Federal High Court Upholds NMDPRA’s Authority to Impose Statutory Levies
In a landmark ruling, the Nigerian Federal High Court has upheld the Nigerian Midstream and Downstream Petroleum Regulatory Authority’s (NMDPRA) power to impose and collect levies on petroleum products sold within Nigeria. This decision marks a significant judicial interpretation of the Petroleum Industry Act 2021 (PIA) and reaffirms the regulatory authority’s mandate.
The court’s judgment, delivered by Honourable Justice Inyang Ekwo on February 5th, 2024, addressed a case brought by IHS Nigeria Limited and INT Towers Limited against the NMDPRA.
The plaintiffs contested their liability to pay the statutory 0.5% levies for the ‘Authority Fund’ and the ‘Midstream and Downstream Gas Infrastructure Fund’ on petroleum products they imported. They argued that since their products were not directly sold in Nigeria but used for internal business operations, they should be exempt from the levies.
Furthermore, the plaintiffs sought to challenge the validity of two key regulations under the PIA – the Midstream and Downstream Petroleum Operations (MDPO) Regulations 2023 and the Petroleum (Transportation and Shipment) (PTS) Regulations 2023. They claimed these regulations overreached the provisions of the PIA and infringed upon their constitutional right to personal property.
However, Justice Ekwo sided with the NMDPRA’s counsel, Dr. Emeka Akabogu, affirming the validity of the MDPO Regulations 2023 and the PTS Regulations 2023. The court ruled that these regulations were in line with the provisions of the PIA and did not conflict with the sections mandating the payment of levies on petroleum products and natural gas sold within Nigeria.
The judgment clarified that the definition of ‘sold in Nigeria’ encompassed various scenarios, including where goods are sold “fob” within Nigerian territorial waters, where they are loaded or offloaded for sale within Nigeria, or where the transaction originates, occurs, or concludes in Nigeria.
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This ruling has significant implications, confirming the broad regulatory powers granted to the NMDPRA under the PIA. It also establishes that petroleum products meant for export are subject to the MDPO Regulations and liable for the payment of levies, reinforcing compliance within the industry.
The decision sets a precedent for the interpretation of the PIA and underscores the NMDPRA’s role in regulating the petroleum sector, ensuring transparency, and safeguarding national interests.
Source: NMDRA
