NMDPRA Resumes Consultations on PIA Regulations, Proposes $2m Penalty for Tampering with Oil Meters

Emmanuel Addeh in Abuja

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) yesterday continued its stakeholders’ consultations on various regulations in its areas of operation in the oil and gas sector.

At a three-day event which kicked off in Abuja, the Authority stated that it was in continuation of efforts to streamline its regulations which came as a fallout of the new Petroleum Industry Act (PIA).

According to the NMDPRA, the latest set of regulations would deal with health and safety in the sector as well as accuracy of measurement devices to ensure that no party is cheated.

It came about two months after the agency concluded the new rules on gas pricing domestic demand and delivery regulation as well as the petroleum transportation and shipment regulation.

The two new regulations were the Midstream and Downstream Petroleum Safety Regulation and the Petroleum Measurement Regulation.

Under the proposed regulations, the NMDPRA stated that tampering with metering systems or its ancillary equipment without approval would now attract a sanction of $2 million per meter.

Speaking at the event, the Chief Executive Officer of the NMDPRA, Mr. Farouk Ahmed, said the meeting underscored the importance of stakeholders’ feedback on the proposed new rules.

Represented by the Executive Director, Distribution Systems, Storage & Retailing Infrastructure, Mr. Ogbugo Ukoha, Ahmed noted that in the next three days, the proposals would be discussed in details which will be fed into the final document.

“As you know, the essence of these engagements is for us to receive your feedbacks and add value to the draft to make it richer,” he stressed.

 The CEO explained that it was the Authority’s objective to be guided by the collaboration with the operators in the market, pointing out that the NMDPRA considers it very critical to the success of the new PIA.

A review of the document showed that some of the objectives of the new regulations would be to oversee the safety and occupational health in the Nigerian midstream and downstream petroleum operations and provide for the safety standards to be observed during petroleum operations.

It also sets out the permits, authorisations and fees for such activities, outline the duties of licensees and permit holders and provide sanctions and penalties for failure to comply with the regulations. 

On the safety regulation, part of the new proposed rules was that operators shall provide for its personnel sufficient and appropriate safety equipment and personal protective equipment of internationally approved standard and ensure that such equipment is always maintained in good condition.

“They will also establish emergency medical procedures including an appropriately manned and well-equipped onsite clinic, standard first aid boxes and automated external defibrillators situated at strategic locations in the facility, and medical evacuation procedures.

“They are also to provide firefighting and first aid equipment at every facility or installation in accordance with best industry standards and ensure that all personnel including contractors undergo occupational fitness tests and minimum industry training in a manner specified by the Authority,” the NMDPRA stated.

It would also ensure that all major accident hazards associated with the project/facility would be identified, recorded, analysed and reduced to as low as reasonably practicable while every safety, emergency and communication systems conform to acceptable standards and specifications.

In addition, the Petroleum Measurement Regulations shall ensure accurate measurement and allocation of petroleum, petroleum liquids, natural gas and their derivatives.

It would also determine the basis for calculating revenue accruing to government, licensees, contractors and other parties as well as provide sanctions and penalties for failure to comply with the regulations.

 It further proposes that licensees shall ensure all metering and allocation systems are designed, fabricated, inspected, tested, and installed in accordance with the regulations and guidelines issued by the Authority.

In addition, part of the new proposed sanctions would see that employment/ engagement of non-accredited Authority contractors for fabrication, construction, calibration, testing are fined $5,000 per facility.

Also, using unapproved tank for storage hydrocarbon without approval per tank will attract a $5,000 fine while using unapproved tank for storage or changing tank petroleum product without approval will attract N1 million.

Modification, alteration, upgrade of LACT or measurement system (Export) without the Authority authorisation would cost defaulters $250,000 per system even as they will part with $25,000 for modification, repair, alteration of surface or underground hydrocarbon storage tanks without approval.

“Non-compliance in ensuring Authority representatives witness outturn verification at the port of discharge per loaded vessel or shipment is $250,000 while tampering with metering systems or its ancillary equipment without approval per meter is $2,000,000,” it proposed.