In this post we will be looking at Functions of national strategic stocks, National strategic stocks levy, Duties of the Authority, Maintenance of operating and dead stock and offences in Nigeria.
INTRODUCTION
The National Strategic Stocks Regulations are made by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (“Authority”). The objectives of these Regulations are to: set out the general rules for the administration of the national strategic stocks, stipulate the public service levy for the funding of the national strategic stock and provide sanctions, fines and administrative penalties for failure to comply with the provisions of these Regulations.
These Regulations shall apply to activities connected with the establishment, administration, financing, storage, and distribution of national strategic stocks of petroleum products in Nigeria, including the designation of the strategic locations across the country where the national strategic stocks shall be maintained and distributed from.
The operator of a facility designated to hold a petroleum product as national strategic stock, shall not release or dispense a petroleum product held as national strategic stock without the written authorization of the Authority.
Read: The Domestic Natural Gas Pipeline Tariff Regulations
Functions of national strategic stocks
The national strategic stocks of petroleum products are to:
- provide strategic reserve of petroleum products in the country;
- ensure security of supply of petroleum products;
- reduce the impact of disruption in the supply of petroleum products in the country; and
- stabilize the domestic prices of petroleum products.
National strategic stocks levy
- There shall be a national strategic stock levy of not more than 5% of the retail price of petroleum products which shall be collected by the Authority on wholesale basis at wholesale points.
- The levy shall apply to any petroleum product imported into or processed and sold in Nigeria and shall be for the purpose of administering and financing of the national strategic stocks.
- The Authority shall from time to time determine and publish the amount to be charged as the levy, which shall form part of the retail price of each petroleum product.
- The Authority shall maintain accounts for the administration and financing of the national strategic stocks into which the levy shall be paid and expenses incurred disbursed from, and the accounts shall be interest-bearing and any accrued interest shall be applied to the administration and financing of the national strategic stocks.
- The Authority shall issue a debit note for the levy to wholesalers of petroleum products, which shall be paid to the Authority within 21 days from the date of issuance of the debit note.
Read: NCEC Certificate Registration
Duties of the Authority
The Authority shall, in the administration of national strategic stocks:
- Determine a minimum reserve volume of national demand of petroleum products as national strategic stocks.
- Impose public service obligations on a licence issued for the bulk storage of petroleum products.
- Impose public service obligations on a licensee or permit holder to distribute petroleum product from the national strategic stocks.
- Designate such places in consultation with security agencies, as it may consider appropriate on marine and on land for holding, maintenance and distribution of the national strategic stock.
- Approve the duration of the maintenance of national strategic stocks at a designated bulk storage facility.
Read: NMDPRA (Midstream Downstream) Permits
- Ensure that the national strategic stocks are efficiently operated within an appropriate corporate governance framework issued by the Authority.
- Ensure that national strategic stocks are maintained in a manner that guarantees security of storage, supply and distribution value-chain.
Maintenance of operating and dead stock
- The operator of a facility which has been designated as national strategic stock facility, shall at all times maintain an operating stock and a dead stock in accordance with guidelines published by the Authority.
- The holder of a licence for the bulk storage of petroleum products granted by the Authority and designated for national strategic stock, shall maintain a separate operating stock in accordance with guidelines published by the Authority.
Offences
- A person who fails to pay the levy in the manner stipulated in these Regulations, commits an offence and is liable to an administrative penalty of 10% of the amount unpaid which shall be added for each month or part of it, after the date on which payment should have been made, and the Authority may suspend the operations of the facility into which the product was discharged or stored until the payment is made.
- A facility owner who fails to maintain the stock levels for the petroleum products designated as national strategic stocks, commits an offence and is liable to an administrative penalty of 120% of the inventory cost of the volume released, and in addition shall replenish the stock within 24 hours from the date of issuance of the administrative penalty by the Authority.
Read: Storage Tanks Design & Terminal Construction
- A petroleum product off-taker who evacuates the petroleum products designated as national strategic stocks without the authorisation of the Authority, commits an offence and is liable to an administrative penalty of 120% of the inventory cost of the volume evacuated.
- A petroleum product off-taker who fails to comply with the conditions of the evacuation authorisation, commits an offence and is liable to an administrative penalty of 120% of the inventory cost of the volume evacuated.
- A person who fails to provide information required in these Regulations, commits an offence and is liable to an administrative penalty of NGN5,000,000.
- A person who makes a false declaration to the Authority or wilfully furnishes information so required which is in any respect false or insufficient, commits an offence and is liable to an administrative penalty of NGN10,000,000.
- A person who fails to comply with any of the provisions, directives given or conditions of any licence, permit or authorisation issued in these Regulations may, in addition to the sanctions, fines and penalties prescribed by the Act, pay to the Authority an administrative penalty not more than USD100,000, and may have the licence, permit or authorisation issued to the person suspended or revoked by the Authority.