The Petroleum Industry Bill signed into law by President Muhammadu Buhari has reversed an exclusive right for holders of local refining licence to import petroleum products.
Holders of crude oil refining licences in Nigeria include Dangote Oil Refinery Company, Waltersmith Refining & Petrochemical Company Limited, OPAC Refineries, Niger Delta Petroleum Resources, BUA Refinery & Petrochemicals and Edo Refinery and Petrochemical Company Limited.
Stakeholders in the oil and gas sector had raised concerns over the line in the upper chamber’s version of the PIB.
In the senate joint committee report on the Petroleum Industry Bill (PIB), the lawmakers had intended to limit the importation of petroleum products to local refining licence holders – a request did not go down well with stakeholders.
Precisely, section 317 (8) of the senate version of the report noted that petrol importation licence will be restricted “only to companies with active local refining licences”.
“The Authority shall apply the Backward Integration Policy in the downstream petroleum sector to encourage investment in local refining,” the senate version read.
“To support this, licence to import any product shortfalls shall be assigned only to companies with active local refining licences.
“Import volume to be allocated between participants based on their respective production in the preceding quarter.”
Checks showed that the exclusive right has been removed in the harmonised version of the report signed into law by President Buhari on August 16.
This means that ‘qualified’ refiners or companies can now participate in the importation of petroleum products.
According to the Act, Section 317 (8) noted that petrol importation licence will be granted to holders of refining licence or companies with “proven track records of international crude oil and petroleum products trading”.
“The Authority may apply the Backward Integration Policy in the downstream petroleum sector to encourage investment in local refining,” it reads.
“Pursuant to subsection (8), licence to import any product shortfalls may be assigned to companies with active local refining licences or proven track records of international crude oil and petroleum products trading.
“Import volume to be allocated between participants shall be based on criteria to be set by the Authority taking into account their refining output in the preceding quarter, the share of active wholesale customers competitive pricing and prudent supply, storage and distribution track records.”
At the moment, companies registered under the Corporate Affairs Commission (CAC) as providers of goods and services in the downstream sector of the Nigerian oil and gas industry are eligible to apply for petroleum products importation permits.
According to the Department of Petroleum Resources (DPR), this is subject to having access to appropriate storage facilities which could be owned or leased from third parties.
But this is set to change as the federal government kicked off the implementation process of the new petroleum law.
Last week, the president appointed Timipre Sylva, minister of state for petroleum resources, as head of the PIA implementation committee.