Holders of Nigerian refining licences can pay for domestic crude oil supplies in either naira or US dollars, according to the newly passed Nigerian Petroleum Industry Bill (PIB) by the National Assembly last Thursday.
The following is an excerpt from the Senate Joint Committee on Downstream Petroleum, Petroleum Resources (Upstream), and Gas report: “Since refiners themselves may only be paid in naira for deliveries to the domestic market, it may be onerous to require US dollar payments.”
Two new regulators, the Nigerian Upstream Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority, are to be established, according to one of the bill’s provisions.
The National Assembly stated in sections 109 subsections 2 and 3 of the report: “The commission may issue regulations or guidelines on the mechanism for the imposition of a domestic crude oil supply obligation on lessees of upstream petroleum operations, including applicable penalties.”
“The authority shall supply the commission on a regular basis the crude oil requirements of refineries in operation and where shortages or inadequate supply conditions occur report such conditions to the commission.”
The bill sent to the National assembly stated that: “the commission shall ensure that the domestic crude oil supply obligation contains the following:
(a) crude oil may only be sold to holders of crude oil refining licences, whose refineries are in operation.
(b) the supply of crude oil shall be commercially negotiated between the lessee and the crude oil refining licensee, having regard to the prevailing international market price for similar grades of crude oil; and
(c) holders of crude oil refining licences shall provide payment guarantees as required by the applicable lessee and payment for crude oil purchased pursuant to obligations shall be in US dollars.”
The lawmakers recommended that “holders of crude oil refining licences shall provide payment guarantees as required by the applicable lessee and payment for crude oil purchased pursuant to obligations shall be in US dollars or naira, as may be agreed between the lessees or suppliers and the licensee of the refining licence.”
