Disruption in Oil and Gas Operations Imminent as Helicopter Companies Resist Landing Levy

Chinedu Eze

Helicopter companies that provide shuttle service to oil and gas exploration and production companies in Nigeria have reiterated their determination to resist the insistence of a private firm, NAEBI Dynamic Concepts Limited, to charge them $300 per landing of their aircraft, a development that could disrupt oil and gas operations in Nigeria.

Helicopter service providers have already expressed their determination to resist the landing levy in a letter addressed to the Minister of Aviation and Aerospace Development, Festus Keyamo, stating the consequences, which include the likely disruption of oil and gas operations in Nigeria.  

NAEBI Dynamic Concepts Limited working in consonance with the Nigerian Airspace Management Agency (NAMA) and the Ministry of Aviation and Aerospace Development, has directed helicopter service providers to sign Memorandum of Understanding (MoU) on the payment of the said levy.

The helicopter service providers and oil and gas companies have described the levy as illegal because the operators are already paying levies and charges that are in conformity with the Nigerian Civil Aviation Regulations (NCAR).

It was learnt that the oil and gas companies have vowed that if the matter is pushed further, they would suspend oil and gas operations in protest against the levy.

In a letter addressed to the Minister of Aviation under the auspices of Airline Operators of Nigeria (AON), dated November 5, 2024 and titled, “Re: Memorandum of Understanding on Helicopter Landing Levy,” the operators stated clearly why they refused to sign the MoU relating to the applicability of landing levy on helicopter operations by oil companies on oil fields, terminals, platforms, rigs, Floating Production, Storage & Offloading (FPSO) stations, heliports, helipads, airstrips, aerodromes, etc, describing it as illegal.

The letter also made it clear that contrary to the claim of NAEBI Dynamic Concepts Limited to have had agreement with oil and gas companies on the levy, the feedback was that the oil companies have not had any discussion with the firm and have insisted they would not pay the levy because it is illegal.

The letter also indicated that the oil and gas companies knew that the attempt is to indirectly tax them through the helicopter service providers.

According to the letter, “This veiled burden could ultimately lead to service disruptions in the future should the oil companies refuse to pay any indirectly imposed levies on their operations and invariably adversely impact the viability of the businesses of our members.

“Therefore, we wish to draw the Honourable Minister’s attention to the seeming arbitrariness of the imposition of $300 per landing, as no metric was provided to indicate how this amount was arrived at. Also, considering the various issues enunciated on the legality or otherwise of the arrangement and the non-conformance with industry due precepts and international standards, we will politely decline assenting to this MOU.”

Addressing the issues topically, the operators, after exhaustive deliberations, unanimously agreed that the document as presently structured was ‘not fit for purpose and does not address the various concerns expressed by all’, while stating their reasons.

The letter said the Nigerian Airspace Management Agency’s Established Act clearly defines the roles and responsibilities of the agency, particularly as it relates to the provisioning of air navigation services.

Part of the letter read: “As clearly enunciated in the said act, NAMA is the sole agency or body charged with the provisioning of air navigation services in and for the country and certified as such by the Nigeria Civil Aviation Authority (NCAA).Importantly, NAMA is not empowered by the same Act to cede any portion of its powers, roles and or responsibilities in any shape or form to third party entities, principally because of the security implications of such and the sensitivity issues surrounding the sovereignty of state,” thus reiterating the illegally of the levy.

“On this basis, we find it confounding that a private enterprise in the guise of Messrs. NAEBI Dynamic Concepts Limited shall be empowered by this MOU, riding on the back of an earlier agreement with the Ministry, to carry out functions statutorily charged to NAMA, without proper due diligence being carried out by the Ministry officials involved in the several negotiations, as to the legality or otherwise of the venture.”

The operators also said that their investigations with the Nigeria Civil Aviation Authority revealed that Messrs. NAEBI Dynamic Concepts Limited is not a certified Air Navigation Service Provider (ANSP).

“In this regard, we find it a bit concerning that Messrs. NAEBI Dynamic Concepts Limited, without any demonstrable expertise or track record, shall be charged with roles and responsibilities for which they are not certified by the regulatory authority – NCAA, to so do on behalf of the industry in whatever guise it is considered,” the letter further stated.

It also stated that the International Civil Aviation Organization (ICAO) Document 9082, which deals with policies on charges for airport and air navigation services, identified four major charges.

“The Honourable Minister may wish to note that ICAO through this document emphasizes four key charging principles of non-discrimination, cost-relatedness, transparency and consultation with industry stakeholders, which are to be embedded into national legislation, regulations or policies, as well as into future air services agreements, in order to ensure compliance by airport operators and air navigation services providers (ANSPs).

Evidently, the process by which this entire venture was proposed and agreed by the Ministry did not take due cognizance of the four precepts as espoused by ICAO, as this landing levy is discriminatory, is not transparent, has no direct bearing on any cost of services provided and was reached without proper and due consultations with the industry,” the letter further stated.

The operators also noted that the planned collector of the levy, Messrs. NAEBI Dynamic Concepts Limited, does not have any stamp of recognition and approval by the Infrastructure Concession Regulatory Commission (ICRC).

“The Infrastructure Concession Regulatory Commission (ICRC) was established to superintend and regulate all Public-Private Partnership (PPP) endeavours of the Federal Government, aimed at addressing the country’s physical infrastructure deficit, which hampers economic development.

“A cursory review of all available documents provided on this supposedly thorough arrangement by the Ministry, has not presented us with any information relating to the approvals granted by the ICRC on behalf of the Federal Government, as to the authenticity or thoroughness of the due diligence undertaken before the prosecution of an agreement with Messrs. NAEBI Dynamic Concepts Limited,” letter stated.

The operators also stated that their understanding is that any such venture involving a Public-Private Partnership (PPP) model between the federal government and a private enterprise must procure an ICRC no-objection approval, especially where revenues are to be shared between such an enterprise and government.

The helicopter operators also recalled that in a 2018 memo on the same matter originating from NCAA, the agency stated its position, saying that what Messrs. NAEBI Dynamic Concepts Limited was proposing, amounted to double taxation, as it already certifies all platforms, rigs, Floating Production, Storage & Offloading (FPSO) stations, heliports, helipads, airstrips and aerodromes, albeit privately owned.

NCAA went further to state that the proposed landing levy was illegal, as all helicopter operators in the Niger Delta region were already paying all the statutory taxes, fees and charges to the relevant agencies and the introduction of this new regime of landing levy would be burdensome and inimical to the well-being of the industry.