By Mercy Aikoye
Oil industry regulators and operators on Wednesday expressed reservations over a proposed amendment to the South-South Development Commission (Establishment) Act, 2025, warning that the introduction of a new statutory levy on petroleum companies could undermine investment and increase the financial burden on operators.
The concerns were raised at the resumed public hearing organised by the House of Representatives Committee on the South-South Development Commission to receive stakeholders’ input on a bill seeking to strengthen the Commission’s funding framework.
The amendment proposes, among other measures, that oil and gas producing companies operating within the South-South contribute three per cent of their total annual budgets to the Commission to support infrastructure and socio-economic development across the region.
Chairman of the committee, Hon. Julius Pondi, said the hearing was reconvened after several key stakeholders were unable to attend the initial session held on July 8 because of their participation in the Nigerian Oil and Gas (NOG) Conference.
According to Pondi, the committee considered it necessary to hear from all critical stakeholders, given the strategic role of the petroleum sector in the proposed legislation. He reiterated the House’s commitment to an inclusive and transparent legislative process, assuring participants that every submission would be carefully reviewed before recommendations are presented to the House.
He said the proposed amendment is intended to broaden the Commission’s funding base to enable it effectively address persistent developmental challenges in the South-South, despite the region’s significant contribution to Nigeria’s economy through petroleum production, maritime activities and industrial operations.
Presenting the position of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Commission’s Chief Executive, Mrs. Oritsemeyiwa Eyesan, represented by the Head of Regulations and Statutory Compliance, Kingsley Chikwendu, expressed support for a transparent and sustainable funding framework but cautioned against the proposed three per cent levy.
Chikwendu noted that the phrase “total annual budget” remains undefined in the bill, creating uncertainty over how liabilities would be assessed, deductions calculated, payment timelines determined and obligations enforced, particularly for joint venture operations and companies with assets across multiple regions.
He warned that the proposal could amount to an additional expenditure-based levy payable regardless of profitability or production levels, adding that upstream operators are already subject to several statutory obligations, including royalties, petroleum taxes, the Niger Delta Development Commission levy, Host Community Development Trust Fund contributions under the Petroleum Industry Act, the Nigerian Content Development Fund and environmental remediation commitments.
Similarly, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) urged lawmakers to ensure that any new funding mechanism aligns with the fiscal principles of the Petroleum Industry Act, promotes regulatory certainty and preserves investor confidence in Nigeria’s petroleum sector.
The Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry also opposed the proposed levy, arguing that operators already make substantial statutory contributions under existing laws. Its Chairman, Bala Wudiri, cautioned that another mandatory contribution could duplicate existing obligations, increase operational costs and weaken Nigeria’s competitiveness as an investment destination.
Despite the concerns over the funding model, stakeholders broadly supported efforts to strengthen the South-South Development Commission and improve infrastructure and socio-economic development across the region. They, however, urged lawmakers to adopt a balanced approach that enhances the Commission’s financial capacity without discouraging investment in the petroleum industry.
The House committee is expected to review all memoranda and submissions before presenting its recommendations to the House of Representatives for further legislative action.
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