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Law to compel shell, chevron, mobil and other oil coys to build refineries underway

By Tordue Salem
A Bill seeking to make it mandatory for all oil companies operating in Nigeria to invest in crude refineries, awaits public hearing in the House of Representatives.

The Bill seeks to limit the investment in refineries by oil companies to five years, and prescribes the revocation of the licenses of such companies that do not comply. The radical Bill now considered by the Rep Bassey Otu-led House Committee on Petroleum Resources (Upstream), is sponsored by Rep. Emmanuel Adedeji (AC/Alimoso-Lagos).

In its preamble, the Bill states in part that: “As from the commencement of this Act, it shall be mandatory for all oil companies operating in Nigeria or intending to operate in Nigeria to invest in and operate petroleum refineries in Nigeria”. The sponsor of the piece of legislation seeks to mandate the Minister of Petroleum Resources to determine the sizes of the refineries and per-day production of crude oil.

“Minister shall by regulation prescribe the size and capacity of petroleum refinery to be built and operated by oil companies: provide that the minimum refining capacity to be prescribed shall be N100, 000 barrel stream per day”, the bill reads.

The Bill however seeks to limit the number of years when these foreign oil companies would operate refineries to 5 years, after which the refineries may be managed by local operators in the sector. “All refineries provided for pursuant to this Act, shall commence production and shall put out products for public consumption not more than five years after the grant of license”.

On the possible revocation of licenses, the Bill states that: “The person who contravenes the provisions of sub-section (1) of this section commits an offence and the license so granted shall be revoked. As from the commencement of this Act, investments in and operating petroleum refineries shall be the condition for licensing of oil producing companies operating in Nigeria .

Licenses referred to under sub-section (1) of this section shall include Oil Mining Licenses (OML) and such other categories of licenses as may be prescribed by the Minister or by an Act of the National Assembly for operation in the upstream petroleum sector”. The Bill though seeks a five-year investment by oil companies in the ailing refineries in the Country, indigenous companies may be exempt if they lacked the capacity to invest in refineries.

“Where the Minister is satisfied that a wholly indigenous oil producing company does not have the capacity to invest in and run a petroleum refinery under this Act, he shall exempt such a company from the provisions of this Act. The smaller indigenous operators, if the proposal is law, “would invest in and run such other smaller petroleum refinery of not less than N50, 000 barrel stream per day; and the Minister shall report such exemptions to the National Assembly”

The refineries would also have the powers to “export any kind or quantity of refined petroleum products provided that it does subject to the provisions of this Act and regulations made thereto”, and the “Minister may make regulations prescribing such requirement concerning local supply refined petroleum products that must be met by a refinery under this Act before it is authorized to export refined petroleum products”

The Bill also seeks in one of its high-points to mandate the Minister of Petroleum Resources to compel operators to refine for export, provided they would not benefit from incentives under the proposed law. The prices of petroleum products as proposed by the Bill, shall not be imposed by the refineries, but shall be supplied at the prices so approved by the authorities.

“Refineries under this Act shall supply products at the prices so approved by the appropriate authority and shall not depart there from without prior written approval by the appropriate authority”, it states.

Another Bill the Committee on Petroleum Resources (Upstream), would treat at a forth_coming public hearing is titled “An Act to Make Provisions for Regulations and Fiscal Incentives in Connection with Petroleum Operations Carried out by Indigenous Oil Companies”

The Bill sponsored by the Leader of the House of Representatives, Chief Tunde Akogun, seeks to protest indigenous investors in the petroleum sector. The Bill wants the Minister of Petroleum Affairs to issue guidelines that would increase participation of indigenous players in the oil industry, through the lowering of bars for securing Oil Prospecting and Mining Licenses”.


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