The Federal Government has begun the enforcement of the 0.5 per cent levy on the wholesale price of petroleum products and natural gas as provided in the recently published Midstream and Downstream Petroleum Operations Regulations, 2025.
Under the new regulations, suppliers of petroleum products are mandated to collect and remit the levy at wholesale points, making compliance a condition tied directly to licensing and continued operation in the sector.
According to Section 47 of the Petroleum Industry Act, the NMDPRA shall maintain a fund (in this act referred to as “the Authority Fund”) into which money accruing to the commission shall be paid.
The source of the Authority Fund shall, among others, be “0.5 per cent of the wholesale price of petroleum products sold in Nigeria, which shall be collected from wholesale customers.”
The NMDPRA and petrol traders have been at loggerheads over whose responsibility it is to collect the 0.5 per cent wholesale price levy imposed on petroleum products by the PIA.
While the NMDPRA has said the traders should collect the levy and remit into its accounts, the traders say they prefer not to be burdened by the collection, so want the Authority to be the collector, insisting that there is no provision in the PIA that they should be responsible for the collection
There were also arguments about whether the levy should be charged separately, as is done with the Value Added Tax. But the regulator emphasised that the phrase ‘0.5 per cent of’ was used in the PIA instead of ‘0.5 per cent on’, saying the levy should be deducted from the wholesale price, being 0.5 per cent of it.
The NMDPRA, in its operations regulations, emphasised that the levy would be collected by suppliers from their wholesale customers for imported or locally refined petroleum products and sold in Nigeria.
“There shall be paid to the Authority Fund 0.5 per cent of the wholesale price of petroleum products sold in Nigeria, which shall be collected from wholesale customers by a supplier at wholesale points for imported petroleum products sold in Nigeria and petroleum products produced, processed, refined, and sold in Nigeria,” the NMDPRA said.
Apart from the Authority Fund, operators are also expected to pay another 0.5 per cent of the wholesale price of petroleum products and natural gas sold in Nigeria to the Midstream and Downstream Gas Infrastructure Fund.
“There shall be paid to the Midstream and Downstream Gas Infrastructure Fund 0.5 per cent of the wholesale price of petroleum products and natural gas sold in Nigeria, which shall be collected from wholesale customers by a supplier at wholesale points for imported petroleum products sold in Nigeria and natural gas sold in Nigeria and petroleum products produced, processed, refined and sold in Nigeria,” the regulator stated.
It stressed that the levies in the subregulations shall, in accordance with the PIA, form part of the wholesale price of petroleum products and natural gas sold in Nigeria.
“The levy in subregulation (1) of this regulation shall be due immediately upon the sale of petroleum products and shall be remitted by the supplier to the Authority Fund not later than the 21st day following the month of the sale, or as may be directed by the Authority.
“The levy in subregulation (2) of this regulation shall be due within 21 days of the sale of petroleum products and natural gas sold in Nigeria and shall be remitted by the supplier to the Midstream and Downstream Gas Infrastructure Fund not later than the 21st day following the month of the sale, or as may be directed by the Authority.
“The levies in subregulations (1) and (2) of this regulation shall be included in purchase agreements, invoices, receipts and any other document between a supplier and wholesale customer evidencing the sale of petroleum products or natural gas,” it was stated.
The NMDPRA added that the supplier shall, not later than the 30th day of each month, submit to it a report which shall comprise the volumes, price and names of the wholesale customer and a copy of the purchase agreements, invoices, receipts, and any other document between a supplier and wholesale customer evidencing the sale of petroleum products or natural gas.
“The Authority shall, upon confirmation of payment of the levies, issue a receipt to the supplier, who shall, in turn, provide the wholesale customer with a copy of the receipt.
“The Authority shall monitor wholesale points for the issuance of certificates of quantity and quality and the reconciliation of petroleum products or natural gas sold,” it explained.
The regulator threatened to sanction any operator who fails to comply with the directives.
“Where the supplier of petroleum products or natural gas fails to remit the levies to the Authority Fund or Midstream and Downstream Gas Infrastructure Fund as prescribed in these regulations, the supplier shall, in addition to the amount not remitted, be liable to an administrative penalty equal to 10 per cent of the amount unpaid for each month or part of it after the date on which payment became due,” it warned.
In addition to the penalty specified in subregulation (10) of the regulation, the NMDPRA threatened that it may suspend the licence of the supplier of petroleum products or natural gas until the levies and penalty are paid or suspend the operations of the facility into which the petroleum product or natural gas was processed, discharged, or stored until the levies and penalty are paid.
