We will be looking at Prohibition of undertaking gas distribution, Authority to designate, Bidding process for a local distribution zones and Application for Grant of Gas Distribution.
INTRODUCTION
These Regulations, made under sections 33 (a), 111(4) (a), 148, 149 and 151 of the Petroleum Industry Act, No. 6 of 2021, apply to activities connected with the grant of gas distribution licence for a gas distribution system within a local distribution zone, and concern the procedure for the grant of a gas distribution licence, and the establishment of sanctions, penalties and administrative fines.
Matters covered by the Regulations concern: authority to designate local distribution zones; bidding process for granting a licence; duties of a licensee; construction, modification, and maintenance of a gas distribution pipeline; licence issued for the operation of a petroleum pipeline; offences.
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Prohibition of undertaking gas distribution without a licence
- A person shall not undertake gas distribution in Nigeria without a gas distribution licence granted by the Authority
- A gas distribution licence shall be granted in respect of a geographical limit within a local distribution zone determined by the Authority and shall confer on the holder, the exclusive right to distribute and sell its natural gas without discrimination to consumers in that local distribution zone.
- A gas distribution licence shall, subject to the provisions of the Act and these Regulations, be valid for a term of 25 years from the date of grant of the licence and may be renewed for further terms of 25 years each subject to terms and conditions as may be prescribed by the Authority.
Authority to designate local distribution zones
- The Authority shall, by notice published in the Federal Government Gazette, designate local distribution zones in Nigeria.
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- The Authority shall, in the designation of local distribution zones, adopt a national grid system.
- The grid system referred to in sub regulation (2) shall be based on the UTM system or any other projection system in use by the office of the Surveyor General of the Federation.
- The Authority shall establish a system for numbering of local distribution zones which shall allow for subdivision and aggregation of the zones.
- The basic unit of the grid system shall be a parcel of one square kilometre, subject to adjustment of the zones and national boundary.
- The Authority may further subdivide zones into equal units of one hectare or such sub-units as the Authority may deem appropriate.
- The national grid system referred to in subregulation (1) shall be used for the administration of gas distribution licences, including—
the definition of licence areas, surrenders, bid procedures, conservation measures and other regulatory and local distribution zone management procedures.
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Bidding process for a local distribution zone
Subject to the provisions of Regulation 7, a gas distribution licence shall only be granted—
- based on a fair, transparent and competitive bidding process; and in compliance with the provisions of the Act, these Regulations and the licensing round guidelines issued by the Authority for each licensing round.
- The Authority may periodically publish a licensing round plan for local distribution zones.
- The Authority may grant a gas distribution licence to a winning bidder, provided that the winning bidder has complied with the requirements of the bid invitation and licensing round guidelines.
- The Authority shall issue an offer letter to the winning bidder within 30 days of the conclusion of the bid process.
- The grant of a gas distribution licence on a surrendered or revoked local distribution zone shall be by an open, transparent, competitive, and non-discriminatory bidding process conducted by the Authority under subregulation (1).
- Where the Authority calls for bids under this regulation, it shall prescribe in a licensing round guideline the minimum pre-qualification criteria of prospective bidders in terms of technical and financial requirements and previous experience.
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- The bids received based on the bid parameters prescribed in subregulation (6) shall be considered through an open, transparent and competitive bidding process, and include an electronic bidding process open to the public.
- Where a winning bidder fails to comply with the requirements of the bid invitation within a timeframe specified by the Authority, the offer for a licence shall be deemed to have been withdrawn and the Authority may offer the licence to the second highest bidder on the same terms and conditions in the bid invitation.
Licensing ground guidelines
the licensing round guidelines shall be accompanied with the model licence and model contract for the local distribution zone for the bid round and shall include the—
- licence boundary, the term and minimum work obligations;
- requirements to be fulfilled by the bidders and the pre-qualification criteria;
- bid parameter;
- list of documents required and criteria for the evaluation of technical capacity, financial competence and legal status of interested parties; and
- details and cost for the acquisition of relevant data and studies
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The model licence and model contract for each bid round shall reflect the conditions of the licensing round guidelines for the bid round, and shall in all circumstances include these clauses—
- description of the local distribution zone;
- term of the licence;
- minimum work programme and minimum level of investment;
- details of guarantees to be provided by the licensee regarding th performance of its licence obligations;
- details of obligations regarding surrender, decommissioning and abandonment;
- rules for the resolution of disputes including arbitration, mediation, conciliation, or expert determination;
- Applicable sanctions in the event of failure by the licensee to comply
- with the terms and conditions of the licence; and such other clauses as the Authority may deem necessary.
Application For Grant of Gas Distribution Licence in A Local Distribution Zone
Notwithstanding the provisions of Regulation 5, a qualified person may apply to the Authority for the grant of a gas distribution licence in the manner prescribed in guidelines issued by the Authority. The Authority shall in considering an application under this regulation carry out an assessment of the application taking into consideration—
- whether prior to the application a bid has been submitted to the Authority for the local distribution zone in accordance with Regulation 5,
- the proximity of the proposed gas distribution system to an existing gas distribution system operated by the applicant,
- the technical capability of the applicant which shall include previous experience in the construction and operation of a gas distribution system, the financial capability of the applicant and natural gas availability.