The Nigerian Midstream and Downstream Petroleum Regulatory Authority has declared that petroleum companies operating in free zones, export processing zones and other designated areas in Nigeria remain fully subject to the provisions of the Petroleum Industry Act 2021 and regulations issued under the law.
The regulator stated this in an industry circular released recently.
Free zones are designated areas created by the government to encourage investment and industrial activities through tax incentives, customs waivers and simplified business regulations. They include export processing zones, industrial parks and special economic zones where companies often enjoy exemptions from certain taxes and administrative procedures.
However, the NMDPRA stressed that such incentives do not exempt oil and gas operators from petroleum sector regulations under the PIA.
“The operation of any midstream or downstream petroleum facility within a free zone, export processing zone or similar area does not exempt such facility and its operations from compliance with the provisions of the PIA and regulations made thereunder,” it stated.
In the circular addressed to managing directors and chief executives of oil and gas midstream companies, downstream firms, petrochemical and fertiliser companies, as well as import and export terminals, the authority reaffirmed its statutory powers over all midstream and downstream petroleum activities nationwide.
It explained that the regulatory mandate of the agency extends to all midstream and downstream petroleum activities and applies throughout Nigeria, including the continental shelf, territorial waters, exclusive economic zone, free zones, export processing zones, industrial zones and any other designated areas.
The agency said it is the statutory regulator responsible for the technical, commercial, operational and licensing regulation of all midstream and downstream petroleum operations in Nigeria.
The regulator informed operators that all midstream and downstream petroleum operations, including refining, processing, storage, bulk transportation, pipelines, gas transportation networks, terminals, jetties, wholesale supply, importation, exportation, distribution and the sale of natural gas and petroleum liquids, are subject to its regulatory oversight.
It further warned that all petroleum operations in the midstream and downstream sectors must obtain the appropriate approvals before commencing business activities.
According to the circular, “No person shall establish, construct, operate or undertake any midstream or downstream petroleum activity except with an appropriate licence, permit or authorisation granted by the Authority in accordance with the PIA.”
The authority also moved to reinforce its supervisory powers over government institutions whose actions may affect petroleum operations.
It said, “Pursuant to section 48(1) of the PIA, any government ministry, department or agency exercising any power or function or taking any action which may have direct impact on midstream or downstream petroleum operations shall consult with the Authority prior to issuing any regulation, guideline, enforcement order or directive or exercising any such power or function or taking any such action. The Authority shall review the recommendations of the government ministry, department or agency and communicate the decision accordingly, and the decision shall be complied with by the relevant government ministry, department or agency; and by virtue of Section 309 of the PIA, where the provisions of any other enactment are inconsistent with the PIA, the provisions of the PIA shall prevail.”
The regulator also cited Section 309 of the Petroleum Industry Act to assert the supremacy of the PIA over conflicting laws.
It stated, “By virtue of Section 309 of the PIA, where the provisions of any other enactment are inconsistent with the PIA, the provisions of the PIA shall prevail.”
The authority warned operators against carrying out petroleum activities without regulatory approval, saying defaulters would face sanctions.
“Any person engaging in midstream and downstream petroleum operations without an appropriate licence, permit or authorisation from the Authority shall be subject to sanctions in accordance with the relevant provisions of the PIA,” the regulator warned.
The NMDPRA subsequently directed all industry participants to ensure immediate compliance with the provisions of the PIA and all regulations made thereunder.
