F. PETROLEUM EQUALISATION FUND
100. Establishment of the Petroleum Equalisation Fund
(1) There shall continue to be the Petroleum Equalisation Fund (“the Equalisation
Fund”) into which shall be paid:
(a) any net surplus revenue recovered from petroleum products marketing
companies pursuant to this Act; and
(b) such sums as may be provided for purpose of the Equalisation Fund by the
Federal Government. 57
(2) The Equalisation Fund is a body corporate with perpetual succession, a common
seal and which may sue and be sued in its corporate name.
(3) The Equalisation Fund shall have power to acquire, hold and dispose of property
and subject to this Act perform all acts that corporate bodies may perform by
(4) Where the Government decides that petroleum product markets have been
effectively deregulated, the Minister shall take the required actions to ensure that
the Equalisation Fund ceases to exist and its assets and liabilities transferred
to the Government to be controlled and managed by the Ministry and at such
time the provisions of the sections of this Act relating to the Equalisation Fund
shall stand repealed.
101. Establishment of the Petroleum Equalisation Fund Management Board
(1) There shall be for the Equalisation Fund a Board to be known as the Petroleum
Equalisation Fund Management Board (in this Act referred to as “the Board”)
which shall manage the Equalisation Fund.
(2) The Board shall consist of –
(a) the Minister who shall be the chairman.
(b) a representative of the Ministry of Petroleum Resources;
(c) a representative of the Federal Ministry of Finance;
(d) a representative of the Agency;
(e) a representative of National Association of Road Transport Owners;
(f) a representative of the Major Marketers Association of Nigeria;
(g) a representative of the Independent Petroleum Marketers Association of
(h) a representative each of the Nigerian Labour Congress and the Trade
Union Congress of Nigeria;
(i) three other persons who shall be of high integrity and substantial
professional experience appointed by the President on the
recommendation of the Minister; and
(j) the Executive Secretary of the Equalisation Fund. 58
(3) Membership of the Board shall be on a part-time basis..
(4) The provisions of the Second. Schedule to this Act shall have effect with respect
to the proceeding of the Board and other matters contained therein.
102. Powers of the Board
The Board shall have power to –
(a) determine the method by which net surplus revenue shall be collected from
petroleum products marketing companies;
(b) recover the net surplus revenues from the sale of petroleum products from
petroleum products marketing companies, as may be prescribed by the Agency;
(c) inspect and inquire about any activity relating to the movement or storage of
petroleum products and to that extent, inspect books and facilities, take
measurements, and inquire into the correctness of information provided in
support of claims for reimbursement.
103. Functions of the Board
The Board shall –
(a) receive any net surplus revenue recovered from petroleum products marketing
companies in accordance with the provision of section 102 of this Act;
(b) receive any such sums as may be provided for the purpose of the Equalisation
Fund by the Government;
(c) hold the Equalisation Fund in safe custody and in trust, for the reimbursement of
petroleum products marketing companies suffering loss solely and exclusively as
a result of the sale by them of petroleum products at uniform benchmark prices
throughout the country, being benchmark prices set by the Agency pursuant to
(d) make payment of all disbursements of the Equalisation Fund authorised under or
by virtue of this Act;
(e) account for all money collected, paid or otherwise expended in relation to the
Equalisation Fund and pursuant to the provisions of this Part;
(f) keep proper public accounts and records of transactions on the Equalisation
(g) prepare in respect of each financial year a statement of accounts in such form as
the Minister may direct; 59
(h) ensure the proper administration of the Equalisation Fund in accordance with the
provisions of this Part;
(i) make rules and regulations for carrying out the functions of the Equalisation
(j) do such other things as are necessary, expedient, legal, and in conformity with
the provisions of this Act for the efficient performance of and in connection with
all or any of the functions of the Board as specified under this Part.
104. Utilisation of the Equalisation Fund
The Equalisation Fund shall be utilized for:
(a) the proper administration of the Equalisation Fund;
(b) the reimbursement of petroleum products marketing companies for any loss
sustained by them solely and exclusively as a result of sales by them of
petroleum products at uniform prices throughout Nigeria, being benchmark prices
set by the Equalisation Fund; and
(c) the management of the Board.
105. Executive Secretary
(1) There shall be for the Equalisation Fund an Executive Secretary, appointed by
the President on the recommendation of the Minister.
(2) The Executive Secretary shall be a person with vast knowledge and cognate
professional experience in management and selected through a transparent
merit-based recruitment process. The Executive Secretary shall be the chief
executive and accounting officer of the Board and shall be responsible for
running the day-to-day administration of the Equalisation Fund under the
direction of the Board.
106. Responsibilities of the Executive Secretary
The Executive Secretary shall –
(a) determine the net surplus revenue recoverable from any petroleum products
marketing company and accruing to such company from the sale by the
company of petroleum products at such prices, as may be sold in accordance
with the methodology established by the Agency;
(b) determine the amount of reimbursement due to any petroleum products
marketing company which has suffered loss as a result of the operation of any
enactment or law;
(c) ensure the disbursements of all authorized payments under of this Act; 60
(d) account for all monies collected, paid or otherwise expended under this Act and
publish same in the way and manner prescribed by the Board in consultation with
the Agency; and
(e) carry out such other functions as may, from time to time, be specified by the
107. Other officers of the Board
The Board may, on the advice of the Executive Secretary, appoint as employees of
the Equalisation Fund such number of persons as may be necessary for the
administration of the Equalisation Fund, who shall be subject to the general control of
the Executive Secretary and perform such duties as the Executive Secretary may
108. Collection of net surplus revenue
(1) Net surplus revenue due and payable by petroleum products marketing
companies shall be payable to the Equalisation Fund in accordance with
directives issued by the Board from time to time,
(2) The Equalisation Fund shall have no obligation to issue a demand notice in
respect of the outstanding net surplus revenue and the failure to issue a demand
notice shall not constitute a defence for non-payment of outstanding sums.
109. Bridging and equalisation allowances
Nothing in section 103 of this Act shall derogate from the right of any petroleum
products marketing company maintaining storage facilities to collect bridging and
equalization allowances prior to the release of petroleum products to petroleum
products marketing companies and to remit same to the Board in accordance with
such directives as may be issued by the Board.
110. Claims by petroleum products marketing companies
(1) Petroleum products marketing companies may, as necessary, bring claims for
the recovery of losses sustained under paragraph (b) of section 106 of this Act in
the manner prescribed by the Board.
(2) Where a company brings a claim under sub-section (1) of this section, the Board
shall with the written request of the Executive Secretary, and with or without
notice, have the right to enter upon, inspect and inquire about any activity
relating to the movement or storage of petroleum products and to that event, to
inspect books and facilities, take measurements, and inquire into the correctness
of information provided in support of claims for reimbursement.
(3) The Board shall have the power to- 61
(a) demand details of production, supplies, loading and dispatches from
refining companies, import terminals and storage facilities; and
(b) gain unimpeded access to information relating to petroleum product
imports, refining and sales collated and maintained by any government
agency, including third party monitoring agencies, with authority to monitor
or inspect petroleum products.
(4) The power provided under subsection (3) of this section is limited to refining
facilities, reception terminals, storage facilities and retail outlets.
(5) Decisions as to payment of claims shall be made by the Board within thirty days
from the date on which the claim was first made and where the claim is
successful, payments shall be made within ten working days from the date of the
(6) Where a claim is successful and the Board fails to pay the claim to the company
in accordance with the terms and conditions of this section, the Board shall pay a
penalty to be prescribed by the Minister.
111. Calculation of surplus revenue recoverable
The net surplus revenue recoverable from a petroleum products marketing company
under this Act shall be calculated by reference to the volume of the affected products
sold on zonal basis and to the amount by which the uniform prices at which the
products were sold exceeded, or were less than, the prices of those products
prevailing immediately before the fixing of the uniform prices of the products.
112. Prescribed dates for payment and penalty for non-payment
(1) The Board shall by notice served on the petroleum products marketing company
concerned, specify the date on which any surplus revenue due from that
petroleum products marketing company shall be paid to the Board.
(2) If any sum is not paid within twenty-one days of the specified date, a sum equal
to ten per centum of the amount unpaid shall be added for each month or part of
a month after the date on which payment should have been made.
(3) The Board may for just cause, waive in whole or in part any penalty imposed
under this section.
(4) Where the Board waives a penalty under the provisions of subsection (3) of this
section, the Board shall give its reasons in writing.
113. Certificate as evidence 62
A copy of an entry in the accounts of the Board or other extract from the records of
the Board shall, when certified by the Executive Secretary, be received in all courts
as prima facie evidence of the truth of the contents thereof and as the case may be,
of the debt to the Board by any petroleum products marketing company.
114. Reporting obligations
(1) All petroleum product importers, including the National Oil Company, and
petroleum products marketing companies shall, prior to but not later than twentyone days following each importation, report details of all petroleum products
imported into Nigeria to the Equalisation Fund, and the reports shall include
quantities, date of delivery and place of discharge.
(2) All licensed petroleum product storage facilities, including storage facilities
belonging to the National Oil Company, shall on a monthly basis, deliver to the
(a) logs of product movements into and out of the facilities; and
(b) returns of bridging and equalization allowances collected from petroleum
products marketing companies and remitted to the Board.
(3) Marketing companies shall deliver quarterly statements of all petroleum products
lifted and discharged, including details of load and discharge points, dates and
times of loading and discharge to the Board.
(4) The Executive Secretary may, with the approval of the Board –
(a) require any petroleum products marketing company to furnish returns and
keep records or any other relevant information as may be determined to be
necessary for the proper administration of the provisions of this Act; and
(b) produce the records for examination by the Executive Secretary or any
authorized officer of the Board necessary for the proper administration of
the provisions of this Part.
115. Dispute resolution
(1) Disputes between a company and the Equalisation Fund in respect of any matter
under this Part shall be referred to the Agency and shall be subject to the dispute
resolution mechanism referred to in subsection (2) of this section.
(2) Where the Equalisation Fund is a party to a dispute under this Part, the relevant
provisions of the Arbitration and Conciliation Act, shall apply.
G. PETROLEUM HOST COMMUNITIES FUND 63
116. Establishment of the Petroleum Host Community Fund
There is established a fund to be known as the Petroleum Host Communities Fund (in
this Act referred to as ‘the PHC Fund’).
117. Purpose of the PHC Fund
The PHC Fund shall be utilized for the development of the economic and social
infrastructure of the communities within the petroleum producing area.
118. Beneficial entitlements to the communities
(1) Every upstream petroleum producing company shall remit on a monthly basis ten
percent of its net profit as follows -.
(a) for profit derived from upstream petroleum operations in onshore areas and
in the offshore and shallow water areas, all of such remittance shall be
made directly into the PHC Fund; and
(b) for profit derived from upstream petroleum operations in deepwater areas,
all of the remittance directly in to the Fund for the benefit of the petroleuml
producing littoral States.
(2) For the purpose of this section ‘net profit’ means the adjusted profit less royalty,
allowable deductions and allowances, less Nigerian Hydrocarbon Tax less
Companies Income Tax.
(3) At the end of each fiscal year, each upstream petroleum company shall reconcile
its remittance pursuant to subsection (1) of this section with its actual filed tax
return to the Service and settle any such difference.
(4) The contributions made by each upstream petroleum company pursuant to
subsection (1) of this section, will constitute an immediate credit to its total fiscal
rent obligations as defined in this Act.
(5) Where an act of vandalism, sabotage or other civil unrest occurs that causes
damage to any petroleum facilities within a host community , the cost of repair of
such facility shall be paid from PHC Fund entitlement unless it is established that
no member of the community is responsible. .
(6) The Minister shall, subject to the provisions of section 8 of this Act, make
regulations on entitlement, governance and management structure with respect
to the PHC Fund established under this Act.
H. NATIONAL PETROLEUM ASSETS MANAGEMENT CORPORATION
120. Establishment of the National Petroleum Assets Management
(1) There is established under this Act the National Petroleum Assets Management
Corporation (“the Corporation”), as a body corporate with perpetual succession,
a common seal and which may sue or be sued in its corporate name.
(2) The Corporation shall be a holding company operating fully on commercial
(3) The Corporation shall have power to-
(a) enter into contracts and incur obligations;
(b) acquire, hold, mortgage, purchase and deal howsoever with property,
whether movable or immovable, real or personal;
(c) establish and maintain subsidiaries for the discharge of its functions as the
Corporation may determine; and
(d) do all such things as are necessary for or incidental to the carrying out of its
functions and duties under this Act.
(4) Subject to the provisions of this Act, the functions of the Corporation are to –
(a) acquire and manage investments of the Government in the Nigerian
upstream petroleum industry; and
(b) undertake such other activities as are necessary or expedient for giving full
effect to the performance of its functions under this Act.
(1) The Corporation shall maintain a fund (‘the Fund’) into which shall be paid –
(a) such sums as may be made available by the Government for the purpose of
funding the subsidiaries of the Corporation established pursuant to the
provisions of subsection (3) of section 120 of this Act; and
(b) such monies as may be received by the Corporation in the course of its
operations or in the exercise of its functions under this Act
122. Utilization of the Fund of the Corporation
The Corporation shall utilize the proceeds of the Fund established under section 121
of this Act for –
(a) funding the first two years work programme of its subsidiary to be established
pursuant to this Act; and65
(b) defraying all expenses incurred by the Corporation.
123. Incorporation of Nigerian Petroleum Assets Management Company
(1) The Minister shall not later than three months after the Effective Date take such
steps as are necessary under the Companies and Allied Matters Act to
incorporate a company limited by shares which may be known as Nigerian
Petroleum Assets Management Company Limited (‘the Management Company’)
or such other name as shall be available, and be vested with certain assets and
liabilities of NNPC.
(2) At the time of its incorporation, the initial shares of the Management Company to
be established shall be held in the ratio of 99% by the Corporation and 1% by the
Permanent Secretary of the Ministry in trust for the Corporation.
124. Exemption from certain existing laws
The Management Company to be established shall not be subject to the provisions of
the Fiscal Responsibility Act, 2007 and the Public Procurement Act, 2007.
125. Transfer of Assets and Liabilities
(1) Following the incorporation of the Management Company the assets and
liabilities comprising exclusively the interests in all the unincorporated joint
ventures held by NNPC on behalf of the Government and excluding any asset
that the Government may have vested in the National Oil Company shall be
vested in the Management Company within twelve to twenty-four months from
the Effective Date.
(2) The Government may thereafter vest in the Management Company any
upstream asset as the Government may from time to time deem fit.
(3) The transfer of liability or obligation under this section without any further
assurance other than this section releases NNPC from any further liability or
obligation in respect of the assets or liabilities.
(4) The Management Company shall without further assurance be entitled to enforce
or defend all obligations for or against NNPC in respect of the portion of interests
mentioned in subsection (1) of this section as if the Management Company were
the original party to such obligations.
(5) The relevant transferred assets, all bonds, loans, financing agreements,
alternative financing agreements, joint operating agreements, sole risk
agreements, hypothecations, securities, deeds, contracts, instruments,
documents and working arrangements subsisting immediately before the initial
transfer date and to which NNPC was a party shall, on and after the initial date,
be as fully effective and enforceable against or in favour of the Management 66
Company as if, instead of NNPC, the Management Company had been named
(6) Any pending action or proceeding in relation to the transferred assets, brought
by or against NNPC immediately before the initial transfer date may be enforced
or continued, as the case may be, on and after that date by or against the
Management Company in the same way as if this Act had not been passed.
(7) Notwithstanding the provision of subsection (3) of this section
(a) no action or other proceeding shall be commenced against the
Management Company in respect of any employee, asset, liability, right or
obligation if, had there been no transfer, the time for commencing the action
or other proceeding would have expired; and
(b) the transfer of assets and liabilities to the Management Company under
subsection (2) of this section shall not be deemed to –
(i) constitute a breach, termination, repudiation or frustration of any
contract, including a contract of employment or insurance;
(ii) constitute a breach of any Act, regulation or by-law;
(iii) constitute an event of default or force majeure;
(iv) give rise to a breach, termination, repudiation or frustration of any
licence, permit or other right;
(v) give rise to any right to terminate or repudiate a contract, licence,
permit or other right; or
(vi) give rise to any estoppel.
(8) Subsection (7) of this section shall not apply to such contracts as may be
prescribed by any regulation made for that purpose..
(9) Subject to subsection (8) of this section, nothing in this Act and nothing done as
a result of a transfer under subsection (2) of this section shall create any new
cause of action in favour of a –
(i) holder of a debt instrument issued by NNPC before the transfer date; or
(ii) party to a contract with NNPC that was entered into before the transfer
(10) Any guarantee or surety which was given or made by the Government or any
other person in respect of any debt or obligation of NNPC, and which was 67
effective immediately before the initial transfer of the principal debt or obligation,
shall remain fully effective against the guarantor or surety on and after the initial
transfer date in relation to the repayment of the debt or the performance of the
obligation, as the case may be, by the Management Company to which the
principal debt or obligation was transferred.
126. Exemption from Stamp Duty
(1) Stamp duty shall not be chargeable under the Stamp Duties Act in respect of any
transfer made or transaction entered into pursuant to this Part on which, except
for the exemption granted under this section, stamp duty would have been
(2) Stamp duty shall not be chargeable –
(a) during the incorporation of any subsidiary of the Management Company
and or any subsequent increase to their authorised share capital of any
such subsidiary prior to the transfer of a majority interest there to the public
or private investors; or
(b) in respect of any other transfer of rights and assets pursuant to this Part.
127. Transfer of employees of NNPC
The transfer of employees of NNPC to the Management Company shall be in
accordance with the provisions of section 358 of this Act.
128. Directions to NNPC on matters related to transition
Prior to the vesting of assets and liabilities of NNPC in the Management Company,
the Minister may give the Board of Directors of NNPC directions in writing to ensure
the proper transfer of the assets and liabilities of NNPC to the Management
Company, and the Board of Directors shall, without delay, comply with every such
129. Certain exemption from rates
(1) Oil pipelines and other installations transferred to the Management Company
shall not be regarded as hereditaments or tenements to be valued for rating
(2) For the purpose of this subsection, the expression “oil pipelines and other
installations” include oil rigs, refineries, power generating plants, pumping
stations, tank farms and similar installations but shall not include office or
(3) Except as provided in subsection (1) of this section, nothing in this Act shall
be deemed to exempt the Management Company from liability for any tax, 68
duty, rate, levy or other charge whatsoever, whether general or local; provided
that the Management Company shall not be liable to pay any such tax, duty,
rate, levy or charge unless every company liable to tax under the Part VIII of
this Act is also liable for such payment.
130. Borrowing Powers
(1) Subject to the provisions of this section, the Corporation may, from time to
time, borrow by way of overdraft or by any other means such sums of monies
as it may require in the exercise of its functions under this Act.
(2) The Corporation shall not without the approval of the President, borrow any
sum of money whereby the amount in aggregate outstanding on any loan or
loans at any time exceeds such amount as is for the time being approved by
(3) Notwithstanding the provisions of subsection (2) of this section, a person
lending to the Corporation shall not be bound to enquire whether the
borrowing is within the power of the Corporation or not.
(4) Where any sum of money required to be borrowed by the Corporation –
(a) is to be in a currency other than Naira; and
(b) is to be borrowed by the Corporation other than temporarily, the
Corporation shall not borrow such sum without the approval of the
(5) Subsection (4) of this section, shall not apply to any money borrowed by the
Corporation from any of its subsidiaries or by a subsidiary of the Corporation
from the Corporation or any other subsidiary.
131. Establishment of the Board
(1) There is established for the Corporation, a Board of Directors (in this Part
referred to as “the Board”).
(2) The Board shall comprise of—
(a) the Minister of Petroleum, who shall be the chairman;
(b) the Permanent Secretary, Federal Ministry of Finance;
(c) the Managing Director of the Management Company, the subsidiary
company to be established by the Corporation pursuant to this Part; 69
(d) two persons to be appointed by the President, who shall be persons of
high integrity, substantial corporate experience and professional
accomplishment from the private sector.
(3) The persons appointed pursuant to paragraph d) of subsection (2) of this
section shall hold office for a term of four years in the first instance which term
may be renewed for another term of four years only, on such terms and
conditions as may be specified in the letter of appointment.
(4) The proceedings of the Board of the Corporation and other ancillary matters
shall be as provided in the Second Schedule to this Act.
(5) The conflict of interest provisions contained in the Second Schedule to this Act
shall apply to all members of the Board.
132. Functions and powers of the Board
The Board shall:
(a) provide general guidelines on the functions of the Corporation;
(b) approve the annual programme of action and budget for the Corporation;
(c) oversee the affairs of its subsidiaries;
(d) do such other things as are necessary, expedient, and in conformity with the
provisions of this Act for the efficient performance of and in connection with all
or any of the functions of the Board under this Act.
133. Remuneration of members of the Board
Members of the Board shall be paid from the funds of the Corporation such
remuneration and allowances in accordance with the guidelines of the Government.
(1) No person shall be appointed as a member of the Board unless the person –
(a) is a Nigerian citizen;
(b) has not, in terms of the laws in force in any country:
(i) been adjudged or declared bankrupt or insolvent; or
(ii) made an assignment to, or arrangement or composition with his
creditors which has not been rescinded or set aside;
(iii) been declared to be of unsound mind;70
(iv) been convicted of an offence involving fraud or dishonesty;or
(v) been disqualified by a competent authority from carrying out any
assignment, responsibility or function in his professional capacity
in any part of the world.
135. Removal of a member of the Board
(1) A member of the Board may be suspended or removed from office by the
President if the member –
(a) is found to have been unqualified for appointment as a member of the
Board after his appointment;
(b) has demonstrated inability to effectively perform the duties of his
(c) has been absent from five consecutive meetings of the Board without
the consent of the Chairman except for good cause shown for such
(d) commits an act of serious misconduct;
(e) in the case of a person possessed of professional qualifications, he is
disqualified or suspended from practicing his profession in any part of
the world by an order of a competent authority; or
(f) is in a breach of the conflict of interest rules set out in the Second
Schedule to this Act.
136. Resignation of a member of the Board
A member of the Board may resign his office by giving three months written notice
addressed to the President through the Minister.
137. Vacancy on the Board
(1) A vacancy on the Board shall occur if a member of the Board—
(b) is removed from office in accordance with section 159 of this Act; or
(c) resigns from office; or
(d) completes his tenure of office. 71
(2) A vacancy on the Board shall be filled by the appointment of another person