Reps move to give legal backing to artisanal petroleum refiners

The House of Representatives is anticipated to begin the debate on a bill aimed at establishing a National Agency for Artisanal Petroleum Refining in the country.

The proposed National Agency for Artisanal Petroleum Refining (Establishment) Bill, 2023, sponsored by the Minority Leader, Hon. Kingsley Chinda (PDP-River), aims to provide a regulatory framework and programme for the construction and operation of artisanal refineries in Nigeria and for related matters.

The proposed legislation seeks to formalise and organise existing and prospective petroleum artisans involved in petroleum-producing areas in Nigeria into cooperative societies and merge their operations to gain the benefits of economies of scale.

As stipulated in Clause 1 of the bill exclusively seen by Nigerian Tribune, the objectives of this Bill include:

• Promotion of artisanal petroleum refining to encourage the growth of local industries, services, and technologies in the oil and gas sector of the Nigerian economy.
• Encouragement of Nigerians engaged in artisanal petroleum refining to upgrade vocational skills to improved technical skills.
• Transfer of skills and technology to Nigerians during activities related to artisanal petroleum refining.
• Development and implementation of artisanal petroleum refining plans and programs by individuals with innovative concepts in Nigeria.
• Maximisation of value addition and job creation using local expertise, goods, services, businesses, and financing in the value chain of petroleum refining in the Nigerian economy.
• Development of local capacities in the value chain of indigenous artisanal petroleum refining through education, skills transfer, expertise development, technology transfer, and active research and development programs.
• Achievement of maximum in-country spending on petroleum products in the Nigerian economy.
• Supervision and coordination of the implementation and monitoring of plans, programs, and projects related to artisanal petroleum refining.

Clause 55 of the bill empowers the Agency to train Nigerians to acquire high levels of skill and technical know-how in the construction, repairs, maintenance, and operation of artisanal modular refineries.

It aims to optimise the retention of value from the exploitation of petroleum resources in Nigeria and support, encourage, and improve existing indigenous Nigerian technologies in crude oil refining and gas exploitation.

The Agency plans to establish programmes and train Nigerians to construct, repair, maintain, and operate artisanal modular refineries capable of refining various petroleum products in Nigeria, including gasoline, kerosene, liquefied petroleum gas, distillate fuels, residual fuels, coke, asphalt, solvents, petrochemicals, and lubricants.

The Agency is also empowered to construct, repair, maintain, and operate modular gas processing plants.

Clause 5 of the bill outlines the functions of the Agency, empowering it to actively encourage and engage artisanal refiners in the construction of modernised mini or modular petroleum refineries.

It also supports the participation of artisans in constructing environmentally friendly equipment for gas processing and facilitates the acquisition of licenses, permits, and other relevant concessions from authorities, including but not limited to the Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA), for artisans involved in crude oil refining or gas exploitation.

The Agency is also expected to:

• Support the processing and production of petroleum products, including domestic gas, by artisans in secure and friendly environments.
• Ensure that the produced petroleum products conform to the grades and quality standards prescribed by Nigerian laws or regulations.
• Assist in the purchase and sale of petroleum products, including liquefied natural gas, for domestic requirements.
• Arrange for the export of surplus refined petroleum products.
• Monitor artisanal petroleum refiners’ performance in fulfilling local content obligations.
• Liaise with relevant government agencies to establish convenient marketing for buying and reselling refined petroleum products.
• Enter into contracts or partnerships to facilitate its functions.
• Encourage and support price stability of petroleum products in Nigeria.
• Undertake any other necessary action to fulfil the Agency’s functions.

In order to facilitate the Agency’s effective establishment, Clause 27 specifies that the Agency will establish the National Artisanal Petroleum Refining Development Fund. This fund will be financed by:

• A one per cent surcharge on the monetary value of each contract awarded in the midstream and downstream sectors of the Petroleum Industry (excluding retail outlets).
• Ten per cent of any sums accruing to the Nigerian Oil and Gas Content Development (Special) Fund, paid into the Artisanal Refining Fund.
• Ten per cent of all sums accruing to the Niger Delta Development Commission under the Niger Delta Development Commission Act.

In addition, the agency will also collect the following percentages:

• 10 per cent of all sums accruing to the Petroleum Technology Development Fund (PTDF) under the Petroleum Technology Development Fund Act.
• 10 per cent of all sums accruing to the Presidential Amnesty Programme.
• 10 per cent of royalties paid to the Federal Government by any company for petroleum exploitation in petroleum-producing areas.
• 10 per cent of all revenues received by the Federal Government as payment for oil terminal dues on ships evacuating Nigerian-produced crude oil.
• 10 per cent of all revenues derived from the operation of oil pipelines under the Oil Pipelines Act or any succeeding law.
• 10 per cent of all revenues from the operation of the Oil and Gas Export Free Zone Act or any succeeding law.
• 50 per cent of all sums received by the Federal Government as payment for fines due to natural gas flaring during crude oil production in Nigeria.

Furthermore, the Agency is expected to obtain a one per cent surcharge on the monetary value of every tonne of gas sold by the Nigerian Liquefied Natural Gas Company or any other company involved in local gas production in Nigeria.

Additionally, it will collect any donations, grants, endowments, or bequests accruing to the Federal Government from foreign and/or municipal agencies for artisanal petroleum refining development.

This includes funds allocated from the Natural Resources Development Fund, as well as interest and revenue from savings and investments made by the National Local Content Action Agency on Artisanal Petroleum Refining.

Clause 28 outlines that the Fund will be managed by the National Agency for Artisanal Petroleum Refining and solely used for the construction, repair, and maintenance of artisanal refineries, including gas processing plants. Moreover, the Agency is entitled to utilize up to 20 per cent of the sum paid into the Fund for administrative purposes.

Clause 29 mandates the Central Bank of Nigeria (CBN) to establish a loan scheme known as the Nigerian Artisanal Petroleum Refining Development Credit Guarantee Scheme.

This scheme will guarantee investments or loans for constructing and operating modular or artisanal petroleum refineries in Nigeria.

It will cover various activities, including equipment purchases, transportation of petroleum products, and financial support for indigenous companies or cooperative societies engaged in artisanal petroleum refining operations under this Bill.

Clause 30 outlines that the Federal Government is authorized to source funds through financial instruments, crowdfunding, or similar means to support the design, construction, and operation of artisanal modular refineries.

Clause 56 specifies that the Agency is empowered to establish public-private partnerships or engage with responsible entities involved in manufacturing equipment, machines, tools, and more for the development and operation of modular refineries by artisanal refiners.

Furthermore, Clause 57(1) mandates the Agency to facilitate the connection between artisanal petroleum refiners and bulk buyers of petroleum products.

It aims to create forward linkages connecting bulk purchasers of refined petroleum products with artisanal petroleum refiners in the petroleum-producing areas of the country, enhancing the purchase of these products at fair prices.

Additionally, Clause 57(2) specifies that any arrangement for bulk purchases of refined petroleum products, as indicated in sub-clause (1), may also involve financial institutions that wish to provide loans for such transactions.

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