1. Introduction to the 2023 Regulations
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) introduced a new regulation pertaining to the assignment and transfer of licenses and permits in the petroleum industry titled “Assignment and Transfer of License and Permit Regulations 2023.”
These regulations took effect on February 27, 2023, and are aimed at establishing a streamlined procedure for such assignments or transfers, while also prescribing fees and providing sanctions for non-compliance. Applicable to activities related to midstream and downstream petroleum operations, these regulations encompass various forms of license and permit assignment or transfer. These include assignments resulting from mergers, acquisitions, reorganizations within a group company, establishment of new companies, devolution of ownership, share exchange or transfer, private placements, public listings, and testamentary instruments.
2. Primary Objectives and Compliance
The primary objectives of these regulations encompass three key aspects. Firstly, they seek to provide a clear and uniform procedure for licensees and permit holders when assigning or transferring licenses or permits. Subsequently, they outline the fees associated with such assignments or transfers. Furthermore, they define the appropriate sanctions and administrative penalties in cases of non-compliance.
Transparency and Name Changes
To ensure transparency, licensees and permit holders are required to notify the Authority in advance of any name change resulting from corporate restructuring or rebranding. Once the change of name is approved, the licensee or permit holder must apply for a new license or permit in the new name, return the previous license or permit for cancellation, and fulfill the prescribed fees associated with the name change.
The Transfer Process
Prior to the assignment or transfer of a license or permit, the transferor must notify the Authority of their intention, providing details about the proposed transferee, the reasons and methods for the transfer, and the potential technical and economic value of the transaction. The transferor must also submit the original or a certified copy of the license or permit. Upon receipt of the notification, the Authority has 21 working days to communicate its decision. If no decision is received within this timeframe, the transferor is granted permission to proceed. In the case of approval, the transferor is required to publish a notice of the application in a format prescribed by the Authority.
3. Financial Obligations and Sanctions
Once approval is received, the transferee must follow established procedures, including applying for the transfer to their company, demonstrating technical and financial capabilities, and paying prescribed fees. The fees applicable are either a fixed processing fee or 5% of the transaction value, whichever is higher, based on the specific facility or operation.
Within 90 days of receiving the application, the Authority will notify the applicant in writing of its consent or refusal. If consent is refused, the applicant can make further representations within 21 days. Non-compliance with these regulations, including the provision of false information, may result in administrative penalties and the suspension, cancellation, or revocation of licenses or permits. Appeals against decisions made by the Authority can be made to the Federal High Court within 30 days of receiving the decision.
4. Expanding the Regulatory Framework
In another development, the Authority rolled out six newly gazetted regulations on March 22nd, 2023. These regulations cover diverse facets of midstream and downstream petroleum operations, including:
- Petroleum measurement
- License and permit transfers
- Natural gas pipeline tariffs
- Gas pricing and domestic demand
- Petroleum transportation and shipment
Engr. Farouk Ahmed, the Authority Chief Executive of the NMDPRA, illuminated the core purpose of these regulations: to establish a robust framework that empowers stakeholders with a precise understanding of their rights and responsibilities. A transformative requirement effective March 31st, 2023, dictates that any entity seeking to engage with the NMDPRA must be registered and issued a permit.
5. Technological Integration: The MDOGISP Portal
With 14 additional regulations in the pipeline, the Authority is laying the groundwork for a regulatory framework that encapsulates the intricacies of the industry. Beyond legislation, the Authority is prioritizing technological leaps to streamline service quality.
The launch of the Midstream and Downstream Oil and Gas Industry Service Permit (MDOGISP) Portal illustrates the Authority’s proactive approach to streamlining service providers. The MDOGISP Portal is set to serve as a central hub for coordinating and regulating service providers’ activities, creating a seamless experience for both providers and stakeholders and ensuring high-quality service delivery throughout the Sector.
As these regulations take center stage, a metamorphosis within the Nigerian midstream and downstream landscape is on the horizon. With regulatory clarity, sustainability, and growth as guiding principles, the Authority steers the course towards a thriving energy sector that underpins Nigeria’s sustainable future.
