level of competition in retail-and supply-serviees in-order that- it .may make rOOI'l1!rlendations to the Minister' to issue regulations which allow for the said ,increased level of oompetluon in retail 'and supply eervrces.
,(b)

,24

zs

.~.
TI

to

netemune

whether mere fg a needoot,aR

organised market for

wholesale gas in orderthat:i(

may take the: relevant.steps pursuant to this

, Illl'
iJ9

.Actto deel0Pa 'Wholesale rna.l1ketarrangement;

(c)

to assess whether the dd-Wl15traun'gas sector is operating properly or

3J 31

whether the existing market arrangements maycORStitutf: barriers to entry into the market for.new.players;

---------,-C4986 2008 No,

.(d) to determine

Petroleum Industry
whether there is any ann-comperltive activity being

2 ,3 4 5
6

carried on, -in which case the Authority woejd be required, to.exercise its powers under this Aot
[0 prevent

the continuance of suchaetivitYI

(e) to determine any pre-conditions and-any transitional' ~raogements

requiredfor any servicesto be offered competitively.

c,

,":1' ',J

,
seb-

. (2) To enable the Authority to dlscharge irseesponsibllines.unaer

7
8

section (1) above and in particular,

!O

determine whether there is; orcmaybe,

have power 10-

an abuse of market power, the.Authcruy.shau

(a)

9 10
11

require and compel the disclosure ofinformation.from inquiries and investigations. therehas

licensees; and
'i

(b) undertake (3) If,

in

the opinion of the Authority

been an abuseor a threatened

011

12 13
14 15 16
17

abuse of-market power, the.Authority may serve a notice

such company-or

person specifying the abuse or threatened abuse; and of its intention to Issue a cease and desist order. (4)The Authority shall publish a notice(a) specifying the actual or threatened contravention; (b) directing the company or person to whom the notice is issued to, or

18 192)

not to do, such things as it may specify;

(e) specttymg rbe remedy and the timescale for compliance; (d) notifying the company or person to whom the

and

nonce-is issued ofits

21 22 23 24 25 2fj
Zl

intention to issue a cease and desist order or to levy a fine not eXeedmg N50,000,000, provided that such flne.sball not exceed 10% of the amiUal

turnover of the company or Person for the preceding year. (5) The Authority shall publish the nonce 'in the form and manner specified in the prescribed regulations and shall invite the company or person to wtiOm the notice is issued and' any other interested parties to make representarlens against.or tn.supporr of the notice by a specified date. (6) If the company or person to whom the nonee

28 29 30

e issued fails to coIJi11ly

with a notice served pursuant to subsection (l)'of this section, the Authority may issue a cease and desist order. (7) Failure to comply with an order issued under subsection (6) of this

31

Petroleum Industry
1

2008 No. C4'J87

section shall be an offence punishable by a fine not exceeding N50,OOO,OOO or

2 3
4

taerevccacen afk relevant licence where that company or person is a licensee.

(8.) A cease and desist order may-not be. issued nor a fine imposed if(a) the company

or person .to whom the notice is issued is able to

5
fi 7

demonstrate to the satisfaction of the Authority that it has not abused or is not threatening to abuse its market power; or
(b) the company or person to

whomthe nouce is issued has ceased to

,8
9 10 11

abuse or has ceased from the threat to abuse its market power. (9) Where-a person has ceased to abuse or has ceased-from the threat to abuse its market power, if it is found that the said threat or threat of abuse was deliberate, the Authority may-impose an appropriate penalty which shall be

12 13 14 15 16
J7,

prescribed in the regulations issued pursuant to.this Act. 394.-(1) No person shall.......
(a) cause damage to any Infrastructure, plant or equipment belonging to a Offences and Penalties.

downstreamproducts

or gas licensee; including but not limited to fittings,

meters, apparatus or equipment; (b)a1t~lhe operation of any meter, equipment or apparatus including but used for measuring the quantity or quality of petroleum

18 19

not Iimitedtorhose

products or.gas supplied; .(c).prevent any such meter,equipment or apparatus including but not

'"

limited to all such items used for measuring or registering the quantity of petroleum products or gas supplied from functioning accurately or properly such as 01: registering the quantity of petroleum products or gas supplied; or
(d) otherwise destroy, interfere with or.remove me meters, equipment or

Z2 Z3 24
25 J5' 11 2il 29
1)

apparatus ofa licensee without the permission of the licensee. (2) Any person convicted for intentionally committing any offence listed in subsection (1) of this-section shall be liable to-(0) pay

a.penalty not exceeding N 100,000,000; and

illegally

(b) reimburse the licensee for any petroleum products orgas

-takenand for any. damage to the licensee's equipment; provided that-

31

m where

such person is unable to pay the penalty or to reimburse the

--------_._.
.
liciiliiseCj he or she of; ilt the case ora companYIeNery(jffiecit'l'6fkJnslble: 2 3 4 5 6 7 8 9 iO 11 12 13 14 15 16 17 18 19 ~ 21 22 23 24 25 26 TI 28 29
Prohibition 011 lhe Wrongful Use of Equipment.

fot the management of the company shall be liabte 10:~t

offlcer proves to the strictest standard that he of,sbe'.had
reasonable

fur a
taken all the

period. of hot less than two years and not more lhari.five.)'/18U'8 unless, 'the

precautions

and exercised due dlligmkler tol ptevent

commfssicn of the otfenee; and

(li) the Authority

may, as necessary,
(a)

adjust the atrkrtU'Mf the peralty

stipulated in subsection to this Act,

iii Orner

of this section by reg~latilJns lssUKl pursuant

to reflect CUrrent rates of intla.iJoii.'

(3) Arty person convicted for negligently comrt1iuli1g'any offeaoe listed in

subsection (2) of this section shall be Iwhle
t~

(a) pay a petlli.UynotexceectingH2,OOO,OOO;

(b)

and>

,i

'J_-

reimburse the licensee for any :gasillegally tilkti'i.aiKUUt art)' <lamage

to t'te licensee's equipment, provided thar-,

(i) where such person is unable to pay tJieJ1enalt)t',or:to reimbursetbe

licensee, he she or; in the case'ot.a eompany, 'ev~ryloffitel'!ll'l'spoitsjble for the management of the company, shall be liableatiltnprisortnient.for a period of not less than six months and not more thattbRd)flllr5 unll!SS, having regard to the nature of his or her flinctiongjJitJutt!~ity andlo

ali circumstances, the officer proves that he or.she had:t*.C!n all teooilable precautions and exercised due diligence to prevent dteCbirtitril8lon of the offence; and
I,'

(i;) the Authority may;' from time to time adjustdm: 8ttiOunt of the

penalty stipulated in subsection (a) of this secuon ilteglliations pursuant to-this Act, in order to reflect current rates'of,~on. (4) Where an offence has been committed under-subseenon section. the supplier may. disconrmue rbe supply ofgasluhUI-"" alteration.

issued

(1) ofbis damage.

malfunction or loss has been rectified and ,all~SltftlIy issues hive

, ,"

been resolved.

30 31

39S. No licensee shall use or-permit its pipeline. ttquipmbnt or odter facilities to be used in.for, or in relation to, the commission of any.criminator

Petroleum Industry
1 2
3 4

civil offence, and ~~ch lioel'lsec"shal1~

(a)

upon a written request from the Authority'PHl.lly other-lawful or duly authcnty,

~S$Iif-the Authority or such -lawful authority,

esapowered

in

preventing-the commission or attempted comrmsslon of any criminal offence under this Act Dr any other statute iii force

5
6

in the Federal Republic of

Nigeria, ind1J~Ungbut not Hmtrcd to those affecting the public revenue and

7 8 1910
11

rhe psesewation
'(b)

of rJlHioll(l1'security.

riQl be liable for any act-or. for any omission done tn good faith, in
of a duty or

respect of,any ll-lU or omlssiort arising from the performance

obligation imposed by l-lJeAurbctity.or other jawfuueuthonty.

3%.-( 1) Where no specific penalty is prescribed in respect of any offence
Penalty not Prescribed.

12 13

under this part, any person! who contravenes any-of the provisions of this pari or any regulartons iSstl!Bdin r,tspeot of this Part and is guilty'Qf-anoff~t::~ shall be

14 liable-,
15 (0) as

a first offender, to....

16 17 18
19 JJ 21
(b)

(i) a fine not exceeding N2;OOO,OOO or to such-other amount as may be

prescribed in regulations issued pursuant.to nlis Part;ort

(ii) jmprisonmellt fur a period not exceeding two years; or

am beth-nne ana Imprtsonrnent.

fur sqbseqllent convictions, lO,....

W a fine

nat e~ceing

flflO,OOO,OOO or such etheramount

as may be

22 23 24 25 26
Il 28 29

_ Plll,",fl~ regulations ,iss"ed pur-suant to this. part; or ifJ (:Ji)irpprisonmem

,(iil)bdth

for BpeMod not el(.otl~lngfi'VlIl rears; Of

fine and imprisonment;

(2) The Authority may, as necessary, ~djull:lthe amount of the penally stipulaqxl in eubsecncn order' to
Il'~t

m of this section

through prescribed regulations,

in

current rates of inflation,

Penalty for Refusal to Furnish Returnor Supply Information.

397\ A"y person who(a)

fails.or refuses tofi!mlsh a return or tn supply information to the at the time and in

:n
31

Authority or any other duly empowered Iawfulaufhority the~ pn:~ril:leP; Of

C 4990 2008 No.

Petroleum Industry
(b) who furnishes a false or incomplete return; or
'i'

2 3 4 5
6

(c) supplies false or incomplete lnformeuon: (d) wilfully delays or obstructs the Authority,

or its offlcersraa iDllpCCtor r o

police officer in the exercise of the powers or duties conterred.oeemposed on the Authority under this Act; or (e) conceals, fails or refuses, without reasonable, cause, ..tosupply

7 8 9 10 11 12 13 14 15 16
General

information required by the Authority or any duly empowered lawtPLa:uthoritj at the time and in the manner prescribed or when required.te do so, shall be guilty of an offence and shall be liable to afine notexceedingNOOJXX),cm or to imprisonment imprisonment for a period not-exceeding one year orto beth-fine and

,,.,

(2) The Authority may, as necessary, adjust the amouet-of thecpenalty stipulated in this section by prescribed regulations, rates of inflation.
PART VI -

in order to refllWt current

_"I ,I

INDIGENOUS OIL COMPANIES ANDNIGERIAIII CoNTIi:NT

Chapter I - Indigenous Oil Companies 398. This chapter shall apply to(a) oil prospecting

Terms.

17 18 19 20 21 22 Z3 24 25 26
?:l

licenses and oil mining leases held, whether at or

before the commencement of this act, by indigenous oil companies; and to'
(b) petroleum operations undertaken pursuant to suchdceaseaand

leases;

399. Participation by the Federal: Government in accordance with the

provisions of this Act or any law in force shall-not be appllcahle-toperroleum operations carried out by indigenous oil companies whose apgD,k: production'

from petroleum operations is not more than fifty thousand barrels per day of crude oil or its natural gas equivalent.

400. An indigenous oil company-whose aggregate productionoiUude

oil

is not more than fifty thousand barrels per day or its natuml1g8s .equUtalent ' shall be allowed to produce up to the technical allowable otitp'lif set for the' license.or tease, by the Directorate or Inspectorate, .401; The Minister shall, in consultation asw the-oas'e'rilay be. withfhe pirebtorate orr

28 29 ~ 31

Inspectorate, as the case may be, shall issue regulations or gujdelimSljlm1ltribing

Petroleum Industry

2008 No. C 4991

clearly defined targets and programmes for continuously increasing the level of 2 3 4 indigenous participation in the Nigerian petroleum industry and to generally

give effect to the provisions of this Act which regulations or guidelines shall incfude-,
(a) targets tor indigenous oil and gas reserves; and (b) production

5
6

personnel

content

and measurable

parameters

for

determining the level of indigenous participation.

8 9

402. With reference to section 401 of this Part. the Minister shall not
later than three months after the commencement of this Act and thereafter at

10 intervals of two years, undertake a general review of the set targets, parameters
II 12 and programmes for continuous increase in the level of indigenous participation in the Nigerian petroleum industry and set such new targets, parameters and programmes Act. Chapter Jl ~ Nigerian Content as shall be necessary to give full effect to the provisions of this

13
14 15 16 17 18 19 2J 21 22 23 24 25 26

403.-( I) The holder of a petroleum mining lease shall ensure that(a) the number of Nigerian citizens employed by him in connection with

General

Terms.

the lease in its managerial. professional and supervisory grades or any other corresponding grades designated by him shall not he less than ninety five per cent of persons employed by him in those grades and further that Nigerians constitute a minimum of sixty percent of its Board of Directors; and (b) the number of Nigerian citizens in anyone such grade shall not be less than 60% of the total; and
(c) all skilled,

semi-skilled

and unskilled

workers,

or any other

corresponding

grades designated by the lessee are citizens of Nigeria.

(2) An indigenous company that is holder of a petroleum mining lease,

n
28 :N
J)

which has less tban fifty employees and which is unahle to comply with the provisions of subsection (1) of this section may apply to (he Inspectorate for a written waiver of the said provisions, giving reasons for it's inahilny to comply with the said provisions, and this request shall not be unreasonably refused.
(3) With reference to subsecuon (2) of this secnon, where (he Inspecrorarc

31

C 4992 2008 No.

Petroleum Industry
refuses an application it shall give its reasons' in writing to the applicant.

2 3 4
5 6

404.-(

I) A licensee of a petroleum prospecting licence shall within twelve

months of the grant of his licence, and (he lessee of a petroleum mining lease shall on the grant of his lease, suhmit for the Minister's programme for the recruitment and training of Nigerians.
(2) The programme

approval, a detailed

shall provide for the training of Nigerians in all

7
8 9
[()

phases of petroleum operations whether the phases are handled directly by the licensee or lessee or through their agents and contractors.
(3) Any scholarship schemes prepared and any scholarships proposed to

be awarded by the licensee or lessee, whether or not related to the operations of the licensee or lessee or to the petroleum industry generally shall be submitted to the Directorate for recommendation
(4) Once a programme

11

12
13

to the Minister for approval.

stated in subsection (1) above or a scholarship

14 15
16 17

scheme stated in subsection (3) above has been approved by the Minister upon the recommendation of the Directorate, it shall not be varied without the written permission of the Minister.
(5) A report on the execution of the programme

mentioned in subsection

18 19 Xl 21
R~Sr'''l"ihility OYCftile
1':n\'inlIHllL'I1I,

(3) above and the level of Nigerian content shall be submitted by the licensee or

lessee to the Directorate at the end of every financial year or about the end of June and December in every calendar year.
PAin VII llEALTH, SAFETY AND ENVIRONMENT

22
23

405.-0)

Without prejudice to the overall responsibility

of the Federal

Ministry of Environment for the environment of Nigeria, the Inspectorate shall have responsibility over all aspects of health, safety and environmental matters in respect of the petroleum industry.
(2) The Inspectorate shall at all times ensure that any regulation or directive

24
25 26

27 2li 29 30
31

in respect ofthe petroleum industry, made in pursuance of subsection (1) of this section, shall not conflict with any regulation or directive issued by the Federal Ministry of the Environment in respect of the environment of Nigeria.
(3) For the avoidance of doubt the Inspectorate shall, in consultation with

the Ministry of Environment. make regulations and issue directives specifically

Petroleum Industry relating to environmental aspects of the petroleum industry. 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25

2008 No. C4993

(4) In the event of a confl ret between the regulations or directives of the

Inspectorate and the Federal Ministry of the Environment,

representatives

of

the Inspectorate and the said Ministry shall meet to resolve and agree on the areas of conflict within thirty days from the date of the first meeting, and the agreement between the representatives the representatives shall be in writing and duly signed by

of the Inspectorate and the Ministry. to subsection (4) of this section, where there is no

(5) Witb reference

agreement between representatives of the Inspectorate and the Federal Ministry of the Environment. the regulations or directives of the federal Ministry of the Environment shall prevail. 406. Every company engaged in any activities requiring a licence, lease or permit in the upstream and downstream sectors of the petroleum industry in Nigeria, shall comply with all environmental health and safety laws, regulations, guidelines or directives. as may be issued hy the Ministry of Environment, the Minister, or the Inspectorate, as the case may be. 407. Every company engaged in any activities requiring a licence, lease or permit in the upstream and downstream petroleum industry in Nigeria shall conduct its operations in accordance with internationally accepted princtples.of sustainable development which includes the necessity to ensure that the
Conduct or Operations .

constitutional rights of present and future generations to a healthy environment is protected. 408. Every company engaged in any activities requiring a licence, lease or permit in {he upstream and downstream sectors of the petroleum industry shall(a) uphold the freedom of association and effective recognition
Obligations of Licell>ce. Lessee and Contractors.

26

of the

n
28 29 JJ 31

right of collective bargaining of its employees. (b) not utilise on its own behalf or encourage (he utilisation of all forms of forced and compulsory labour by any of its contractors.
(c) not employ or engage the services of any person below (he age of

eighteen years old.

C 4994 2008 No.

Petroleum Industry
(d) ensure that decisions in respect of employment and occupation are not

2
3 4

discriminatory

against gender or ethnicity .

(e) support a precautionary approach to environmental challenges.

(j)

encourage

the development

and use of environmentally

friendly

5
lM Y to Restore

technologies for exploration and development in Nigeria. 409.-(1) Any person engaged in activities requiring a license. lease or

6 7

permit in the upstream and downstream petroleum industry shall(a) manage all environmental

8
9

impacts in accordance with the licensee or as the case may

lessee's environmental he;

management plan or programme,

10
II

(b) as far as it is reasonably practicable,

rehabilitate the environment

12
\3

affected by exploration and production operations, whenever environmental impacts occur as a result of licensees and lessees operations(I) to its natural or pre-existing state before the operations or activities

14 15 16
17

as a result of which the environmental

impact occurred; or

(ii) to a state that is in conformity with generally accepted principles of sustainable development;
(c) be responsible for any environmental

18 19
2D

damage, pollution or ecological

degradation

occurring

within the license or lease area as the result of

exploration and production activities in the case of upstream operations and as a result of any licensed activity in the case of downstream activities (2) In respect of subsection(l) of this section, the licensee or lessee shall not be liable for, or under an obligation, to rehabilitate where the act adversely affecting the environment has occurred as a result of sabotage of petroleum facilities, which also includes tampering with the integrity of any petroleum pipeline and storage systems. (3) Where there is a dispute as to the cause of an act that has resulted in harm to the environment, rhc licensee, lessee or any affected person or persons shall refer the matter determination to the Inspectorate for a determination and the

21
22 23

24
25

115
T1
28 29

JO

of the Inspectorate shall be final.

31

(4) Where the act referred to in subsection (3) of this section is found to

Petroleum Industry

2008 No. C 4995

have occurred as a result of sabotage, costs of restoration and remediation shall 2 3 4 5 6 7 8 9 JO II 12 13 14 15 16 17 18 19 2) 21 22 23 24 25 26 be borne hy the local government and the state governments within which the said act occurred. 410. From the commencement of this Act, the Inspectorate shalt undertake an annual comprehensive review of the impact of development programmes and practices by petroleum companies in all sectors of the industry since the inception of the petroleum industry in order to identify potential areas of conflict or areas that may lead to possible unrest in the areas of operation. 411. Every Licensee, Lessee and Contractor engaged in petroleum Utilisation of GoodOil J'icid Practic~s.
Corupensarkm. Dcvetoomenr Programmes.

operations in the upstream petroleum industry shall utilise good oil field practices in the course of their operations within the country. 412.-(1) The holder of a petroleum exploration licence, petroleum

prospecting licence or petroleum mining lease shall, in addition to any liability for compensation to which he may he subject under any other provision of this Act, be liable to pay fair and adequate compensation for the disturbance of

surface or other any other rights to any person who owns or is in lawful occupation of the licensed or leased lands, in accordance with written guidelines as shall be issued by the Inspectorate. (2) The rates of compensation contained in the guidelines referred to in subsection (I) of this section shall be arrived at through a consultative process and the Inspectorate shall update the said guidelines annually so as to reflect rates of inflation and any other salient factors. 413, Every year, all licensees lessees and contractors and service Publications

companies ill the upstream petroleum industry shall publish the criteria used for the location of community development projects and other social investment initiatives within their respective areas of operation.
PART

n
28 29
30
31

VJIl-

FISCAL

PROVISIONS

414. In this Part(a) "Contract area" means the

Definitions

com-act area as defined in rhe Production

Sharing Contract;
(b) "Foreign Company"

means a company incorporated outside Nigeria

C 4996 2008 No.

Petroleum Industry
and having an established place of business in Nigeria;

2
3

(c) "Minister"

means the Minister of Finance;

(d) "Nigerian company" means any company, the control and management

4
5 6

of whose activities are exercised in Nigeria and references to a trade or business shall include references to any part thereof;
(e)

"petroleum operations" does not include upstream gas. operations and

7 8 9 10 11 12
13

means the winning or obtaining and transportation of chargeable oil in Nigeria'

hy or on behalf of a company for its own account by any drilling, mining,

extracting or other like operations or process, not including refining at a refinery, in the course of a business carried on by the company engaged in such operations, and all operations incidental thereto and any sale of or any disposal of chargeable oil by or on behalf of the company;

if) "Service" means the Federal Inland Revenue Service;

(g) "upstream gas operations"

14
15

means the winning or obtaining of natural

gas in Nigeria by or on behalf ora company on its own account for commercial purposes and shall include any activity or operation related to natural gas that occurs up to the point at which downstream gas begins. (2) This part shall apply to companies engaged in petroleum operations which shall include:
(0) the incorporated joint venture company; (b) the National Oil Company (c) a holder of the petroleum prospecting

16 17 18 19
20

21
21 23

license or petroleum mining

tease that is being developed under a production sharing contract. (d) marginal field operators, to the extent stated within this Part; and
(e) indigenous oil companies, to the extent stated within this Part.

14
25
PlfWcr, anJ
DUlLeS

26

415.-(1)

The due administration of this Part and the tax payable under

7J
2R 29

the terms of this Part shall be under the Care and management of the Board who may tlo all such acts as may be deemed necessary and expedient for the

assessment and collection of the tax and shall account for all amounts so collected in a manner to he prescribed by the Minister; (2) Whenever the Board "hall consider it necessary with respect to any

3) 31

Petroleum Industry
1 2 3 4 5. 6 7 8 9

2008 No. C 4997

tax due, the Board may acquire, hold and dispose of any property taken as security for or in satisfaction of any tax or of any judgment debt due in respect of any tax, and shall account for any such property and the proceeds of sale thereof in a manner to be prescribed as aforesaid; (3) The Board may sue and be sued in its official name and, subject to any express provision under any subsidiary legislation or otherwise, the Board may authorise any person to accept service of any document to he sent, served upon or delivered to the Board and to represent the Board in any proceedings: (4) Subject 10 such conditions as the Board may specify, the Board may

10 by notice in the Federal' Gazette direct that any information, return or documents 11 12 13 14 15 16 17 18 19 Xl 21 22 23 24 25 2h required to be supplied, forwarded or given to the Board may be supplied 10 such other person whether within or without Nigeria as the Board may direct; (5)The Board may by notice in the Federal Gazette or in writing authorise any person within or without Nigeria ro-,
(a) perform

or exercise,

on behalf of the Board, any power or duty

conferred upon the Board other than the powers or duties specified in this Act; and
(b) receive any notice or other document to he given, delivered or served

upon the Board under or in consequence of this Act or any subsidiary legislation made thereunder; (6) In the exercise of the powers and duties conferred upon the Board, the Board shall be subject to the authority, direction, and control of the Minister and any written direction, order or instruction given by him or her after

consultation with the Chairman of the Board shall he carried out hy the Board: (7) The Minister shall not give any direction, order or instruction in

respect of any particular company which would have the effect of requiring (he

17 28
29

Board to-.
(0) raise an additional assessment upon such company; or (b) increase or decrease any assessment

made or to be made

Of

any

30
31

penalty imposed or to be imposed upon or any relief given or to he given; or

(c) defer the collection of any tax, penalty or judgment debt due hy such

C 4998 2008 No. company; or

Petroleum Industry

2 3
4

(d) do anything which would have the effect of altering the normal-course of any proceedings, whether civil or criminal, relating either to the recovery of any tax or penalty or to any offence relating to tax; (8) Every claim, objection, appeal, representation or the like made by

5
6
7

any person under any provision of this part or of any subsidiary legislation made thereunder shall be made in accordance with the provisions of this part and any subsidiary legislation to this Act; and
(9) In any claim or matter or upon any objection or appeal under (his

8
9 10

Part, any act, matter, or thing done by or with the authority of the Board, in pursuance of any provisions of this Part shall notbe subject to challenge on the ground that such act, matter, or thing was not or was not proved to be in accordance with any direction, order or instruction given by the Minister. 416.-( I) Anything required to be done by the Board, in relation to the powers
Dr

11 12 13
Si;n:llllr~ and

14 15 16
17

F:xel'Uli()11 of

Po-vcr-, ,,"d
Duricx

duties specified in the Ninth Schedule of this Act, may be signified

under the hand of the Chairman of the Board, or of an officer of the Federal Inland Revenue Department who has been authorised by the Board to signify from time to time, anything done or to be done by the Board in respect of such powers or duties.
(2) Any authorisation

I'
19

2Il

given by the Board under or by virtue of this Part

21
22

shall be signified under the hand of the Chairman of the Board unless such authority is notified in the Federal Gazette.
(3) Subject to subsection (1) of this section, any notice or other document

23 24 25 26
27

10 be given under this Act shall he "lid

if-

(a) it is signed by the Chairman of the Board or by any person authorised by him; or (h) such notice or document is printed and the official name of the Board

2R

is duly printed or stamped thereon.

(4) Every notice, authorisation or other document purporting to be a notice,

'30 "
31

authorisation

or other document duly given and signified, notified or bearing

the official name of the 80"d, iu accordance with the provisions of this section,

Petroleum Industry

1AlO8 No.

c_

shall be deemed to be so given and signified, notified or otherwise without 2 3 4 further proof, until the contrary Is shown. 417.-(1) Where a notice is sent by registered post it shall be deemed to
Service and SignalUre of Notices.

have been Served on the next succeeding the day on which the addressee of the registered letter containing the notice would have been informed in the ordinary .course of events that such registered letter is awaiting him or her at a post office, If such notice is addressed in accordance with the provisions of subsection (3)of this section: (2)Provided that notice shall not be deemed to have been served under this subsection if the addressee proves' that no notification, informing him or her of the fact that the registered letter was awaiting him at a post office, was

5
6

7
8 9

10 11
12

teft at the address given on such-registered letter.

(3) A notice to be served in

13 14 15
16 17 18 19

accordance with subsection (1) of this section shall be addressed(a) in' the case of a company incorporated

in Nigeria, to the registered

office of'the company, and (b) in the case of a company incorporated outside Nigeria, either (i) to the Individual authorised to accept service of process under the Companies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria, 2004, at the address filed with the Registrar-General, or

20:(;0 21 ' 22 23 24-' 15

to the registered office of the company wherever it may be situated. (4) Any notice to be glven, sent or posted under this Part may be served

by being left at the appropriate office or address determined under subsection (3) of this section, unless such address is a registered post office box number. 418. There shall be levied upon the profits of a company engaged in petroleum operations or in upstream gas operations for any accounting period Bom such source of its profits during that'period a lax 10be charged, assessed and payable in accordancewith 419.-(1) the provisions of this Part. the income nom petroleum
Ascenetnmem
of Profits.

Charge of Tax.

26Tl 28 21 :J)

In relation to any accounttngpertod,

operations of that period ofa company shall betaken to be the aggregate of(a) the proceeds of sale of all chargeable oil and condensates spiked with erode oil sold by the company in that period:

31

C 5000 2008 No.

(b)

Petroleum Industry
the value of all chargeable oil and condensates spiked VoliIh,cfUdepil

2
3 4

disposed of by the company in-thatperiod; and

(c)

all income of the company from that accounting period incidental to

and arising nom one or more of its petroleum operations, with tIilc;~ion of(i) any income arising nom petroleum operations or upstream gas

5 6 7 8 9 10 11 12 13
14

operations of that accountingperiod from any production sharing contracts of which the company is the contractor; and
(ii) any income derived nom upstream gas operations.

(2) In relation to any accounting period, the incomefrom.upstream gas operations of that period of a company shall be taken to be the aggregate of.;....(a) the proceeds of sale of all chargeable natural gas sold by the ecmpany

in that period;
(b) the value of all chargeable natural gas arising from upstream gas

15 16 17 18 19 20 21 22 23 24 2S
'lh

operations in that period as determined in accordance with the previsions of the Ninth Schedule of this Act;
(c)

All income of the company arising from that accounting period

incidental .to and arising from one or more of its upstream gas operations (including casing head petroleum spirits)with the exception of(I) any income arising from petroleum operations or upstream G!lS

operations of that accountingperiod from any production sharing contracts of which the company is the contractor; and
(ii) any income derived from petroleum operations.

(3) Income derived from natural gas shall be treated separately from income derived from crude oil for the purposes of compmng.proflts of she company for the relevant accounting period, with the exception of pr.o'QIs of an accounting period for production sharing contracts. (4) For any accounting period(a)

'IT 28 29 .l)
31

deductions and adjustments relating to petroleum operations may be

made in respect of only the profits of such petroleum operations; and

(b) deductions and adjustments relating to upstream gas operations may

Petroleum Industry

2008 No. C 5001

be made in respect of only the profits of upstream gas operations with the 2 3 4 5 6 1 8 9 10 11 12 13 '14' 15 16 17 18 19 exception of production sharing contracts under which deductions and

adjustments telating to both petroleum operations and upstream ges'operanons shall be made from each contract area. (5) With respect to subsection (1 )(b) and 2(b) of this section, the value of any chargeable oil or chargeable natural gas so disposed of shall be taken to the aggregate'of-,
(a) the value of that oil or gas as determined, for the purpose of royalty,

in accordance with the provisions of this and any other enactment in force, and any financial agreement or arrangement between the Federal Government of Nigeria arid the company which shall be published in the Gazette within thirty days from the date that such agreement or arrangement enters into force, less(i) any approved cost of extraction of that oil or gas deducted in determining its value as referred to in this subsection; and (it) any approved cost incurred by the company.in transportation and

storage of that oil or gas between the field of production and the place of its disposal. (6) The adjusted profit of an accounting period shall-be the profits of that

:"D period after the deductions allowed by subsection O)-of section 420,of this Act 21 22 23' 24 : 25 26 TJ and any adjustments shall-be made in accordance with section 422 of this Part. (1) The asseseeble-proflt of.an accounting.period shall be the adjusted

profit of that period after any deduction allowed under section of this Act. (8) The-chargeable profits of an accounnng.penod'shell be the assessable

!Wofits of that period after the deduction allowed by this Act.

420. In computing the adjusted profit of any company of any accounting period from its petroleum operations or upstream gas-operations, as the case
Deductions.

28 +maybe,

there shall be deducted all benchmarked.tvenfled and approved verified and

,j'B "expenditure incurred within Nigeria, or 8O%ofallbenchtnarked; 30

-epprcved expenditure incurred in' another country during the said accounting

31" '1)er'lOd including but without otherwise expending odHnitiAg the'generality'of

C 5002 2008 No. the foregoing2 3

4 5 6
(a)

Petroleum Industry

rents incurred by the company for that period in respect of land or

buildings occupied under a petroleum prospecting license or apetroleum mining lease for disturbance of surfacerights or any other like dlamrbarces:
(b) all non-productive rents, the liability for which was incurred by the

company during that period;

(c)

all royalties the liability for which was incurred by. the .ccmpany

8
9 10 11 12 13 14 15 16 17 18 19

during that period in respect of crude oil or natural gas, or of casing head petroleum spirit won in Nigeria, including condensate .injected into such crude oil; (d) all sums payable by the companies into the Ojl and Gas Fij!,d Abandonment Fund, under the terms of this Act;
(e) all sums the liability for which was incurred by the company to the

Federal Government of Nigeria during that period by way of customs or excise duty or other like charges levied in respect of machineries. equipment and goods used, in the company's petroleum operations or upstream gas operations; and
(f) any expense incurred for repair of premises, plant. machinery. pr

fixtures employed for the purpose of carrying on petroleum operations or upstream gas operations, or for the renewal, repair or aheratioll of any implement, utensils or articles so employed; (g) debts directly incurred to the company and proved to th~ satisfaction of the Board to have become bad or doubtful in the accountjngper~od.for which the adjusted profit is being ascertained notwithstanding that such l*I or doubtful debts were due and payable prior to the commenccm,Qtof that period: Provided that(i) the deduction to be made in respect of a doubtful debt sIJall not

:D
21 22 23 24 25 26
. Z!

28 7} )) 31

exceed that portion of the debt which is proved to have beoome dpubf~:11 during that accounting period, nor in respect of any particular~_11 it include any amount deducted under the provisions oftJUs,palJlflPbJn

1 .

Petroleum Industry
, . , !

determining the adjusted profit of a previous accounting period; 2

3 4 (ii) all sums recovered by the company during that accounting period , i,

on account of amounts previously deductedinrespect

of bad or doubtful

debts shall, for the purposes.of subsection (I ) (c) of section 419 of this Act, be treated as income of that company for that period; and
(iii) it is proved to the sansfactlon of. the Board that the debts in

5
6 7 8
9

respect of which a deduction is claimed were either(a)

included as a profit from the carrying on of petroleum operations

or upstream g<J.soperations in t~e accounting period in which they were incurred; or

(b)

to
II

advances made in the normal

COUP;lT

of carrying on petroleum

12
13
14
(h)

operations or upstream gas operations not being advances on account of any item falling within section 4,21 of this Act; Any other expenditure, including janglble cosh;~irectly incurred in

15
16 17 18

connection with drilling and appraisal of development wells, but excluding an expenditure which is qualifying expenditure for the purpose of the Ninth Schedule to this Act, and any expense or qeduct!?n in respect of a liability incurred which is deductible under any other provision of this section;
(i) Any expenditure, tangible or intangible directly incurred in connection

19 ll) 21 Z2
23

with the drilling of an exploration well and the next two appraisal wells in the same field whether the wells are productive or not;
, . . , ' .i

Provided that where a deduction may be given under this section in respect of any such expenditure that expenditure shall not be treated as qualifying drilling expenditure.fer the.purpose of toe Ninth Schedule to this Act.
(j) Any contribution to a pension, provident or other society. scheme or

1"
25 26
27

fund which may be approved, with or without retrospective effect, by the Board subject to such general conditions or particular conditions in the case of any such society. scheme or fund as the Board. may prescribe: Provided that any sum received by or tbe value of any IJmefit obtained by such company, from all)' approved pension. provident or other society.

18
29
)J

31

C 5004 2IlO8 No.

Petroleum If!!!,ustry
scheme, or fund, in any-accounting period of that company shall, for the

2 3 4 5 6 7
8

purposes of this Part, be treated as income of that company of that accounting period;
(k) all sums donated to a unlverslty'

or other tertiary or research

institution(I) for research or any other developmental purpose: or

(ii)as an endowment out of the profits of company; notwithstanding

the

accounting Period of the

9 10
II'

that the donation is of a capital or revenue nature, provided

that the said donation shall not exceed an amount which ii; equal to 2 per

cent of chargeable profit;

12 13 14 15 16 17 18 19 20 21

(6 Allsums.

the liability of which was incurred by the company during

that period to the Federal Government, or to any state

orlLocal Government

Council i'n Nigeria

byWayl6rdUty, customs and 'excise duties.tstamp duties,

education tax, tax (other than the tax imposed by this 'Act)' or a'1t'J other rate, fee or

ottier jike charges.

"
,

(m) Such other deductions as may be prescribed byan)HJegutation made

under this Act.

"

(2) Where a deduction hils beerratlowed to' a company under this section in respect Of any liability of the company l.hld'errch liabilityor IiItf is waived or released the amount of the deductionorthe

part

thereof

ptJ.it thereof
of subsection

22 'corresponding (0 such part of ihe 'liability shall', fOr ihepUrP~s 23 24

Deductions not Allowed.

(l}(c) of section 419 of this Part,be treated as Income of the ctimpany of-its accounting period in which such waiver or release was tnade'ot'given. 421.-(1) Subject to the express provisions of this part.fcr'thepurposeof

25 26 V 28 29 30 31

ascertaining the adjusted profit of any company of any accounting period from its' petroleum 'operations -or upstream gas -operatlons, no'detfuetf6'n shall be 'allowed in respect of '
I,

(cj any disbursenrent or expenses not being wholiy!and eXclltsively laid 'curer expended, at any liability not being incurred, for the purpose
it 'liabiHtY'Whdfiy

or exclusively

of those'operatlon;

Petroleum It.Uiustry ,,',

"

1 2

(b~ capital withdrawn or any sum employed or intended to be employed any as capital;
(c) anycapltat

3 4 5
6 7 8 9

employed in improvement as distinct fr~tp repairs;

(d) any sum recoverable under any insurance or contract ofinde?lnity; (e) rent or cost of repair to allY premises or part.of any premises not

incurred for the purpose of those operations: (/),anyamount incurred in respect of any Income tax, proflt tax, or similar tax whether charged within Nigeria or elsewhere;
(g) the depreciation

of any premises, ~uildi~gs, structures,

work of a

10
11

permanent nature, plant. machinery cr fixtures;

(h) any payment to any provident,

savings. widows, orphans or other

12 13 14 15 16 17 18 19 2J) 21 22
2J

society, scheme or fund except such payments are allowed under section l(c) of section 420 of this Part; (i) any customs duty imported by the company(i) for resale or for personal COt1S4JTlptiDnemployees' of the company; of , ... .,
'

0,11

goods (including articles or aqy other thing)

(ij) where goods of the same quality to those so i',Op~rted are produced in Nigeria and are available, at the time the imported goods were ordered by the c9mpany for sale to,the public a~prices less or equivalent to the cost to the company of the imported goods.
(j) any expenditure.for the purchase of information relating to the existence

and extent of petroleum deposits: (k) any expenditure for the purpose of paying the gas flare, penalty ,or domestic market obligations as may he imposed by the Minister of ~etroleum Resources; (l) any demurrage and surcharges incurred at the ports or fines and

24 25
2h

T7
28 19 2J)

penalties paid with respect to commercial transactions, between parties;

(m) all work over expenditure except intangible drilling costs as defined

in this Act;
(n) any signature or production bonuses,

31

Petroleum Industry

1
2 3 4

(2) Notwithstanding the provisions of subsection (1) of section 420 of this Act, in computing the adjusted profit of any company of any accounting period til:s'deductioh shall be allowed In respect of sums incurred by way of interest during that period upon any borrowed money where such money was borrowed from a second company if during that period(a) either company has

s
6
1 8

an interest

in the other company; or

(b) both have Interests in another company either directly or through other companies; or
(e) both aresubsidiaries

9
10

of another company.

(3) For the purposes of subsection (2) of this section(a) a company shall be deemed to be a subsidiary of another company if

11
12' 13 14' 15

and so long as an interest in it is held by that other company either directly or through any other company or companies; (b) an interest means' 'a beneficial interest in issued share capital, by whatever name called; and (e) the Board shall disregard any such last mentioned interest which in its opinion is insignificant or remote, or where in its opinion that interest arises from a normal market investment and the companies concerned have no other dealing's or connection between each other, 422. Where a company engaged in petroleum operations or upstream gas operations is engaged in 'the transportation of chargeable oil or chargeable

l6
17

18'19
Exclusion of Certain Profits, etc,

i>
21

22
23 '24

'hatural gas by ocean going oil-tankers operated by or on behalf of the company from Nigeria to another territory then such adjustments shall'be made in

computing an adjusted profit or a loss as shall have the effect of excluding there fr6rtl any profit or loss attributable to such transportation . 423.-(1) Where the Board is of opinion that any disposition is not in fact

'1S
Anificial Transaction,
etc,

26

.iJ
28 ~ 20 31

given effect to or that any transaction which reduces or would reduce the amount of any 't:ix payable is artificial or fictitious, the Board may disregard ~ny such di!;'posi'tion or direct that such adjustments shall ~ made as n-spccrx liability to tax as the Board considers appropriate so as to counteract the reduction of liability to tax effected, or to counteract the reduction which would otherwise

Petroleum In.dustry
be effected,.by the transacdonandjhe 2 3 4 5
6

:lOO8 lIit!. C.$lO'1

companies concerned shall be assessable

accordingly. In this subsection, the expression "dispcsitloa" includes any trust, grant, covenant, agreement or .arrangement.. (2) For the purpose ofthi& section, transactions <teemed 10be artificial or fictitious, include;
(a)

transactions between persons one of whom has control over the other

7
8

or
(b)

transactions between persons both of whom are controlled by some

9 10 11 U 13
14

other person which, in the opinion of the Board, have not been made on the terms which,I1)ight fairly have been expected to have been made by independent persons _engaged in the same or similar activities dealing with one another et.arm's length. (3)Nothing in this seetion shall prevent the decision of the Board in the

exercise of any discretion given to the Board by this.section from being questioned in an appeal against an assessment in eccordancewim the provisions of section

15
16, '

453 of this Part and on the hearing of any such appeal the appropriate Appeal Commissioners or the Court may confirm or vary any such decision including

17

18 ,;'flY directions made under this section.

19
J)

424....,...WThessessable profits ,of(lPy company for any accounting period a

shall be the amount of the adjusted profit of that period after the deduction of:
(a)

Assessable Profits and Losses.

21

the amount of any loss incurred by that company during any

previous

22
23, .24
25,

accounting period; and

(b)

in "case to-which section 425 of this Actapplies, the amount of any

.'

I~ which under that section is deemed to bea loss incurred by that company .in its trade or business during its fir~,acc9unting period. (2) A deducUpn under- subsection (fj.of this section shall be made so far as possible from the amount, if any, of the adjusted profit of the first accounting

26
'Il

28 .pedod after that in which the loss. was incurred, and, so far as it cannot be so
19
,J)

made, then from the amount of the adjusted profit of the next succeeding jlCQOlll1tingeriod and so on, p ,(3) Within five months after me end of any accounting period of a company,

31

,..,
,,'

-----------

. -

__

.1"

c~

2008 No. 1 2 3

\, Pelroleum!ndustry
or within such further time as the

.. w.

Board mey permit in writihg'u. anY-imtance,

to be

the company may elect in writing that a deduction or at:ly,p1Rt~

,
5
Trade or Business Sold or Transferred to

made under this section shall be deferred to and be madein-the. succeeding accounting period, and may so elect from time to timemiarty succeeding
accounting period.

6 7 8 9 10 11 12 13

425;-(1) Without prejudice to section 437 of this Act, 'where a trade or business of petroleum operations or upstream gas operations carried otiin Nigeria by a company incorporated under any law in force in Nigeria is sold or
transferred to a Nigerian company for the purposes of better 'orgamsation of that trade or business or the transfer afits

Nigerian Company.

manegementtoNigeria

and any

asset employed in that trade or business is so sold or transferred-then, if the Board is satisfied that one of [hose companies has control over tbe-otber or that both companies are controlled by some other person or are-members recognised 'group of companies.
"(2) The Board may(a) if, on or before the date on which the trade or business 'is so sold or

ora

I'
15 16 17 18 19 21 21
Z2

transferred.

the first sale of or bulk disposal of chargeable oil or chargeable

natural gas by or on behalf of the company selling or transferring ,the tnKI.e or business has occurred, but the first sale of or bulk disposal-of chargeable oil or chargeable natural gas by or on behalf of the Nigerianoompaily acquiring that trade or business has not occurred-. (i) direct that the first accounting period of the Nigerian company shall be the period of twelve months commencing on the date on wlrieh the sale or transfer of the trade or business takes place; or commencing on such date within the calendar month in which the sale or transfer takes place as may be selected by the Nigerian company; with the approval of the Board, and (il) for the purposes of subsection (2)(a)(i) of this section, afl$djunting period as respects the Nigerian company shall be a period-oftwelve months commencing on the date on which the sale or transrer()f1he trade or business to the Nigerian company takes place, oricOi1'!tnencing on such

23

24
25
26

27 28 29 Xl 31

,.

Petroleum Industry

1DOIl No.' C SOOlI

date wjthin tbe.calendar month in which tbe sale or transfer takes place 2 3 4 5 6 .7 8 9 10
II

as may be selected by the.Nigerian company wilb'the approval of the Board, and the definition of "accounting period" in (the mterpretanon section) of this Act shall be construed accordingly, btu without prejudice to the continued application in respect of the Nigerian.company provisions ofparagraphs
(b) (b), (c) and

of the

(d) of that definition;

to

direct that for the purposes of the Ninth Schedule

this Act, the

asset sold or-transferred to the Nigerian company by tbe company selling or transferring the trade or business shall be deemed to have been sold for an .amouat equal to the residue of thl:,qualifying expenditure on the asset on the
day following the day on which the sale or-transfer thereof occurred; and
,(c):

12 13 14 15 II> 17 18 19 . ))
21. .22
'I'

direct that the Nigerian company, acquiring.the asset so sold or,

transferred shaU not be entitled to any initial allowance in respect of that asset, and shall be deemed to have received all allowances given to the company selling or transferring the trOOeQr- usiness-in respect of the asset b 'under the ninth Schedule aiW.any:allowances deemed to have been received by that company under the provisions of this paragraph;
(3) With reference to subsectjon{l) of this section the Board may-

(l}require,~company selling or transfeJTingtll@tradeor.business, or the

:: Niger~company~l,IiriDg,thattradeorbusiness,
,_. -te ~,salisfactionof

to~o,rgivesecurity,

me Beare.for payment i&fulL9fall tax.cuecr to become ~ing.or, transferring the trade or busiaess, and

.duefromrhecompauy
'(Ii)

23 24
25

impose such CQAditWns ~itseesfit-on either of the'oompanies aforesaid

or on both of them, and in the event of failure by tbat company or, as the case may be; mosecompaniee roearry en or fulfil the guarantee or conditions, the Board may revoke the direction and tnay make ali such additional assessments or repayment of tax as may be necessary tQ.give:effect to the .revocauce. 426.~1) Wl;Ierein pursuance of meproveions of Part A-Ofue.Comenes
,LIlW~ of.the.Pedesation, Trade or Business Transferred under the Companies Act.

'1f5
T1

, 28' _.'B.

)), ,. ,~~ AUied-Ma,tters Act Cap. CW

3Li,;,("tbe, rOl16ti~~~comp~").is

2QG4, a company

incorporated under. that Act to carryon any

.....

C5010 2008 No.

Petroleum Industry
trade or business of petroleum operations or upstream gas operations previously

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
19

carried on in Nigeria by a foreign company and the assets employed in Nigeria by the foreigncompanyinthat tradeor businessvest inthe reconstitUted company. then; if the Board is satisfied that the trade or business carried on by ehe reconstituted company immediately after rhelnccrporaticn-of thar company

under that Act is not substantially different in nature from the trade or business previously carried on in Nigeria by the foreign company, the provisions of this section shall have effect. notwithstandinganything sratedto tbe-OOhCillry this in part(a)

if as respects the trade or business previously carrieden iaNigeriaby on or

the foreign company the flrst sale of or bulk disposal of thar~ble

chargeable 'natural gas by or en behalf of the foreign companybas cccursed on or before the date on which the reconstituted company is inoorporateW(l)

the first accounting period of the reconsutured.company

shalf-be

the period of twelvemOnthscommencingon the date on whichthat compgny is incorporated. or commencing on such date within the calendar mOJ'Jth in which the company is incorporated, as may be selected-by the company with the approval of the Board, and
(if) an accounting period in respect of the reconstituted company shall

Xl 21 22 23 24 25 26

be a period of twelve months commencing on the date on which that company is incorporated. or commencing on such date within the calendar month in which the reconstituted company is incorporated as may be selected by the company with the approval of the Board, and the definition of "accounting period" in this Act shall be construed accordingly. but without prejudice to the continued application in respect of the reconstituted company of the provisions of paragraphs (b), (c) and (d) of 'that definition;
(b) for the purposes of the Ninth Schedule to this Act; the assets so vested

Z7
28

'z;) )) 31

in the reconstituted company shall be deemed to have been sold to it on the day of its incorporation, for an amount equal to the residue'ofdte qualifying expenditure thereon on the day following the day on which' the' trade or

Petroleum Industry

2008 No. CSOII

business previously carried on, in Nigeria by the foreign company ceased; 2 3 4 5 6 7 8 9 ,10 11 12 13 14 15 16 17 18 19 (c) the reconstituted company sha~1not be entitled to any initial allowances in respect of those assets, and shall be-deemed to have received all allowances given to the foreign company in respect of those assets under the Tenth Schedule and any allowances deemed to have been received by the foreign company under the provisions of this paragraph or section 425 of this Act; and
(d} the amount of any loss incurred during any accounting period by the

foreign company in the said trade or business previously carried on by it in Nigeria, being a loss which has not been allowed against any assessable profits of any accounting period of that foreign company, shall be deemed to be a loss incurred by the reconstituted company in its trade or business during its first accounting' period; and the amount of that loss shall, in accordance with the provisions of section 444 of this Act, be deducted from the adjusted profits of the reconstituted company: 427. For the purpose of sections 425 and 426 of this Act, the Board may by notice require any person, (including a company to which any assets are sold or transferred, or in which any assets have vested in pursuance of Part A of the Companies And Allied Mailers Act Cap C20 Laws of the Federation of Nigeria 2004. to complete and deliver to the Board any returns specified In the notice er any such information as the Board may require about the assets; and it shall be the duty of that person to comply with the requirements of any such notice
Call for Returns and Information relating to Certain Assets.

:n
21 22 ,23 14 25 26 Zl 28 29 l) 31

within the period specified In the notice, which shall be a period of not less than twenty-one days from the service thereof.

428.-( 1) The chargeable profits of any company of any accounting period

shall be theamount of the assessable profits of that period after the deduction of any amount to be allowed in accordance with the provisions Minis section. (2) There shall be computed the aggregate amount of all allowances due to the company under the relevant provfsions-of'the ninth Schedule to this Act for the accounting period except that for production sharing connets,the aggregate amount of all allowances due to the company shall be restricted to

Chargeable Profits and Capital Allowances.

----------- .._C50U 2008 No.

each contract area. 2
3 (3) 'In calculating the amount of the deduction to be allowed under this section for the accounting period. the limitation imposed by stlbsection (4) of this section shall be applied to ensure that the amount of any taxchargeable on

Petroleum Industry

4 5 6 7 8 9 10
II

the company for that period shall be not less than fifteen per cent.of the tax

which would be chargeable on the company for that period if no:~tion

10 be made under this section for that period.

were

(4) The amount to be allowed asa deduction under subsection (I) in respect
of tile said allowances shall be(a) the aggregate amount computed under subsection (~) of~is.lltttion;

U
I3

(b)

a sum equal to eighty-five per cent of the assessable.pmfiQ, of the

accounting period less one hundred and seventy per pent o(tbc,tohll,IUIlOl.lOt

14 15 16 17 18 19

ofthe deductions allowed as petroleum investment alJowance~

under

the relevant provisions of the Tenth schedule to this Act fortaar.period, whichever is the less.

,. :
owing

(5) Where the total amount of the allowances computed.under subsection

2 of.this section cannot be deducted under subsection (I) of this ~~ion

Xl
21 22 23 24 25 26 T7
Assessable Tax.

(a)

there being an insufficiency of or no assessable proptsofthe~nting

penodror
(b) the limitation imposed' by subsection (4) of this'SflCt~

such total

amount or the part thereof which has not been so deducted,

shall be, iijldedto

fur shall be

the aggregate amount to be computed under subsection (2) ofthi&,~~ion the following accounting period of the company ,and th~fter

deemed to be an allowance due to the company, under the:r.el~vant !pfPvisions of the Tenth Schedule to this Act for that following ~{:w~ting

pencd.

28 29 30 31,

4Z9.-(l) The assessable.tax for any accounting peciod,_of a company

engaged in petroleum operations shall De QIt,amount-eqlJa!.~_eighf;y, flve.per

ceruof the chargeable profit of that, period.

(2) The assessable tax ofanyaccounting

,,".
period ofacOmlm~ll,e~ged,in

Petroleum Industry 1
'2

upstream gas operations shall be an amount.equal.ro forty . five-percent of the ctKl.l'!:eableprofit of that period. with the exception of upstream gas operations in a production sharing contract area or
a deep

3 4'
5'
6

offshore contract area for which

me tax rate. shau

be thirty-five percent of the chargeable profltof that period.

(3)Where a company engaged-in petroleum operations has not yet qualified

tor treatment under paragraph lax

fur

7( 4)

of the Tenth Schedule to this Act, its assessable

'1
8

any accounting period during which the company has not.fully amortized
c

all pre

production capitalised expenditure due to it less the amount to

be

9 10 11
!

-retaised 'in the hook- as provided for in paragraph it. of the Tenth Schedule to this Act; shall be 65.75% of the chargeable profit for that period. (4) Where a company carries on petroleum operations by production sharing

12 13 14

contract or any similar arrangement in the deep offshore 'and inland basin, the assessable tax for any accounting year on the profits derived from the contract areas shell be an amount equal to 50 per cent of its chargeable profits from the contract area: (5) Where. a company transfers, or disposes of gas to a gas utilization

15 16

17 ' project in Nigeria as defined under Section 280 or Section 39 of the Companies 18 19
:J)

Income Tax Act, Cap .. .lt.aw of the Federation of Nigeria 2004, the assessable tax from the sale, transfer, or disposal of the gas shall be at.a rate equal to that
specified in subsection (2) of this section,

21 22
23

(6) Where a eompany sells, transfers or disposes of gas 'to any other 'person outside Nigeria, the assessable tax from me sale of gas shall be an

amount equal to' the tax rate specified in subsections (2) of this section.
430.-( I) 'I'heassessable tax for any accounting periodof.an indigenous company-that is engaged in petroleum productions and with an aggregate
Indigenous Companies.

24 25

,1fj production of not more than fifty thousand barrels of oil 'or gas equivalent per

Z7
28 29
l)'

dar shall be 60% ohhe cbargeable.profa for that period. (2) Nothing contained in this act shall be construed as havlng exempted an indigenous oil company from the payment of any other taxes imposed by the Federal Government under any exisint law in force. ",' :(3) The payment. of royalty ,for petroleumcperedore carried out by an

,,31

C 5014 2008 No.

Petroleum Industry
e ,

indigenous oil company in areas less than 200 meters waterldelKb4baU

be

2 3 4 5 6
Invt:StmCrlt Tax Credit.

graduated according to the production branches and zones, of,opo~ as set

out in the Tenth Schedule to this Act. (4) The fiscal terms applicable generally to compenes ~

'm Uf'5tTeam

petroleum operations shall apply 10an indigenous oil company widtan aggregate

production of above fifty thousand Barrels of oil or its gas etilUivalent per day. 431.-(1) A petroleum producing company which executee .production

8
9

sharing contract with the Nigerian National Oil Company or any athol: company
shall, throughout the duration of the production sharing conttaQt; ,NienC1t1edto claim a Petroleum Investment Allowance

10
11

in accordance wlthIJIDQ.,wlevant

provisions of-the ninth- Schedule of this Act.

(2) The Petroleum Investment Allowance applicable, sbaH ,be:,I1CStricted to each contract area.
(3) The chargeable

12 13 14
15

tax computed shall 'in respect of the said plW4uction

sharing contract be split between the National Oil Company or any ~~y or companies as the case may be and the crude. oil prcdecfag company 'in

16
17
Additional

accordance with the proportion of the percentage of profir otl spl;it of.e,ch.

18 19
2ll

432.-( 1) If, for any accounting periods of a company, the amouet of the
chargeable tax for that period, calculated in accordance witbltht)tN!OvfSions 'Of this Act other than this section, is' less than the amount mentioeedjn Sl,lllt$ectien (2) of this section,)he company shall be liable to pay an,a.(iditiotlal amouneof chargeable tax for that period equal to the difference between two.amounts.
(2) The amount referred to in the foregoing subsection

Chargeable Tax Payable in Certain

Circumstances.

21 22
23

is. for an)'~g

tax

24 25 26 T7 28 29
II

period, of a company, the amount which the chargeable

fer

that period,

calculated in accordance with the provisions of this Act, would ~

ro if. 'in

the case of crude oil exported from Nigeria by the companYlltD.erelet!ence!in section 419 of this Act to the proceeds of sale thereof were afrefmuee to [he

amountobtained by multiplying the number ofbarrels'ofthaecrude oil by the

relevant sum per barrel.
i'

(3) For the purposes of subsection (2) of'this section there!eYlUJlsumper barrel of crude oil exported by a company is the posted price appUcable to that

31

Petroleum Industry

2008 No. C 5015

crude oil reduced by such allowances (if any) as may from time to time be 2 3 4 5 6 7 8
9

agreed in writing between the Government of Nigeria and the company. (4) The whole of any additional chargeable tax payable by a company by virtue of this section for any accounting period shall be payable concurrently with the final instalment of the chargeable tax payable for that period apart from this section, and shall he assessed and be paid by the company accordingly under the provisions of this Act. (5) In this secrion-.
(a)

"posted price", in relation to any crude oil exported from Nigeria by

10 II 12 13 14
15

a company, means the price F.D.R at the Nigerian port of export for crude oil of the gravity and quality in questionwhich is from limeto timeestablished by the company, after agreement with the Government of Nigeria as to (he procedure to be followed for the purpose, as its posted price for Nigerian crude oil of that gravity and quality.
(b)

References in this section to crude oil include references to casing

16 17

head petroleum spirit, which has been injected into crude oil. (6) Every posted price established as aforesaid must bear a fair and

18 reasonable relationship19
(a)

to the established posted prices of Nigerian crude oils of comparable

20
21

quality and gravity, if any; or

(b)

if there are no such established posted prices for such Nigerian crude

22 23 24 25 26
T1

oils, to the posted prices at main international trading export centres for crude oil of comparable quality and gravity, due regard being had in either case to freight differentials and all other relevant factors. (7) Where any crude oil which in relation to a particular company is chargeable oil is exported from Nigeria otherwise than by that company, that crude oil shall for the purposes of this section be deemed to be exported from Nigeria by that company. 433.-(1) Where two or more companies are engaged in petroleum
Partnership,
etc

28 29 :D 31

operations or upstream gas operations either in partnership, in ajoint adventure

C 5016 2008 No.

Petroleum Industry
or in concert under any scheme or arrangement the Minister may make rules

2 3 4 5 6 7 IS 9 10 II
12

for the ascertainment of the tax to be charged and assessed upon each company so engaged, which may necessarily(a) provide for the apportionment

of any profits, outgoing, expenses,

liabilities, deductions, qualifying expenditure and the tax chargeable upon each company, or
(b) provide for the computation

of any tax as if the partnership,

joint

adventure,

scheme or arrangement

were carried on by one company and

apportion that tax between the companies concerned or

(c) accept some other basis of ascertaining

the tax chargeable upon each

of the companies which may he put forward by those companies

(d) contain provisions which have regard to any circumstances

whereby

13 14 15 16 17 18
19

such operations arc partly carried on for any companies by an operating company whose expenses are reimbursed by those companies (2) The rules referred to in Subsection (I) of this section(a) may be expressed to be of general application for the purposes of this

section and Act or of particular application 10 a specified partnership,joint adventure, scheme or arrangement.
(b) may be amended or replaced from time to time as may be necessary.

20 21 22 23 24 25 26 Tl 28 29 3'J

(3) Rules made under this section shall not impose a greater burden of tax upon any company so engaged in any partnership, joint adventure, scheme or arrangement than would have heen imposed upon that company under this Act if all things enjoyed, done or suffered by such partnership, joint adventure, scheme or arrangement had been enjoyed, done or suffered by that company in the

proportion in which it enjoys, does or suffers those things under or by virtue of that partnership joint adventure, scheme or arrangement. (4) Notwithstanding the provisions of subsection (3) of this section, each company shall be responsible for reporting its own petroleum operations or upstream gas operations, profits, outgoings, expenses, qualifying expenditure and the tax chargeable on its petroleum operations or upstream gas operations.

Petroleum Industry
434.-(1) 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19

2008 No. C 5017

Companies nut Resident in Nigeria.

A company not resident in Nigeria which is or has been engaged

in petroleum operations or upstream gas operations ("non resident company") shall be assessable and Chargeable to tax, either directly or in the name of its manager, or in the name of any other person who is resident in Nigeria and employed in the management of the petroleum operations or upstream gas

operations carried on by such non-resident company, as such non- resident company would be assessed and charged if it were resident in Nigeria. (2) The person in whose name a non-resident company is assessable and chargeable to tax shall be answerable(a) for all matters required
(0

be done by virtue of this Part for the

assessment of the tax as might be required to be done by such non-resident company if it were resident in Nigeria; and
(b) for paying any tax assessed and charged in the name of such person hy

virtue of subsection (1) of this section

435. The manager or any principal officer in Nigeria of every company

which is or has been engaged in petroleum operations or upstream gas operations shall be answerable for doing all such acts as are required to be done by virtue of this Act for the assessment and charge to tax of such company and for payment of such tax. 436.-(1) Where-

Manager of Companies,

etc. to be Answerable.

2fJ 21
22 23 24 25 1h T1 28 29 JJ 31

(a) a company is being wound up or (b) where in respect of a company a receiver has been appointed by any

Company Wound Up, etc.

Court, by the holders of any debentures issued by the company or otherwise, the company may be assessed and charged to tax in the name of the liquidator of the company or the receiver or any agent in Nigeria of the liquidator or receiver and may be so assessed and charged to tax for any accounting period whether before, during or after the date of the appointment of the liquidator or receiver (2) Any such liquidator. receiver or agent shall be answerable tor doing all such acts as are required to be done by virtue of this Act for the assessment and charge to tax of such company and for payment of such tax.

C S018 2008 No.

Petroleum Industry
(3) Such liquidator or receiver under this section shall not distribute any

2 3 4 5
A voidance by

assets of the company to the shareholders or debenture holders thereof unless he has made provision for the payment in full of any tax which may be found payable by the company or by such liquidator, receiver or agent on behalf of the company. 437. Where a company which is or was engaged in petroleum operations or upstream gas operations transfers a substantial part of its assets to any

Transfer.

6 7 8 9 10 II 12 13

person without having paid any tax, assessed or chargeable upon the company, for any accounting period ending prior to such transfer and in the opiriion of the Board one reason for such transfer by the company is to avoid payment of such tax. then that (ax as charged upon the company may be sued for and recovered from that person in a manner similar to a suit for any other tax under section 459 of this Part, subject to any necessary modification of that section. 438. Every person answerable under this Act for the payment of tax on behalf of a company may retain out of any money in or coming to his hands or within his de facto control on behalf of such company so much thereof as shall be sufficient to pay such tax, and shall be and is hereby indemnified against any person whatsoever for ail payments made by him in accordance with the

lndcmnificaticn

14 15 16 17 18 19

of
Representative.

provisions ofthis Act. 439.-(1) Every company which is or has been engaged in petroleum

Preparation and Delivery or Accounts and Parucularx.

Xl 21 22 23
24

operations or upstream gas operations shall for each accounting period of the company. make up accounts of its profits or losses, arising from those operations, of that period and shall prepare the particulars following particulars(0) computations of its estimated adjusted profit or loss and of its estimated

2S
26
?]

assessable profits of that period;

(b) in connection with the Ninth Schedule to this Act, a schedule showing-

(i) the residues at the end of that period in respect of its assets; (ii) all qual ifying petroleum expenditure incurred by it in that period; (iii) the values of any of its assets (estimated by references provisions of that Schedule) disposed of in that period; and
(iv) the allowances due to it under the said schedule for that period;

2R 29 Xl 31

to the

Petroleum Industry
(c) a computation of its estimated chargeable profits of that period;

2008 No. C 5019

2 3 4 5
6

(d) a statement of other sums, deductible under the liabilities for which were incurred during that period;
(e) a statement of all amounts repaid, refunded, waived or released to it,

during that period; and

if) a computation of its estimated tax for that period.

(2) Every company which is or has been engaged in petroleum operations or upstream gas operations shall, with respect to any accounting period of the company, within five months after the expiration of that period or within five months after the dale of publication of this Act in the Federal Gazette upon enactment (whichever is later) deliver to the Board a copy of its accounts

7 8 9 10 11 12 13 14 15 16 17 18 19 Xl 21 22 23 24

(bearing an auditor's certificate) of that period, made up in accordance with the provisions of subsection (1) of this section .. and copies of the particulars referred to in that subsection relating to that period; and such copies ofthose accounts and each copy ofthose particulars (nor being estimates) shall contain a declaration which shall be signed by a duly authorised officer of the company or by its liquidator, receiver or the agent of such liquidator or receiver, that the same is true and complete and where such copies are estimates each copy shall contain a declaration, similarly signed, that such estimate was made to the best of the

ability of the person signing the same. 440.-(1) The Agency, the National Oil Company, and the Inspectorate
Roil'S of Agency. National Oil Company and Inspectorate.

shall, as necessary, provide information to [he Service on(a) the approved budget of joint venture and production sharing contracts,

pre-audit and post- audit joint venture accounts, benchmarked, verified and approved by NAPIMS or its successor organisations or agencies;
(b) production,

2S
'}fj

lifting or exported crude, realisable prices, American

n
28 29 30 31

Petroleum Institute gravity of various crude oil blends, schedule of shipping agents or companies involved in lifting crude oil, stating names, addresses, quantity and value of crude oil lifted hy COMD or its successor organisations or agencies;
(c) names and addresses oflicensed companies in [he oil anti gas industry,

C 5020 2008 No.

Petroleum Industry
schedule and approved cost of all exploration and first two appraisals, wells,

2 3 4

schedule of licenses or concessions granted categorised prospecting

as to petroleum

licences and oil mining leases and payments made thereon,

production and lifting of crude oil specifying the affected terminals by the DPR or its successor organisations or agencies; and (d) any other information that the Service may, by regulations, from time to lime. (2) The information specified in subsection (1) (a) of this section shall be delivered to the Service as follows(n) approved budget shall be delivered not later than 30 days after the

5
6 7

require,

8
9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Board may cau Ill!furlhn huunuatton.

approval;
(b) pre-audit joint venture account shall be delivered not later than 30

days after

(he

accounting year; and

(c) post-audit joint venture accounts shall he delivered not later than 31st

May of the year following the accounting date. (3) The information specified in subsection (1) (b) of this section shall be delivered to the Service on or before the 30th day of the month following that in which the production or lifting took place. (4) The information specified in subsection (1) (c) of this section shall be delivered to the Service as follows:
(a) names and addresses of such shall be delivered notlater

than 15 days

after the issuance of licences to such companies;

(b) schedules and approved costs of all exploration and first two appraisals

wells shall he delivered not later than 30 days after the approval; and
(c) schedules of licenses/concessions

granted shall be delivered on or

before the 30th day of the month following the granting of licenses/concession. 441. The Board may give notice in writing to any company which is or has been engaged in petroleum operations or upstream gas operations when and as often the Board may require, requesting it to furnish within such reasonable time as may be specified by such notice fuller or further information as to any of the matters either referred to section 440 of this Act, or as to any other

n
28 29

JJ
31

Petroleum Industry
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Xl 21 22 23

2008 No. C 5021

matters which the Board may consider necessary for the purposes of this Act. 442.-(1) For the purpose of obtaining full information in respect of any company's petroleum operations or upstream gas operations the Board may
Power to Call for Returns, Books, etc.

give notice to such company requiring it within the time limited by such notice, which time shall not be less than twenty-one days from the date of service of such notice, to complete and deliver to the Board any information called for in such notice and in addition or alternatively requiring an authorised representative of such company or its liquidator, receiver or the agent of such liquidator or receiver, to attend before the Board or its authorised representative on such

dale or dates as may be specified in such notice and to produce for examination any books, documents, necessary. (2) If a company assessable to lax under the provisions of this Act fails or refuses to keep books or accounts which, in the opinion of the Board are adequate for the purpose of ascertaining the tax, the Board may by notice in writing require it to keep such records, hooks and accounts as the Board considers to be adequate in such form and in such language as the Board may in the said notice direct and, subject to the provisions of subsections (3) and (4) of this section, the company shall keep records, books and accounts as directed. (3) An appeal shall lie from any direction of the Board made under this section to ajudge of the High Court. (4) On hearing such appeal {hejudge may confirm or modify such direction and any such decision shall be final. 443.-(1) Not later than two months after the commencement each
lmercst on sboruall of tax p,id as estimate.

accounts and particulars which the Board may deem

24
25 1h T7 28 19 l) 31

accounting period of any company engaged in petroleum operations or upstream gas operations, the company shall submit to the Board a return, the form of

which the Board may prescribe, of its estimated tax for such accounting period (2) If, at anytime during any such accounting period the company having made a return as provided for in subsection (1) of this section is aware that the estimate in such return requires revision then it shall submit a further return containing its revised estimated tax for such period.

C 5022 2008 No.

Petroleum Industry
(3) Where the further returns provided for under subsection (2)of this

2 3
4

section is not made, the Service shall impose interest at the prevailing London Inter-Bank Offer Rate plus spread to be determined by the Minister !,or the
differential of actual tax over estimated tax paid by the company.

5 6
7

(4) Every

return

made

by

an oil and gas producing company in fulfillment

of the provisions of this Section shall be subject to review and validation by the
Service.

8
9

444.TheAccountant-General ofthe Federation shall. every month, convene

a meeting of operators in t'ie crude oil and gas sector for the purposes of

10
E~I~nsi()n of Pcr;ot.is tor Making Returns

reconciliation of all sales, receipts and taxes in respect of crude oil.

, 445. Where it is shown by any company to the satisfaction of the Board that for some good reason the company is not able to comply with the provisions of section 439 of this Part, within the time limited by that section or any notice given to it under sections 441 or 442 of this Part, and within the time limited by any such notice, the Board may grant in writing such extension of that time as the Board may consider necessary. 446.-(1) The Board shall proceed to assess every company with the tax

11 12 13 14 15 16

Bll~rt.l to make

17 18 19 20 21 22

";"wssrnCiHs

for any accounting period of the company as soon as may be after the expiration of the time allowed to such company for the delivery of the accounts and particulars provided for in this Part. 2) Where a company has delivered accounts and particulars accounting period of the company, the Board may(a) accept the same and make an assessment accordingly;

for any

23
24

or

(b) refuse to accept the same and proceed as provided in subsection (3) of

25 26 27 28 29 30 31

this section upon any failure as therein mentioned and the like consequences shall ensue. (3) Where, for any accounting period of a company, the company has failed to deliver accounts and particulars provided for in section 439 of this

Part within the time limited by that section or has failed to comply With any notice given to it under the provisions of sections 441 or 442 of this Part within the time specified in such notice or within any extended time provided for

Petroleum Industry

2008 No. C 5023

within this Act, and the Board is of the opinion that such company is liable to 2 3 4 5
(j

pay tax, the Board may estimate the amount of tbe tax to be paid by such company for that accounting period and make an assessment accordingly, but

such assessment shall not affect any liability otherwise Incurred by such company by reason of its failure or neglect to deliver such accounts and particulars or to comply with such notices; and nothing in this subsection shall affect the right of the Board to make any additional assessment under the provisions of section 448 of this Part. 447.-( I) Without prejudice to any other power conferred on the Service

7 8 9 10
J

for the enforcement of payment of tax due from a company that has been properly served with an assessment which has become final and conclusive and a demand notice has been served upon the company in accordance with the provisions of this Part ofthis Act, or has been served on the company or upon the person in whose name the company is chargeable, then, if payment of tax is not made within the lime specified by the demand notice, the Service may in the prescribed form, for the purpose of enforcing payment ofthe tax due(a) distrain

12 13 14 15 16 17 18
19

the taxpayer by his goods, other chattels, bond or other

securities; or
(b) distrain upon any land, premises or places in respect of which the

Xl 21 22 23 24 25
1fj

taxpayer is t~e owner and, subject to the provisions of this Section, recover the amount of lax due by sale of anything so distrained. (2) The power to distrain under this section shall be in the form contained in the Fourth Schedule to the Federal Inland Revenue Service Act 2005, and such authority shall be sufficient warrant and authority to levy by distress the amount of tax due. (3) For the purpose of levying any distress under this section, an officer duly authorised by the Executive Chairman may apply to a Judge of the Federal High Court sitting in Chambers under oath for the issue ofa warrant under this section, (4) The Judge of the Federal High Court mayan application made exauthorise such officer, referred to in subsection (3) of this section, in

27 28

29
l)

31 'parte

C 5024 2008 No.

Petroleum Industry
writing to execute any warrant of distress and, if necessary, break open any

2 3 4 5
6

building or place in the daytime for the purpose of levying such distress and he may call to his assistance any police officer and it shall be the duty of any police officer when so required
(0 aid

and assist in the execution of any warrant

of distress and in levying the distress. (5) The distress taken pursuant to this section may, at the cost of the owner thereof, be kept for 14 days, at the end of which time, if the amount due in respect of tax and the cost and charges incidental to the distress are not paid, the same may be sold.
(6) There shall be paid out of the proceeds of sale, in the first instance,

7 8
9

10
II

the cost or charges incidental to (he sale and keeping of the distress, and the residue, if any, after the recovery of the tax liability, shall be payable to the owner of the things distrained upon demand being made within one year of the sale or shall thereafter be forfeited.
(7) In exercise of the powers of distress conferred

12 13 14
IS

by this section, the

16 17 18 19

person to vvhom the authority is granted under subsection (4) of this section may distrain upon all goods, chattels and effects belonging to (he debtor wherever the same may he found in Nigeria.
(8) Nothing in this section shall be construed as authorising

the sale of

Achhuona! '\"n'lTl~nL,_

'21 "
22
2J

any immovable property without an order of a Court of competent jurisdicucn.

448.-(1) lfthc Board discovers or is of the opinion at any time that, with
respect to any company liable to tax, tax has not been charged and assessed upon the company or has heen charged and assessed upon (he company at a less amount than that which ought to have been charged and assessed for any accounting period of the company, the Board may within six years after the expiration of that accounting period and as often as may be necessary, assess such company with tax for that accounting period at such amount or additional amount as in the opinion of the Board ought to have been charged and assessed, and may make any consequential revision of the tax charged or to be charged for any subsequent accounting period of the company.
(2) Where a revision under subsection (1) of this section results 'in a

24 2'
)J5

27 28 29
30

31

Petroleum Industry

2008 No. C 5025

greater amount of tax to be charged than has been charged or would otherwise 2 3 4 5 6 7 8 9 10 II 12 be charged an additional assessment, or an assessment for any such subsequent accounting period shall he made accordingly, and the provisions of this Act as to notice of assessment, objection, appeal and other proceedings under this Act shall apply to any such Assessment or additional assessment and to the tax charged thereunder. (3) For the purpose of computing under subsection (I) of this section the amount or the additional amount of tax for any accounting period of a company which ought to have been charged, all relevant facts consistent which subsection (3) of section 454 of this Act shall be taken into account even though not known when any previous assessment or additional assessment on the company for that accounting period was being made or could have been made. (4) Notwithstanding the other provisions of this section, where any form

13 14 15
16 17

of fraud, wilful default or neglect has been committed by or on behalf of any company in connection with any tax imposed under this Act. the Board may, at any time and as often as may he necessary, for the purpose of recovering any loss of tax attributable to the fraud, wilful default or neglect. 449.-(}) Assessment of tax shall he made in such form and in such
Making of
Assessments

18
19 20 2J 22 23 24 2'i 26 TI 28 29 30 31

manner as the Board shall authorise and shall contain the names and addresses of the companies assessed to tax
Of

etc

of the persons in whose names any companies

(with the names of such companies) have been assessed to tax, and in the case of each company for each of its accounting periods, the particular accounting period and the amount of the chargeable profits of and ussessabte lax and chargeable tax for that period. (2) When any assessment requires to he amended
Of

revised, a form

(If

amended or revised assessment shall he made in a manner similar to that in which (he original of that assessment was made under subsection (I) of (hi, section but showing the amended or revised amount of the chargeable profus. assessable tax and chargeable tax. (3) A copy of each assessment, and of each amended or revised assessment shall he filed in a list which shall constitute the Assessment List for the purpose

C 5026 2008 No. of this Act.

Notices (if
.-\S.ICS'dl1Cnt.

Petroleum Industry

2 3 4 5
6

450.-(1) The Board shall cause to be served personally on or sent by registered post to each person whose name appears on an assessment in the Assessment List, a notice of assessment stating its accounting period and the amount of its chargeable profits, assessable tax and chargeable tax charged and assessed upon the company, the place at which payment of the tax should be made, and informing such company of its rights under subsection (2) of this section. (2) If any person in whose name an assessment was made in accordance with the provisions of this Act disputes the assessment, that person may apply to the Board, by notice of objection in writing, to review and revise the assessment so made on him; and such application shall be made within twenty-one days from the date of service of the notice of such assessment and shall state the amount of chargeable profits of the company of the accounting period in respect of which the assessment is made and the am?unt of the assessable tax and the tax which such person claims should be Slated on the notice of assessment. (3) The Board, upon heing satisfied that owing to absence from Nigeria, sickness or other reasonable cause, the person in whose name the assessment

etc

7
8 9

10 11 12 13 14 15 16 17 18 19

~ was made was prevented from making the application within such period of 21 22 23 24 25
2fi twenty-one days shall, extend the period as may be reasonable in the

circumstances. (4) After receipt of a notice of objection referred to in subsection (2) of this section the Board may within such time and at such place as the Board shall specify, require the person giving the notice of objection to furnish such particulars as the Board may deem necessary, and may by notice within such time and at such place as the Board shall specify, require any person to give evidence orally or in writing resisting any matters necessary for the ascertainment of the tax payable. and the Board may require such evidence if given orally to be given on oath or if given in writing to be given by affidavit (5) In the event of any person assessed who has objected to in assessment

n
28

29 30 31

Petroleum industry

2008 No. C 5027

made upon him agreeing with the Board as to the amount of tax liable to he 2 3 4 5 6 7 8 9 iO 11 12 13 14 15 16 17 18 19 20 21 II 23 24
25

assessed, the assessment shall be amended accordingly, payable shall be served upon such person.

and notice of the tax

(6) Ifan applicant for revision under the provisions of subsection (2) of this section fails to agree with the Board the amount of the tax, We Board shall give such applicant notice of refusal
(0

amend the assessment as desired by

such applicant, and may revise the assessment to such amount as the Board may determine and give such applicant notice of the revised assessment and of the tax payable together with notice of refusal to amend the revised assessment and, wherever requisite, any reference in this Act to an assessment or to an additional assessment shall be treated as a reference to an assessment or to an additional assessment as revised under the provisions of this subsection. 451.-(1) No assessment, warrant or other proceeding purporting to be Errorsand
defecls in

made in accordance with the provisions of this Act siJali he quashed, or deemed to he void or voidable, for want of form, or he affected by reason of a mistake, defect or omission therein, if the same is in substance and effect in conformity with or according
(0

assessment
and notice.

the intent and meaning of this Act or any Act amending the

same, and if the company assessed or intended to be assessed or affected thereby is designated therein according to common intent and understanding. (2) An assessment shall not be impeachable or affected(a) by reason of a mistake therein as
(0-

(i) the name of a company liable or of a person in whose name a

company is assessed; or (ii) the amount of the tax;

(b) by reason of any variance between the assessment

and the notice

LiJ T1 28

thereof, if in cases of assessment, the notice thereof he duly served on the company intended to be assessed or on the person in whose name the assessment was to he made nn a company, and such notice contains, substance and effect, the particulars on which the assessment is made. 452.-( 1) Income tax computations made under this Pan, including any lncolne [3)(
computauon.

in

29
)) 31

assessments made under section 446 of this Part, shall be made in the currency

C 5028 2008 No.

Petroleum Industry
in which the transaction was effected.

,\pp<.:al'

to

2 3

453.-(1) Every representative

company

appealing

shall appoint

an authorised

I'L',kr;1I11'!"il

Court auainst '-\' -cssmc II\S

who shall attend before the court in person on the day and at the

4 5
6

time fixed for the hearing of its appeal, but if it be proved to the satisfaction of the judge that owing to absence from Nigeria, sickness or other reasonable cause any duly appointed representative is prevented from attending in person

7
8 9

at the hearing of the company's appeal on the day and at the time fixed for that purpose, the judge may postpone the hearing of the appeal, for such reasonable time as he thinks necessary for the attendance of the appellant's representative, or he may admit the appeal to be made by any other agent, clerk or servant of the appellant, on its behalf or by way of written statement. (2) Twenty-one clear days' notice shall, unless rules made hereunder otherwise provide, be given 10 the Board of the date fixed for the hearing of the appeal. (3) The onus of proving that the assessment complained of is excessive shall be on the appellant. (4) The judge may confirm, reduce, increase or annul the assessment or make such order thereon as to him may seem fit, (5) Notice of the amount of tax payahle under the assessment as determined

10 11 12 13 14 15 16 17 18 19

211 by {he judge shall be served by a duly authorised representative of the Board 21 22
either personally on or hy registered post to, the appellant. (6) Notwithstanding anything contained in this Act, if in any particular

2.3 case, the judge from information given at the hearing of the appeal, is of the 24 25
opinion that the lax may not be recovered, he may on application being made by or on behalf of the Board require the appellant 10 furnish within such time as may he specified security for payment of the tax and if such security is not given within the time specified the tax assessed shall become payable and recoverable forthwith. (7) All appeals shall be heard in camera, unless the judge shall, on the application of the appellant, otherwise direct. (8) The costs of the appeal shall be in the discretion of the judge hearing

'"
27

2R
29

JJ 31

Petroleum Industry
the appeal and the judge shall fix a sum. 2

2008 No. C 5029

(9) The Chief Judge of the Federal High Court may make rules providing

3
4

for the method of tendering evidence before a judge on appeal, the conduct of such appeals and the procedure to be followed by a judge upon stating a case for the opinion of the Court of Appeal.
(10) Pending (he making of any rules under this subsection,

5
6 7

the rules

applicable in civil appeal cases from Magistrates Court to the High Court of Lagos State shall apply to any appeal or to any such procedure for the purposes of this section and Act with any necessary modifications.
(II) An appeal against the decision of the judge shall lie to the Court of

8
9

10
II 12

Appeal(I) at the instance of the appellant where the decision of the judge is to

13
14 15 16 17 18

the effect that the correct assessment of tax is in the sum of N 100,000 or upwards; and
(b) at the instance of the Service where the decision of the judge is in

respect of a matter in which the Service claimed that the correct assessment of tax was in the sum ofN 100,000 or upwards.

454.-(1) Where(n) no valid objection or appeal has been lodged within the time limited by either secuons 450 and 453 of this Act, as the case may he, against an assessment as regards the amount of the tax assessed thereby, or
(b) where the amount of the tax has been agreed to under subsection (5) of

19
2D

Assessment to he lin;iI ~IHJ Conclusive.

21 22
23

section 450 of this Act, or

(c) where the amount of the tax has been determined

24 25
2f> TI

on objection or

revision under subsection (6) of section 450 of this Act, or

(d) on appeal, the assessment its made, agreed to, revised or determined

on appeal, as the case may be, the said assessment shall be final and conclusive for all purposes of this Act as regards the amount of such tax, and if the full amount of the tax in respect of any such final and conclusive assessment is not paid within the appropriate period or periods prescribed in this Act, the provisions thereof relating tothe recovery of tax, and to any penalty under

28
J9

Xl
31

C 5030 2008 No. section 457. shall apply. 2 3 4 5 6 7 8

Procedure in LISe'> Where Ohjcuioll or "'J'l'uli is PlnJin.~

Petroleum Industry

(2) Where an assessment has become final and conclusive, any tax overpaid shall be repaid. (3) Nothing in section 450 of this Part shall prevent the Board from making any assessrnenr or additional assessment to tax for any accounting period which does not involve re-opening any issue on the same facts which has been determined for that accounting period under subsection (5) or (6) of section 450 of this Act, hy agreement or otherwise or on appeal.

9 10 11 12 13

455. Collection of tax shall in cases where notice of an objection or an

appeal has been given remain in abeyance, any pending proceedings for any instalment thereof being stayed until such objection or appeal is determined but the Board may in any such case enforce payment of that portion of the tax (if any) which is not dispute

"

linu- vhhiu which r'avmcru i, 1" hL\bd~

14 15 16 17 IS 19 20 21 22 21 24 25 26 T1 28 29 30 31

456.-(1) Subject to the provisions of section 455 of this Part, tax for any
accounting period for petroleum operations as well as upstream gas operations shall be payable in equal monthly instalments together with a final instalment as provided in Subsection (4) of this Section. (2) The first monthly payment shall be due and payable not later than the third month of the accounting period and shall be in an amount equal to onetwelfth or, where the accounting period is less than a year, in an amount equal to monthly proportion, of the amount of tax estimated to be chargeable for such accounting period in accordance with the section 443 of this Part. (3) Each of the remainder of monthly payments to be made subsequent to the payment under subsection (2) of this section shall be due and, payable not later than the last day of the month in question and shall be in an amount equal to the amount of tax estimated to be chargeable for such period by reference lO the latest returns submitted by the company in accordance with subsection (2) of section 443 of this Part, less so much as has already been paid tor such accounting period divided by the number of such of the monthly payments remaining to be made in respect of such accounting period. (4) A final instalment of tax shall be due and payable within twenty-ope

,Petroleum Industry
1 days efter the service of the notice of assessment of tax for such accounting period, and shall beJ~ amount of the, tax assessed for that accounting period

2 3
,4 5

lessso much thereof as bas already been paidunder subsection (2) and (3) of
this secnen or is the subiecr of proceedings. (5) Any instalments on account: of tax estimated to be chargeable shall be

6
7 8

treated

as tax

charged and assessed for the purposes of sections 457 and 459 of

thisPart. (6) TheService shall impose interest at Central Bankof Nigeria minimum

,9
10

rediscount rate.
(7)For the purposes of subsection (1) of this;section, the conversion of the timing ofpaymears of tax, to provide for the making of monthlypaymenrs shall

11
I2 13

be given effect to as set out in the Ninth Schedule of this Act. " 457.-(1) If any taxjs
JK)t

paid within the period stipulated in this section

,14- and.seceon 456 of this Part15

(a) a penalty equal to 10 per cent.per annumof.the.amoura of tax payable

Penally for Non-Payment of Tax and Enforcement of Payment

16 17 18 19 :l)
21

. r&ballrbeadded thesero, and Uteprovisions of this Act relating to the collection

and recovery of ta~ shall apply to the collection of such sum;
(b)

the tax due saall incur interest at the prevailing Central Bank of

Nigeria minirnurruediscoum rare plus spread to be determined by the Minister from the date when the tax becomes payable until it is paid and the provisions flfJItis Act retariag 10 collection and recovery of tax shall apply to the

22

cclfeedoe,and recoveryof the interest;

'.(e)

23
24 25
26 27 28

rbe Servtce-ahall serve ademand note uponrhe company or person in if the payment

wlwfle name the.company.is chargeable.rand

is riot made

within one month from the date of service of such demand note. the Service ,ma)j proceed.to enforce payment as provided in this Section; ,(d). penalty and inte.J;est imposed under this subsection shall not be the deemed robe.part ofthetax paid for the purpose of claiming relief under any of thaprovisiens of dlis-A.l;.t. without.lewfuijustification or excuse fails to pay

i9
.3)

a) A.n~coroparwwhiqh

31 "the tal;.~,the

period of ore.rnorsh prescribed in paragraph (b) of subsection

(1) dfthis section, commits an offence under this 'Act;'and d1t ~orproof of sucajustiflcanon

Petrol.um IntJustry -. - ,
.

2
Collection of Tax after determination

or excuse shall bean tMcb.~.

ou~

"<. ~"'

3 4

458. Where payment of tax In wI\oIe or i"lIan ha. bOOn""'" -fIII1dioi the result of a notice of objection or of appeal; the assessrnenr
la'll.

.ttd8r the

of objection or appeal

5
6 7 8

asdetermined on such objecUon or1ijtPI!:.la& then. may be_II

s~:"'"
AlCb

be payable fprtbwith 35 any part tb\!reof in p~ingl to determination service

Ofl

and as to the balance thereof within one month t'ro;ri4:JtO""'" of In wIloce...,.tbe eomplIitIy

tOO,company assessed, or en the ~

9
10
Suit tor Tax

is assessed, of

the notification of the lax paYllble, and If mch ~_

pIrid

within such period the provisions of6Cf.iOOs453-(jf dllispartmilt appJy,

459.... Tax. may be iUl!d for and l1lC9veJ't:(Hn.(laQrt'ofr~ (1)

11

hy the Board.

12 juri"'iction at the place at which payment ~d

13 offIcial name with flJll costs of mil from the

be made; bydat in'its

cmnpanYaJ&OUOI1b iIdt fU'Qr

14 15 16 17 18 19

from me person in whose name the company is -1lIl~1I6edto 8f1e1: due'ro the Government of the Pederattcn. (2) for the purposes of this section, a court of oontpd'dlit IjitiJdlction shall include a magistrate's court, which court is ner$y -lfW~; necessary jurisdiction, with the

if the amount clainwdin any suil-d0et; not exceed with ~ij6

iT "
it

me

amount of the jurisdiction of the magisrrateeencemed suits.

ponohal

(3) In any suit under subsection (I) of tbillsoctlon the prodile:doR of-a certificate signed by any person duly authorised ~ the Botd,pla,1he and address of the defendant and the aBlOUntof tax due by the defeddaIK .niJe sutflcienrevidence give judg~nt
Relief in
Respecr of

of the amount so due and llUfficient aul:hoIity _die

coun to

for the said amount.

460 ..-( 1) If any person who hai

""m (or any .",,,".lIin8

potIoII aII<tIOi

Error.

that any assessment made upon him or .in name for that perWd was e~ve by reason of some error or mistake in the lWO(JUnts,J)lIrtiPUlan'OI'otkr wPililR' information supplied by him to the Board for the puspose -of die :aliI&eSllmeRt. such penon may ar any time, nor later than six years afilrt die end of the accounting period in respect of whichtke assessment '..,.; 1~ an

.
(2)00 tecei"ln~any such applk:ationthe Board shall Inquire into the shall by, way pf fIP8)1t1etlt:of

appiicitlilol1lnwriting to the Board for relief.

2
3

-tnlttdundilUbject

to Ute pt'OY.isi0JlSfth-is ~ion o

4 S 6

tuAi",e suchrelief in resptJ~n~thefflor be reasonable and just-.

or rtibtake as appears to the Boatd to

(3) No relief sltail-be given under this section in respect of

lin

error or

7,: mistake as to the baai~wn which tlJ!;tliahilit)' ~fhe applicant ou.ght to have been t
8, computed.where such KWUnf.8lpartiol.llars

or information was in fact made or

given on the basis or in accordance with the practice of the Board generally

1O! ,pNVttilw . t the timeWhcn-8Uclt accoeras, pardooJar or information was made

11

or given. {ifJIn dete:rtniiling.kny apptication under this section the Board shall have of the case, and in particular shall

12 ,
13

regard to all the relevant circumstances

14 .eonsieer. whether lltb Bral;lting .of nelic;f would ,csplt jn the exclusion from

is
16

cbatge to tax of antpartQftbe

chargeable profits of the applicant, and for this

purpose the Board may take Into consideration the liability of thf. applicant and of-other years.

17 assessments made upoebimtneespect

18 (5)

No, appeal shall lie from a determination of the Board under this
Repayment of

19
:J)

section, whicb d.etermioation,sn3J.Ibe final and. conclusive. 461 .....:(l~Sa.as otherwise expressly provided.in this Act, no claim for e the repayment of any tax overpaid shall be allowed unless it is made ia writing. wit:hJn stx years next after the-end of the accounung penod to wbich it relates,
aDd If the Board disputes any such claim it shall give to [he claimant notice of rex.

21 22
23

14 25 ~, 1:1

refusel to admit [be olelm end the provisions ofthe relevant sections of this ,Part shan apply with any necessary mcdlflcanora. , r(i2r The: 8oorli-shaU glve a certificate of the amount of any tax 10 be repaid
1lftdao!aDy of thep/li)viwas

oflhis ACt or undereey order ot a counof ~te~t'

thI: certif.l.";ate,the Accountant-General

28 ' jurid.ction

and-upon-the ~eiptof

of the

19

Federation shall cause repayment to be made in confonnity therewith.

)}

46.2.,....(1) AD)' PIJ;~m,guijw,~faI\offenGe against this Act or of any rule

for wbicl!:oo other penalty. is specifically.provided, shall be

31 -made.tbereuneer

Penalty for Offences.

C 5034 2O(Il No.

1 2 3 4

Petroleum Industry
liable to a fine 0[1'1110,000 (ten thousand naira), and wheresucb'~js

one

under the relevant sections of this Part. under the relevant sections of this Pari,
or is a'failure, arising from the provisions of the relevant sectioRsoflhiS;Part

to deliver accounts, particulars or information or to keep records requit:ed,-8.

further sum of N2,OOO (two thousand Naira) for each and every ~ dUring

5
6 7

which such offence or failure continues, and in default ofpayment to imprisonment for six months, the liability for such further sum to commence from the day
following the conviction, or from such day thereafter as the court may!oroer:~ (2)Any person who-. (a) fails to comply with the requirements of it notice served OI\lbimiQndet this ACI; or
(b)

8 9
10 11 12 13 14 15 16 17 III

having a duty so to do, fails to comply with the provisions of sectioa

439 of this Part; or

(c)

without sufficient cause fails to attend in answer to a noticem summons

served on him under this Act or having attended.fails to answer any q*stioil' lawfully put to him; or
(d)

If' "f.'

fails to submit any.return required to be submitted by 'the relevant

sections of this Part, in accordance with that section or in accordance with that section and the relevant sections of this Part shall be guilryof'anotfence
(3) Any offence in respect of which a penalty is provided by_section

19 .~
21
Deduction of tax from

.
(1)

of Ihis section shall be deemed 10 occur in Lagos. ~.-{~} Where any interest other than interest on inter-bank eeposits Or

~ 2l
24 25 26

Interest, etc.

royalty becomes due from one company to another company or to any,PI'JSOIlto whom the provisions ofthe Personal Income Tax Act apply, the ompanyiJlaki~ such payment shall, at the date when payment is made or credited, wbiClevet first occurs, deduct therefrom tax at the rate prescribed in subsection (2) of this section and shall forthwith pay over to the Boord 'the amount So dedutted.
(2) The rate at which tax is to be deducted in this section shallbe 10 per

.. :!l. :lll 7!!

"

cent.
(3) For the purposes of this section, person authorised to dedueHax includes

ti .
31

government departments, parastatals, statutory bodies, institutio~s.other

Petroleum Industry
establishments approved for the operation of Pay As You Earn system. 2 3 4 5 (4) The.tax, when paid over to the Board, shall be the final tax due from a non-resident recipient of the payment. , (.:5) In accounting for the tax so deducted to the Board, the company shall state in,wrillng the following particulars, that is to say(0) the gross amount of the interest or royally; -(b) the name and address of tile recipient; and

6
7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

(c) the amount of tax being accounted for. 464.-( I) where.anyrent.becomes due from or payable by one company
Deduction of tax on rem.

to another company or to any person 10 whom the provisions of the Personal Income Tax Act apply ,the company paying such rent shall, althe date when the rent is paid or credited, whichever first occurs, deduct therefrom, tax at the rate prescribed under subsection (2) of this section and shall fon:hwith pay.over to the Board-the amount so deducted. (2) Tbe.rare.at.wmeh percent. (3) For the purposes of this section, person authorised to deduct tax includes government departments, parastarats, statutory bodies, institutions and other tax is to be deducted under this section shall be 10

establishmems approved for the operation of Pay As You Earn system. (4) The tax, when paid over to the Board, shall be the, final tax due ITom a non-resident recipient oftbepayment. (5) In 'accounting for the tax so deducted 10 the Board, the company shall state in writing the following particulars, that is 10 say-

(a) the gross amount of the rem payable per annum; (b) the name and address of the recipient and the period in respect of

which such rent has been paid or credited;

(c) the address and accurate description of the property concerned;

Z7
28, 29
J)

and

(d) rbe amouneof tax being accounted for. (6) Any reference to rent in this section shall be construed whenever necessary as including payments for the use or hire of any equipment, payments for charter vessels. ship-or aircraft and all such other payments for the use of or

31

PetriJJemnI.rim!ry
4 ... '.

hire of movable and immovable property.

Deduction of

.,',

tax tmm
dividend.

2 3

46S ... where-any (I)

dividend or 801:11 other distributiOn ticltomcs dUe

froth or payable by a Nigerian COn1p3Tt)' to any other to

coml'any.;oftt,J:lWfptrsoo

4
5 6 1 8
9 10

whom the provlsicns of the Personal lncertre Tax Act apply~ the oompany
credited, Whichever first oceurs, deduct tbmt'tom to at the
pi)'

paying such dividend or making such distribution st1allJ.!tl!the'date wtsItI the

amount is paid

Of

rate prescribed under subsection (2) of this section and shatl;flJtChwtth to the Board the amount eo deducted.
(2) The rate at which tax Is to be deductedunder
1;1,

over

thill,sectibfHhall be 10
-'"".1;

percent.

11 12 13
14 15

-(3) Dividend received after deduction of tax PnfllCfl~ltb mi&1lJ1Ction shall be 'regarded as.franked investntent income of tht'comPl'H)'.reet~R
dividend 'and shall not be charged to fUf1herta-lt as part' of dteptoflCSIOf

the' thei

recipient company. However, where such income is re:.distttbl.ikldl:l.nd!la~ is to be accounted for on the gross amount of the; lhstt'lbutiohhvfldclitdllttce with:

16 subsection (1) of this section, the company may set-off the wl~. 17 1& 19 :xl
21 22 23 24 25 26 Tl
Deduction of lax at source.

tax

which it has itself suffered on the same income.

1

-. ';,:!

{4)The tax, when paid over to the Board, shall be the,fittaUn:ifUefrorrt " II"
'

a non-resident recipient of the payment.

(5) In. acccurulng for the tax so deducted-to the BOard, thelcOintpany shalf
state in writing the following particulars, fhais
(a) the gross amount of

ro say-,

I.

,,;,

{he dividend or such-other dlstl1Jjlitidd;

"i;

(b) the name and address of-the redpient; (c) the accounting

,I
and

period or periods of the company

",'-respect of the:'

.proflts out of which the dividend or distribution lsdeclated tobepayable the date on which payment is due; and (a).theamount'oftax,sodeducted.
',-1 :'-

28

466.-(1) Income tax' assessable on any cOmlxutY',:wbitther or not as

29 ; assessment. has been made, shall, if the Service so dtreets.. be'tWi:Mlt'able from. 30" '<any payments made by any person to.such company. 31
1 ,

v,,",'; "

(2) Any such direction may apply to any person orcJa!i8-ofpcmt)ns:8)'Jtdified'

:in ,uch direc~on, 'oither with feipeCt to all compa.nic, ora company or class of 2 ,3 4
,j,

companiei,liltblcto paymento{ illCQl1letax. (3)Any direction uQdcrllubsection addressed to the ~son-or bepubliWd,in (l)oftbifi StWliOlUbaJl ooin,writiog die federal Gazette and ihlllspecify

tbellllature_ot' JUlymel1l5and the rare at wbieh tax is IDbe 4ooucted. (4) Intletennining dw rate of lax: to be appliN to any payments made ro

6 7
,8'

a 'COmpany,.dw Sero;'ice mB}j,me into account=

(IJ) any a~le

profits of itI;u company for the year arising from <my

hi
10

iOther IiOUfCCl chargeable UJ iflcmne laX.under lhii Act; .and

(0) any income tax or arrears of rex payable by that company lor any ef

11 II '

the six preceding yean; of

a5SeiSmefll.

(5)-lncome,ti.lX~"'RJd.ul'tder f. P"I' n

theproViliiom of this $el;llonby deduction

I,
14
Jj

.-..1<10.
8Nd

"""'I''''Y 6ilol1ho sot-offfor tho p_

of collection

against 13" charged on stK:h company by aM auenJnenI, but nmyto rbeextenr dutt (be-total of udprOl\lided dedlJcUiHts dees not l!xceodliw amount of the: assessment

16 '17
Ilrl

iRe assesssnent is for tbe period to which such, paynwnts relate

llnder Ihe -provisioni of the rdevflnt sections of thfs Part. 467.--{I)Anypersonwho(tJ)makcs or signs .or causes to be made or Mined, or deHvers or causes to be delivered to the Service or any officer of the Service. any declaration. nonce,
(b) False
SlalelJlentli

J9 Xl 21 U. 2J 24 25 ~

and ReJUtlls.

ce"'aae,orother

document, wbaJ.8PeY.er; er

makes any statement in eewer to an)' question Of enquiry p.Lt to him

iii

by an'offlcer which he other enactment or law,

requiredto

ltI'l6Wl!r by

or under

tms

Act or any

being a document or staJltm<mipooI.i~edor made for any purpose of tax, whdl is untrue in .an)' materiaJ partictd.ar. commus an offence under this section.
(2)Wbare by ~ason.of .allYs1lChdocUmcnl or stalemenl required to be

V
28 29
l)

pIIOdueeU WlCiter eubsecece

(1)

of this

CC(ion

the .full amount of anytax~yabk

is not paid or any overpayment s made in respect of any repayment of tax, ee

aniouot of laxUIIlpilidor the overpayment shaU be recoverable as a debt due to

3J. 'the Service.

C 5038 2008 No.

Petroleum Jilduslry
(3) Any person who commits an offence under this secrloe'sbell.beltable

2 3 4
Penally for Failure to deduct or remit lax.

on conviction [0 a fine of N-I ,OOQ,OCM) and 100 per cent ofthe,amount

of tax

unpaid or overpayment made in respect of any repayment or to 'imprisonment

fora term of3 years or to both such fine and imprisonment. 468.-(1)

I'

5
6 7

Any person who, being obliged to deduct any taJtil.oder this

Pan, .fails to deduct or having deducted fails to pay to the Service within 30

days for the date the amount was deducted or. the lime the duty to,dcduot'aroSe. commits an offence and shall-be liable on conviction to pay the tax. withheld-or
not remitted in addition to a penalty of 10 percent ofthe tax withheJl.dor not

8 9 IO 11 12 13
14
Penalties for offences by authorised and unauthorised

remitted per annum and interest at Central Bank of Nigeria, rediscount rare plus spread to be determined by the Minister. '"

(2)The Directors or other officers responsible for tax Illllttl3mina company that commits the offence in subsection (1) of this section sIlaR'-be: tiable on conviction to imprisonment for a term of 3 years. 469. Any person who is appointed for the due administration oftbi51Actror

15

16 "employed, in connection with the assessment and collection of a.taKiW:bD-17

(a) demands from any company an amount in excess 'Ofd'ieaUthorised

persons.

18 19 :!J 21 22 23 24
25

assessment of the tax; or

(b) withholds for his own use or otherwise any poruon

..

ot'the amount of

tax collected; or
(c) renders a false return,whether

orally or in writing, ofthe..oount

of

tax collected or received by him; or (d) defrauds any person, 'embezzles any. money, or oraerwise uses his position to deal wrongfully with the Service; or
(e) steals or misuses Service documents;

or
I ,

26
27

if) compromises

on the assessment or collection of any raaes.,

commits an offence and shall be liable on conviction to a fine equivalent to 200

per cent of the sum in question or to imprisonment for, a Mm'()f_,'3iYeaFJ, or-to

28

'J9 .both such fine and imprisonment.

Deduction of

))
31

, . 470.-(1) Income tax assessable on any company, wbetheret.eotan

assessment has been made, shall, if the Service so directs, be re4ovetattlt' frdrh

T" at Source.

Petroleum Industry
any payment made or to be made by any person to such company. 2 3 4 5 6 7 8 9 10 11
12

2008 No. C 5039

(2) Any such directive referred to in subsection (1) of this section may apply to any person or class of persons specified in such directive, either with respect to all companies or a company or class of companies, liable to payment of income tax. (3) Any directive under subsection (1) of this shall be in writing addressed to the person or published in the Federal Gazette. (4) In determining the rate of tax to be applied to any payments made to a company, the Service may take into account(a) any assessable profits of that company for the year arising from any

other source on which income tax is chargeable under this Part; and
(b) any income tax or arrears of tax payable by that company for any of

13 14 15 16 17 18 19 20 21

the six preceding years of assessment. (5) Income tax recovered pursuant to this hy deduction from payments made to a company shall he set-off for the purpose charged on such company by an assessment. (6) For the purposes of this, the rate at which tax is to be deducted and the nature of activities and the services for which a company making the payment is to deduct tax and rhe dare when the payment is made or credited which ever first occurs shall he in accordance with the regulations
10
{If

collection against lax

be issued by the

Minister responsible for finance acting on the advice of the Service with the approval of the Federal Executive Council. 471. The institution of proceedings for or the imposition of, a penalty, fine ur term of imprisonment under this Part shall not relieve any person from liability to payment of any tax for which he is or may become liahle. 472. No prosecution in respect of an offence under sections 457 and 459 of this Part may he commenced, except at the instance of or with the sanction of the Board. 473. The provisions of this Part shall not affect any criminal proceedings under any other Act
Of Tax 10 he

21
23

24 21
?J5

r~yablc notwilhstanding any proceedings for penalties. Prosecution to b~ with the sanction of the Board. Saving, for criminal prccccdmgs.

T7 28
19
3)

law.

C 5040 200s
Rc,[ri<:lioll on effects or Personal lncnmc Tax ant] other
A<:\S.

No.

Petroleum Industry
474. No tax shall be charged under the provisions of the Personal Income

2 3 4 5

Tax Act or any other Act in respect of any income or dividends paid out of any profits which are taken into account, under the provisions of this Act, in the calculation of the amount of any chargeable profits upon which tax is charged, assessed and paid under the provisions of this Act. 475.-(1) If the Minister by order declares that arrangements specified in of territory outside Nigeria

Double taxaunn urraugcmcuts with other ic:rrw,ri,;s.

6 7 8 9 10 I\ 12 13 14 15 16 17 18 19 20 21

the order have been made with the Government

with a view to affording relief from double taxation in relation to tax imposed under the provisions of this Act and any tax of a similar character imposed by the laws of that territory, and that it is expedient that those arrangements

should have effect. the arrangements shall have effect notwithstanding anything in any enactment. (2) The Minister may make rules for carrying out the provisions of any arrangements having effect under this section.

(3) An order made under the provisions of subsection (1) of this section may include provisions for relief from tax for accounting periods commencing or terminating before the making of the order and provisions as to income

(which expression includes profits) which is not itself liable to double taxation. (4) Where, before the publications of this Act in the Federal Gazette upon enactment, any order has been made under the provisions of section 33 of the Personal Income Tax Act and the arrangements specified in that order, with any modifications, are expressed to apply to a tax in a territory outside Nigeria and to income tax in Nigeria and to any other taxes of a substantially similar character either imposed in that territory or Nigeria or imposed by either

22
23 24 25

contracting party to any such arrangements after those arrangements came into force and(a) such order was made before the l st day of January. 1958, {hen, for the

2iJ

n
28 29 Xl 31

purposes of this Act, that order shall be deemed to have been made under this section on that day and those arrangements shall have effect, in Nigeria, as respects tax for any accounting period; or
(b) such order was made on a day after the year 1957, then, for the

Petroleum Industry

2008 No. C 5041

purposes of this Act, that order shall be deemed to have been made under 2 3 4 5 6 7 8 9 10 II 12 13 14 15 this section on that day and the arrangements specified therein shall have

effect, in Nigeria, as respects tax for any accounting period beginning: on or after the date when those arrangements come into force and for the unexpired portion of any accounting period current at that date; (5) Where any arrangements, to which this subsection applies, contain a

provision for exchange of information with the Commissioner of Income Tax or the Commissioner as defined in section 2 of the Companies Income Tax Act as deemed to have been

then the order, with respect to those arrangements,

made under this section, shall be deemed provide for such exchange with the Chairman of the Board as respects tax, (6) The Minister may by order replace or vary any order deemed to have been made under this section for the purposes of this Act, without otherwise affecting such last mentioned order for the purpose of any other Act. 476.-(1) In this sectionMethod of Calculating Relief to he Allowed for Duuhle Taxation.

16
17 18 19 20 21 22 23 24 25 26 Tl 28
l)

"foreign tax" means any tax payable in that territory which, under the arrangements, is to be so allowed; and

"income" means that part of the profits of any accounting period which is liable to hath tax and foreign tax, before the deduction of any tax, foreign tax, credit therefore or relief granted under subsection (6) of this section. (2) The provisions of this section shall have effect where, under

arrangements having effect under section 475 of this Pan, foreign tax payable in respect of any income in the territory with the Government of which the arrangements are made is allowed as a credit against tax payable in respect of that income in Nigeria. (3) The amount of the credit admissible to any company under the terms of any such arrangements shall he set off against the tax chargeable upon that

company in respect of the income, and where that tax has been paid the amount of the credit may he repaid to that company or carried forward against the tax chargeable upon that company of any subsequent accounting period. (4) The credit for <Inaccounting period shall not exceed whichever is the

3J 31

C 5042 2008 No.

Petroleum Industry
less of the following amounts, that is to say-

2
3

(a) the amount of the foreign tax payable on the income, or (b) the amount of the difference between the tax chargeable

under this

4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 Z3 24 25 26

Act (before allowance of credit under, any arrangements having effect under the relevant sections of this Part and the tax which would be so chargeable if the income were excluded in computing profits, (5) Without prejudice to the provisions of subsection (4) of this section, the total credit to be allowed to a company for any accounting period for foreign tax under all arrangements having effect under section 475 of this Part shall not exceed the total tax which would be ultimately horne by that company, for that accounting period, if no such credit had been allowed (6) Where the income includes a dividend and under the arrangements foreign tax not chargeable directly or by deduction in respect of the dividend is to he taken into account in considering if any, and if so what, credit is to he given against tax in respect of the dividend, the amount of the income shall be increased by the amount of the foreign tax not so chargeable which falls to be into account in computing the amount of the credit, (7) Where the amount of the foreign tax attributable to the income exceeds the credit therefore computed under subsection (4) of this section, then the amount of that income, to he included in computing profits for any purposes of this Act other than that of subsection (4) of this section, shall be taken to be the amount of that income increased hy the amount of the credit therefore after deduction of the foreign tax. (8) Where(a) the arrangements

provide, in relation to dividends of some classes,

but not in relation to dividends of other classes, that foreign tax not chargeable directly or by deduction in respect of dividends is to be taken into account in considering if any, and if so what, credit is to be given against tax in respect of thc dividends; and
(b) a dividend

n
28 29 30 31

is paid which is not of a class in relation to which the

arrangements so

Petroleum Industry
provide, 2 3 4 5 6 7 8 9 10
II

2008 No. C 5043

then, if a dividend is paid to a company which controls, directly or indirectly, not less than half of the voting power in the company paying the dividends, credit shall he allowed as if the dividend were a dividend ofa class in relation to which the arrangements so provide. (9) Any claim for an allowance by way of credit shall he made not later than three years after the end of the accounting period, and in the event of any dispute as \0 the amount allowable the Board shall give to the claimant notice of refusal to admit the claim which shall be subject to appeal in like manner as an assessment.
(10)Where the amount of any credit given under the arrangements

is

12 13 14 15 16 17 18 19

rendered excessive or insufficient by reason of any adjustment of the amount of any tax payable either in Nigeria or elsewhere, nothing in this Actlimiting the

time for the making of assessments or claims for repayment of tax shaJJ apply
!O

any assessment

or claim to which the adjustment gives rise, being an

assessment or claim made not later than three years from the time when all such assessments, adjustments and other determination have been made whether in Nigeria or elsewhere, as <Irematerial in determining whether any, and if so that, credit falls to he given. (11) Where a company is not resident in Nigeria throughout an accounting period no credit shall be admitted in respect of any income included in the profits of that company of that period. 477, At any time after the enactment of [his Act, the Minister may by order delete any of the powers or duties specified in the Ninth Schedule
Of

20
21 22 2.1 24 25 26

Power10
Amend S~hedub.

include therein additional powers or duties and may do so by amendment of such Schedule or by substituting a new Schedule therefore.
PAIn

n
28 29 7D 31

IX -

REPEAl.S, TRAl':SITION'IL

.vcn SA VIN(j~

PROVISIONS

478.-(1)

From the commencement of this Act the following enactments

and regulations are hereby repealed(a) Associated

Gas Re-injection Act Cap. A25 Laws of the Federation

2(()4.

C 5044 2008 No.

Petroleum Industry
(b) Deep Offshore and Inland Basin Production

Sharing Contracts Act

Cap. D3 Laws of the Federation of Nigeria 2004;

(c) Hydrocarbon Oil Refineries Act No. 17 of1965,

3
4

Cap. H5 Laws of the

Federation of Nigeria 2004

(d) Motor Spirits (Returns) Act Cap. M20 Laws of [he Federation

5
6 7 8
9 \0

of

Nigeria 2004
(e) Nigerian National Petroleum Corporation

Act No. 73 of 1977, Cap.

123 Laws of the Federation of Nigeria 2004.

(j) Nigerian National Petroleum Corporation

(Projects) Act No, 94 of

1993, Cap. N 124 Laws of the Federation of Nigeria 2004;

(g) Nigerian National Petroleum Corporation

II 12 13 14 15 16 17 18 19

(Amendment) Act, 2007;

(II) Oil Pipelines Act Cap. 07 Laws of the Federation of Nigeria, 2004; (1") Petroleum Act 1969, CAP 350 Laws of [he Federation (j) Petroleum (Amendment) Decree No. 23 of 1996; (k) Petroleum (Amendment) Decree No, 22 of 1998; (1) Petroleum Products Pricing Regulatory Agency (Establishment)

1990

Act

2003;
(m) Petroleum Equalisation Fund (Management

Board, erc.j Act No.9 of

1975, Cap. Pil Laws of the Federation of Nigeria 2004;

(n) Petroleum Profits Tax Act, Cap. PI3 Laws of the Federation

Xl
21 21 23 24

1990;

(0) Petroleum (Special) Trust Fund Act, Cap PI4 Laws of the Federation

of Nigerian 2004;
(p) Petroleum Technology Development Fund Act, Cap. PI5 Laws of the

Federation of Nigeria 2004; (2) Any subsidiary legislation repealed as a result of the repeal of any of the enactments in subsection (I) of this section shall, in so far, as it is not

21
2f> 27

inconsistent with thix Act, remain in operation until it is revoked or replaced by subsidiary leg'Yla,'u" made under this Act. and shall he deemed for all
0l-"C11

28
29
S,,\'ill~
P["(wisinns,

purposes to have 479.-(

made under this Act.

3ll 31

I) Any license, lease or contract in respect of the exploration,

production and, or . development of crude oil or natural gas, granted under the

Petroleum Industry

2008 No. C 5045

Petroleum Act 1969, shall continue in force for the remainder of its duration, 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 as if it had been issued under the provisions of this Ac!. (2) Any license, permit or other right granted in respect of commercial activities pertaining to the downstream, including refineries, pipelines, storage, transportation, distribution and retail, under any laws in force at the time in

Nigeria, shall, in accordance with the terms of section 308 (4) apply to the Authority for the issuance of the appropriate commercial licence, and pending the issuance of the said appropriate licence, the said licence, .permit, or right shall continue in force as if it had been issued under the provisions of this Act. (3) Any other licence, permit or other right in respect of any sector of the petroleum industry in Nigeria to which subsection (I) and (2) of this section does not apply, and that has been granted by the Department of Petroleum Resources or the Petroleum Products Pricing and Regulatory Authority, as the case may he, and which is still in existence on the effective date, shall continue in force for the remainder of its duration as if it had been issued under the provisions of this Act. (4) Any tariff, price, levy, or surcharge which was payable to the

Department of Petroleum Resources or the Petroleum Products Pricing and Regulatory Authority prior to the effective date shall continue in force uruilthe expiration of the term of the said tariff, price, levy, or surcharge, or until

alternative provisions are made pursuant to the provisions of this Act or any regulations made under it, whichever is earlier. (5) Within three months from the date of commencement of this Act the Minister on the advice of the Directorate or the Inspectorate, as the case may he, may make any further transitional and savings provisions that are considered necessary or desirable, provided that these provisions are consistent with the transitional and savings provisions in this Act. 480. Any staff of the Ministry of Petroleum Resources who are employed
The Directorate.

IS
26 Tl

29 30 31

hy the Directorate transferred

as from the effective date shall he regarded as having

their services to the Directorate with effect from that date, on

terms and conditions no less favourable than those obtaining immediately before

C 5046 2008 No.

Petroleum Industry
the effective date, unless they indicate otherwise before the expiration of three

2 3 4 5 6 7 8 9 10 11 12 13 14 15 lei 17 18 1"
~)

months next following the effective date, and such services will be regarded as continuous for the purpose of pensions and gratuities.

481.-(1) The provisions of this section shall apply to all contracts or

other instruments subsisting immediately before the effective date and entered into by the Ministry of Petroleum Resources.
(2) By virtue of this Act there is vested in the Directorate

as from the

effective date and without further assurance all assets, funds, resources and other moveable or immovable property which immediately before the effective date were vested and held by the Ministry of Petroleum Resources on its own behalf.
(3) As from the effective date(a) Tnc

rights, interest, obligations and liabilities of the Ministry of

Petroleum Resources existing immediately before the effective date under any aforementioned contract or instrument at law or in equity which shall

have been held on its own behalf', or have accrued to or have been incurred on its own behalf, or for its own benefit or use shall by virtue of this Act be assigned to and vested in the Directorate; (11)Any such contract or instrument as is mentioned in sub-paragraph (a) above, shall he of the same force and effect against or in favour of the Directorate and shall be enforceable as fully and effectively as if instead.of the Ministry of Petroleum Resources, the Directorate had been named therein or had been a party thereto;
(C)

21 22 23 24 25 2[,

Any proceeding or cause of action pending or existing or which could the Ministry of Petroleum Resources

have been taken by or against

immediately before the effective date in respect of any such rights, interest, obligation or liability of the Ministry of Petroleum Resources may be

n
28 29
rll"
IIl'IKclnr;lIc'

commenced, continued or enforced or taken by or against the Directorate as if this Act had not been made. 482. All staff of the former Petroleum Inspectorate in the Nigerian National Petroleum Corporation or the Department of Petroleum Resources in the

30
31


Ministry of Petroleum Resources 2 3
4 .5 6
Oft

the effective date shall be regarded

IlS

having trilnsferr6'dthelr aerviees to the Inspectorate with effect from that date
on terms and conditions no less favourable thtn those obtattmg immedia~y before tbe effective date, unless [hey indicate otherwise before the expiration

of threernonths

1'iext foUowiag the effective date, and such services will be

regarded as continuous for the J'I1I'pOse of pensions arid gf"ltuities.

7 8 9 10
11 12 13

4IJ. Every persce whose service has been transferred to the Inspectorate
from the former Perrolenm Inspecrorere in the Nigerian National Petroleum

Corporation or \'he Departl'flent'Of Petroleum Resoerces in the former Ministry of Pet:roietlnl 'Resources under this Act sha:l1cease to be in the employment of.
the Nigeritn Nationa,) Petroleum Cotpotatfon
'Of

the Mmistry of Petroleum

Resources 'on the day preceding tbeeffective employed 'by the Iespecterete

date afld sholl 'be deemed to be

wtth effect from the effective date.

14 15 16
17

4114, No liability shan attach to the Inspectorate or to any employee or

agent of,the Inspectorate or to B member .for any loss or damage sustained by any person as a reeutt of the lawful exercise or pertormance ef any function which in terms of this Act is conferred or imposed upon the Inepeotorate or the members,
-(1) The provisions

18
19 3J 21 22 23 24 25 26 Xl 28 19 :J) 31

of this section shall apply to all contracts or

other 'instruments subsisting immediately before the effective date and entered into by the former Nigerian National Petroleum Corporation or the former

Ministry of Petroleum Resources for or on bebalf of the former 'Petroleum Inspectorate or the former Department of Petroleum Resources. (2) By virtue of this Act there is vested in the Inspectorate as from the effective.dete and without further assurance all assets, funds, resources and which.immediately before the effective

other moveable or lmmcvableproperty

date were vested and held by the Nigerian National Petroleum Corporation or the Ministry of Petroleum Resources for and onhehaif of, or for the use of the former Petroleum Inspectorate or the Department of Petroleum Resources. (3) As from the effective date(a) The rights. interests,

obligations and liabilities of the Ministry of

._-----

C5048 2008 No.

Petroleum Industry
Petroleum Resources existing immediately before the effective date under

2 3 4 5 6 7 8

any aforementioned

contract or instrument at law or in equity, which shall

have been held on behalf of, or have accrued to, or have been incurred on behalf of, or for the benefit of, or for the use of the former Petroleum Inspectorate of the Nigerian National Petroleum Corporation or the

Department of Petroleum Resources of the Ministry of Petroleum Resources, shall by virtue of this Act be assigned
10 and

vested in the Inspectorate;

(a)

(b) Any such contract or instrument as is mentioned in sub-paragraph

9
10 11 12 13 14 15 16 17 18 19

above, shall be of the same force and effect against or in favour of the Inspectorate and shall he enforceable as fully and effectively as if instead of the Petroleum Inspectorate of the Nigerian National Petroleum Corporation or the Department of Petroleum Resources of the Ministry of Petroleum Resources, thereto;
(c) Any proceeding or cause of action pending or existing or which could
"

the Inspectorate had been named therein or had been a party

have been taken by or against the Petroleum Inspectorate of the Nigerian National Petroleum Corporation or the Department of Petroleum Resources of the Ministry of Petroleum Resources immediately before the effective dale in respect of any such right. interest, obligation or liability of the Petroleum Inspectorate or the Department of Petroleum Resources may be commenced, continued or enforced or taken by or against the Inspectorate as if this Act had not been made. 486. From the date of commencement of this Act the staff of the former

'"
The Authority

21

22
23 24

Petroleum Products Pricing Regulatory Authority shall be regarded as having transferred their services to the Authority with effect from that date on terms

25
2f>

and conditions no less favourable than those obtaining immediately before the effective date, unless they indicate. otherwise before the expiration of three months next following the effective date, and such services will be regarded as continuous for the propose of pensions and gratuities. 487. No liability shall attach to the Authority or to any member or employee or agent of the Authority for any loss or damage sustained by any person as a

n
28

29
JJ 31

Petroleum Industry

2008 No. C 5049

result of the lawful exercise or performance of any function which by or in 2 3 4 5 6 7 8 9 10 11 12 13 terms of this Act is conferred or imposed on the Authority. 488.-(1) The provisions of this section shall apply to all contracts or

other instruments subsisting immediately before the effective date and entered into by the former Petroleum Products Pricing Regulatory Authority. (2) By virtue of this Act there is vested in the Authority as from the effective date and without further assurance all assets, funds, resources and other moveable or immovable property which immediately before the effective date were vested and held by the Petroleum Products Pricing and Regulatory Authority. (3) As from the effective date(a) The rights, Interest, obligations and liabilities of the Petroleum Products

Pricing and Regulatory Authority existing immediately before the effective date under any aforementioned contract or instrument at law or in equity

t4
15 16 17
18

which shall have been held on behalf of or have accrued to or have been incurred for its own benefit or use, shall by virtue of this Act be assigned to and vested in the Authority;
(b) Any such contract or instrument as is mentioned in sub-paragraph (a)

19 XI 21 22 23 24 25 26

above. shall be of the same force and effect against or in favour of the Authority and shall be enforceable as fully and effectively as if instead of the Petroleum Products Pricing and Regulatory Authority, the Authority had been named therein or had been a party thereto;
(c) Any proceeding or cause of action pending or existing or which could

have been taken by or against the Petroleum Products Pricing and Regulatory Authority immediately before the effective date in respect of any such rights, interest, obligation or liability of the Petroleum Products Pricing and

'IT
2S 29 3D 31

Regulatory Authority, may be commenced, continued or enforced or taken by or against the Authority as if this Act had not been made. 489. From the effective date of this Act any staff of the former Nigerian National Petroleum Corporation that lire employed by the Agency sh\llHbe The Agency.

,
"

regarded as having transferred their services to the Agency with effect from

CSOSO 2008 No.

Petroleum Industry
that date, on terms and conditions no less favourable than tbose abwinlns;

2 3 4 5

immediately before the effective date, unless they indicate otherwise before the expiration of three months next following the effective date, <100 such services will be regarded as continuous for the purpose of pensions and gratuities. 490. Any contracts entered into by the Corporation, for the benefit of, or

6
7 8

with respect to the functions of the National Petroleum Investment Management

Services or the Crude Oil Marketing Department, as the case may be, and

which are in respect of matters pertaining to the functions of the Agency, shall

9
10
The Ccmrc.

be enforceable as fully and effectively as if instead of the Corporation.

Agency had been named therein or had been a party thereto.

the

11 12 13 14 15 16 17 18 19 Xl 21 22 23

491. From the effective date of this Act, any staff of the Research and Development Division of the former Nigerian National Petroleum Corporation that are employed by the Centre shall be regarded as having transferred their services to the Centre with effect from that date, on terms and conditions no less favourable than those obtaining immediately before the effective date,

unless they indicate otherwise before the expiration of three months next following the effective date.and such services will be regarded as continuous for the purpose of pensions and gratuities. 491. Any contracts entered into by the Corporation, for the benefit of, or with respect to the functions of, the Research and Crude Oil Marketing

Department and which are in respect of matters pertaining to the functions of the Centre, shall be enforceable as fully and effectively as if instead of the Corporation, the Centre had been named therein or had been a party thereto.

starr (lithe Institutions.

24

493. From the effective date of this Act any staff of the former(a) Ministry of Petroleum Resources;

25
'2h T7 28 ~ Xl 31

(b) Department of Petroleum Resources;

(c) Petroleum Products Pricing and Regulatory Authority;

(d) Nigerian National Petroleum Corporation, and of the Petroleum Equalisation Fund, and the Petroleum Technology

Development Fund, and who is employed by the National Oil Company or any of the Institutions of this Act shall be regarded as having transfer@d.his or her

Petroleum Industry 1
2

20118 No. C $051

services to the said National Oil Company or any of the said Institutions with effect from that date, on terms and conditions no less favourable than those obtaining immediately before the effective date, lind such services will be regarded as continuous for the purpose of pensions and gratuities.
PART X -l~TERPRETATION AND CITAllON

3
4
5

6 7
8
!)

494. In this Act unless it is specifically stated otherwise"Act" means the Petroleum Industry Act 2008; "accounting period", in relation to a company engaged in petroleum operations or upstream gas operations; means
(a)

Interpretation.

lU 11

a period of one year commencing on Ist January and ending on 31st

December of the same year; or

(b)

t2 13
14

any

shorter

period commencing on the day the company first makes

a sale or bulk disposal of Chargeable Oil or Chargeable Natural Gas

under a programme of continuous production and sales, domestic, export

15
16 17 18

or both. and ending on 31 st December of the same year; or

(c) <Any

period of less than a year being a period commencing on 1 st

January' of any year and ending on the date in the same year when the company ceases to he engaged in Petroleum Operations or Upstream Gas Operations; "adjusted profit" means adjusted profit as stated in Part VII of this Act; "assessable profits" means assessable profits as stated in Part VII of this Act; "assessable lax" means assessable tax as stated in Pari VII of this Act: "Associated gas" means(a)

19 20 21
22

23 24
25

natural gas, commonly known as gas-cap gas, which overlies and is

26
Tl

on contact with crude oil in a reservoir; and

(b) solution g'1S dissolved in crude oil in a reservoir;

28
'}9
l)

.. ttorney-General" A

means the Attorney-General

of the Federation;

"benchmark prices" means:

(a)

a price set by the Authority as e basis for comparison; or

31

(b) a price set by the Authority to be used as a reference point for

C5052 2008 No.

petroleum products;

Petroleum Industry

2
3

"board" means the governing board of the Institution Of any other entity that is the subject matter of the chapter within which the word has been used, unless it is specifically slated otherwise;

4 5
6 7

"casing head petroleum spiru' means any liquid hydro-carbons obtained

in Nigeria from natural gas by separation or by any chemical or physical process but before the same has been refined or otherwise treated; "chargeable natural gas" in relation to a company engaged in petroleum operations or upstream gas operations means natural gas actually delivered

8
9 10 11

by such company to the National Oil Company or to any other company

under a gas sales contract but does not include natural gas taken by or on behalf of the Government of the Federation in pursuance of this Act; "chargeable oil" in relation to a company engaged in petroleum operations or upstream gas operations, means casing head petroleum spirit and crude oil won or obtained by the company from such operations; (1979 No. 95) "chargeahle profits" means chargeable profits as stated in Part VI of this Act; "chargeable tax" means chargeable tax as stated in Part VI of this Act

12 13 14 15 16
17

18 19
2J

and imposed under this Act; "fertilizer, but excludes pipelines for the transportation of natural gas

21
22

from producing wells to facilities producing pipeline specification gas; "effective date" means the date on which this Act comes into force; "energy efficiency" means a change to energy use that results in an

23 24 25
26

increase in net benefits per unit of energy; "enforcement order" means an order issued by the Inspectorate; Authority or Agency; "ex-pump" "ex-refinery" means the price of petroleum products at the retail pumps; means the price of petroleum products at the refinery gate;

n
2B

29
JJ

"Exclusive Economic Zone" shall have the same meaning as defined in the Exclusive Economic Zone Act Cap. 350, Laws of the Federation of Nigeria;

31

Petroleum Industry

2008 No. C 5OS3

"explore" means to make a preliminary search by surface geological and 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Xl 21 22 23 24 25 26 Tl 28 29 geophysical methods, including aerial surveys but excluding drilling below 91. 44 metres; "farm out" means an agreement between the holder of an oil prospecting license or an oil mining lease, and a third party which permits the third party to explore, prospect, win, work and carry away any petroleum

encountered in a specified area during the validity of the license or lease; "Field" reservoirs includes an area consisting of a single reservoir or multiple all grouped on, or related to, the same individual geological the surface area, although it

structural feature or stratigraphic conduion.. may refer

10

both the surface and the underground productive formations;

"flscaltsed crude" means the net quantity of crude oil produced in a

batch or cargo ready for export after the removal of solid and liquid impurities of the crude; or the total quantum of crude oil at standard temperature and pressure that is produced and metered at all export terminals in Nigeria or at the delivery point to the refinery in Nigeria, multiplied hy the posted prices; "fiscalised natural gas" means: "first class commercial bank" refers to a hank which has had a rating of -not less than" AA" by an internationally acceptable rating agency for the oil and gas industry for more than ten years; "frontier acreages" means any or all licenses or leases located in the

Anambra, Benue Trough, Bida, Chad, Dahomey, and Sokoto Basins of Nigeria; "gas" or "natural gas" means wet gas, dry gas, lean gas, all other gaseous hydrocarbons, and all substances contained therein, which are produced along with crude oil or gas, excluding those condensed or extracted liquid

hydrocarbons that are liquid at normal temperatures and pressure conditions such as stabilized or field condensate, including the residue gas remaining after the condensation or extraction of the liquid hydrocarbon from gas; "Gazette" means the Gazette of the Federal Government of Nigeria; "good oilfield practice" refers to a wide variety of internationally

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31

C5054 2008 No.

Petroleum IntilJSiry
recognised arid accepted petroleum development llA)roilcbe!I Whictt are nOI

deleterious to the environment, beatth end safety of, attd which conform to

3
4

principles of sustainable development that do not compromise ttle future of succeeding generations of the people of Nigeria;
"Government" means the govemmera of the Federal'ltepufJ1ic ot Nigeria:

5
6 7

"indigenous oil company" means a cornpany-.

(a) engaged

in the exploration for and production of crude oil and

8
9 10 11 12

natural gas of which sixty per cent or more of its shtlres are beneficially owned directly or indirectly by Nigerian citizens or llISOOittions of
Nigerian citizens; (b) which meets the requirements Of any guidelines

otrtplmions that

may be issued by the Directorate or the Inspectorate; a1'Id

(c)

13
14 IS

whicb is accredited as an indigenous oil 'col'l'lplifiyb)' die Ditectotate

or inspectorate;
"industry"

means (he petroleum Industry in Nigeria;

16
17

"Inland Basin" means any of the following basins, nemely: Anambra,

Benin, Benue, Chad, Bida, Dahomey, Gongola, Sokoto and such omer basins as may be determined by from time to time, by the Minister; "intangible drilling costs" means all expenditure for labour fuel, repairs, maintenance, hauling, and supplies and materials (not tetng supplies and

18 19 W
21 22 23

materials for well cement, casing or other well fixtures) which are for or incidental to drilling, cleaning, deepening or completing wells or the

preparation thereof incurred in respect of (a) determination of well locations, geological studies and topographical

24 25 26
27

and geographical surveys preparatory to drilling

(b) drilling, shooting, testing and cleaning wells;

(c) cleaning, draining and levelling land, road building and the laying of foundations;
(d) erection of rigs arid tankage assembly and installation of pipelines

28 29 30 31

and other plant and equtpment required in the preparation or drilling of wells producing petroleum;

Petroleum Industry
"Institutions" 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2JJ T1 28 'E 30 31 Directorate, or "Institution" refers to the National

2008 No. C 5055

Petroleum

the Nigerian Petroleum Inspectorate, the Petroleum Products

Regulatory Authority, the National Petroleum Assets Management Agency, the Petroleum Equalisation Fund, The Petroleum Technology Development Fund, and the Nigerian Petroleum Research Centre, either jointly, any two or more of the said Institutions, or singly; "Liquified natural gas" means natural gas in its liquid state at

approximately atmospheric pressure; "local company" has the meaning assigned to it under arty law enacted in respect of Nigerian content in the petroleum industry in Nigeria; "local distribution zone" means an authorized area as specified
III

regulations issued under this Act, within which one distributor of downstream

natural gas may operate; "loss" means a loss ascertained in like manner as an adjusted profit: "Marginal field" means a field: with low recoverable reserves and comparatively high development costs under present ecooomic and technological conditions; and that is designated Inspectorate; "Midstream processes, sector" means the sector of the petroleum industry which as a marginal field by the Nigerian Petroleum

stores, markets and transports commodities such as crude oil,

natural gas, natural gas liquids (NGLs, mainly ethane, propane and butane) and sulphur; or refers to those industry activities that fall between exploration and production, that is the upstream; and refining and marketing, that is, the downstream, and includes pipeline transportation of crude oil and natural

gas and gas derivatives; "Minister" means the Minister in charge of petroleum resources and

overseeing the Petroleum industry in Nigeria; "MMcf" means one million cubic feet; "Natural gas liquids" means hydrocarbons liquefied at the surface in

separators, field facilities or in gas processing plants and include hut arc not

C 5056 2008 No.

Petroleum Industry
limited to ethane, propane, butanes, renames, and natural gasoline, mayor

2
3 4

may not include condensate; "Natural Gasoline" means a mixture of hydrocarbons extracted from

natural gas, which meet vapour pressurs end point and other specifications for natural gasoline, as adopted by the GPSA with 69,83.97,138,
kPa(abs) being common specifications;

5
6 7

and 179

"Network Code" means the code developed

by

the transportation network

8
9

operators III respect of downstream natural gas; "Nigeria" includes the submarine areas beneath the territorial waters of Nigeria and the submarine areas beneath any other waters which are or at any time shall in respect of mines and minerals become subject to the legislative competence of the National Assembly; "Nigerian Content" has the meaning assigned to it under any law enacted in respect of national or local content in the petroleum industry in Nigeria: "Nigerian company" means a company incorporated in Nigeria; "Non-associated occur with crude oil; "Non-productive rents" means and includes the amount of any rent as to gas" means natural gas accumulation which does not

10
II

12 13
14 15

16
17

18
19

which there is provision for its deduction from the amount of any royalty under a petroleum prospecting licence or oil mining lease to the extent that such rent is not so deducted; "Oil and Gas Policy" means the policy of the government for the time heing in force on the petroleum sector; "Person" means any individual, company or other juristic person; "petroleum" means mineral oil (or any related hydrocarbon) or natural

20
21 22 23 24 25 26 II

gas as it exists in its natural state in strata, and includes tar sands, heavy oils, bituminous and other stratified deposits from which oil can be extracted by destructive distillations but does not include coal; "petroleum mining lease" means a lease granted to a company, under the Minerals Act, for the purpose of winning petroleum or any assignment of such lease:

28
29 'JJ

31