- Oil regulators and industry operators on Wednesday raised objections to a proposal requiring oil and gas companies operating in the South-South to contribute three per cent of their annual budgets to the South-South Development Commission, as the House of Representatives commenced legislative work on a bill to amend the Commission’s Establishment Act.
The concerns were raised during a public hearing organised by the House Committee on the South-South Development Commission at the National Assembly.
Chairman of the committee, Julius Pondi, said the amendment seeks to expand the Commission’s funding framework to enable it to effectively deliver on its mandate of promoting sustainable development across the South-South region.
He explained that the hearing was reconvened after several key stakeholders were unable to attend an earlier session because of their participation in the Nigerian Oil and Gas Conference.
Pondi said the committee was seeking stakeholders’ views on the proposed funding model, its sustainability, its implications for government and industry, as well as possible alternatives that could strengthen the legislation.
Presenting the position of the Nigerian Upstream Petroleum Regulatory Commission, Kingsley Chikwendu said the Commission supports a predictable and transparent funding framework but expressed concerns over the provision requiring operators to contribute three per cent of their total annual budgets.
According to him, the phrase “total annual budget” is not defined in the bill, creating uncertainty over how the levy would be assessed, implemented and enforced.
He warned that the proposal, if retained in its current form, could amount to another expenditure-based levy payable irrespective of a company’s profitability or production level.
Also speaking, Ahmed Laido, who represented the Nigerian Midstream and Downstream Petroleum Regulatory Authority, urged lawmakers to ensure that any additional funding mechanism aligns with the Petroleum Industry Act.
He said the proposed framework should promote regulatory certainty, encourage long-term investment and support the Federal Government’s ease-of-doing-business reforms in the petroleum sector.
The Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry also opposed the proposal, arguing that operators already make statutory contributions under existing laws, including payments to the Niger Delta Development Commission and the Host Community Development Trust Fund.
The group warned that imposing another three per cent levy could increase the financial burden on operators, duplicate existing obligations and reduce Nigeria’s attractiveness as a destination for oil and gas investment.
The committee assured stakeholders that all submissions would be considered before the amendment bill progresses through the legislative process.
