Stakeholders Kick against Heavy Fines as NMDPRA Ends Consultations on PIA Regulations

Emmanuel Addeh in Abuja

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) yesterday concluded its consultation on two Petroleum Industry Act (PIA) regulations, but with stakeholders kicking against the proposed ‘heavy’ penalties for potential infractions.

The three-day event which kicked off in Abuja was in continuation of efforts to streamline the Authority’s regulations which came as a fallout of the new PIA.
The latest set of regulations dealt with health and safety in the sector as well as accuracy of measurement devices to ensure that parties.  The two new regulations are the Midstream and Downstream Petroleum Safety Regulation as well as the Petroleum Measurement Regulation.

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

But at the end of the programme on Thursday, the stakeholders said that the fine proposed for the potential infractions would kill the oil and gas companies.
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.

Some of the participants included: Chevron, the Independent Petroleum Producers Group (IPPG), Nigeria LNG, World Bank, Shell, the upstream commission, among others.
Represented by the Executive Director, Distribution Systems, Storage & Retailing Infrastructure, Mr Ogbugo Ukoha, who also doubles as head of the technical team, Ahmed assured that the concerns raised by the operators would taken into consideration in the final regulations.

According to him, in the coming days and months, the NMDPRA will make public the regulations which will essentially ensure their official take-off.
Some of the  objectives of the new regulations will 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.
In addition, the Petroleum Measurement Regulations  shall ensure accurate measurement and allocation of petroleum, petroleum liquids, natural gas and their derivatives.

It will 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.
On the other hand, among others, the proposal on measurement proposes a $2 million fine for non-compliance for tampering with metering systems or its ancillary equipment without approval per meter.

The stakeholders further called for a redrafting of the regulation to address peculiar situations and called for a review for the period for appointment of Competent Persons as well as synergy between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the NMDPRA to reduce some costs.
They also called for the specificity of the kind of training needed in the industry, retention time for inspection records, and replacement of intelligent pigging in the industry.

“Administrative penalties should be reviewed downward and dollarisation of fees and penalties should be reviewed,” the oil and gas operators demanded.

The comments on the high penalties were the most numerous during the event, while the duties of licensees and permit holders, operation and maintenance of measurement system, fees, duty to provide information came in that order.