• Tuesday, May 28, 2024
businessday logo


Obsolete laws stunt government revenue in oil and gas industry

The continued operation of obsolete laws as well as delay in the passage of the Petroleum Industry Bill (PIB) by the National Assembly may be costing Nigeria huge sums of revenue accruable to the national coffers, BusinessDay investigations have shown.

Specifically, the 1969 Oil Pipeline Act CAP 07, which stipulates that companies should pay as low as N20 for permit for survey of pipelines and N200 for licence across the country, has become a drainpipe on the nation’s economy as companies are taking advantage of the provisions which are no longer in consonance with the present realities.

Seye Fadahunsi, director, Pillar Oil, says the country needs to review a lot of its obsolete laws in order to catch up with the rest of the world.

“Even though current fees are low and good for the companies, it is however not good for the country. We need to keep pace with what happens internationally. The country needs a lot of pipeline renewal every year that would fetch it a lot of revenue,” Fadahunsi says.

Babajide Soyede, a former general manager of Warri Refinery and Petrochemical Company, says the implication of not reviewing such laws is that the government would always be the loser in terms of revenue.

Soyede says much as he is not advocating for the government to be unreasonable about reviewing the fees upwards, the current fees are not in tune with realities on ground.

Pipeline laying is a major component of the oil and gas industry because without the pipelines, neither crude oil nor gas could be transported or exported, BusinessDay investigations further show.


However, some officials of the Department of Petroleum Resources (DPR) tell BusinessDay that their efforts to review some of the obsolete laws have been hampered by the inordinate ambition of the National Assembly members and their desire to make pecuniary gains as condition for effecting any change on obsolete Nigerian laws.

It is for these reasons that some industry sources say that the 1969 laws which stipulate payment of N200 licence and N20 permit by oil and gas companies subsist till date despite that companies renew their licences every year.

BusinessDay investigations further show that the money used to raise the bank draft for the fees is far more than the fees being charged.

“The agency is helpless because the National Assembly members have not always seen any reason for them to work on the Act because they don’t have the necessary financial muscle to push for the needed changes in the Act,” says a source at DPR.

“You know that we need to provide some money before the legislators would even look at the Act. This is why many of the laws that should have been changed cannot be changed now,” the source further says.

But Dakuku Peterside, chairman, House of Representatives Committee on Petroleum Resources, (Downstream), says it is not true that House members demanded money before they could effect the changes in the 1969 Act, as is being alleged in some quarters.

Peterside says the challenge with changing the Act has been that everybody thought the PIB would have been passed by now, which would have taken care of the anomalies. He adds that there have been some proposals for amendment of parts of the Act but it was thought that doing so would be piecemeal, which would not be too good.

The Oil Pipeline Act Cap 07 of 1969 stipulates that “the applicant for a permit to survey shall pay a fee of N20 upon submitting his application, and a fee of N50 upon the grant of such permit”.

It further says “the applicant for a licence shall pay a fee of N50 upon submitting his application, and a fee of N200 upon the grant of such licence”.

Other provisions of the Act include: “The holder of a permit shall pay a fee of N50 in respect of each variation of such permit; The holder of a licence shall pay a fee of N200 in respect of each variation of such licence; An annual fee shall be paid on each licence of N20 per mile of the length of the pipeline, subject to a minimum of N200; and the holder of a licence shall pay a fee of N100 upon submitting his application for a restriction order under section 12 of this Act, and a fee of such amount as the minister may determine not exceeding N400 on such order being made.”

Olusola Bello