The Federal Government has commenced enforcement of a 0.5 per cent levy on the wholesale price of petroleum products and natural gas, tightening regulatory oversight in the downstream segment of the oil and gas industry.
The levy is contained in the newly issued Midstream and Downstream Petroleum Operations Regulations, 2025, which make compliance mandatory for operators, with enforcement tied directly to licensing and continued operations in the sector.
Under the regulations, suppliers of petroleum products are required to collect the levy from their wholesale customers at wholesale points and remit same to the appropriate funds, in line with provisions of the Petroleum Industry Act (PIA).
Section 47 of the PIA empowers the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to maintain an Authority Fund, into which revenues accruing to the regulator are paid. One of the funding sources is 0.5 per cent of the wholesale price of petroleum products sold in Nigeria, to be collected from wholesale customers.
The enforcement follows months of debate between fuel traders and the NMDPRA over responsibility for collecting the levy. While operators had urged the regulator to handle collection to avoid additional operational burden, the authority insisted that suppliers act as collection agents, as now clarified in the regulations.
The NMDPRA stated that the levy applies to both imported and locally refined petroleum products sold in Nigeria and must be deducted as 0.5 per cent of the wholesale price, rather than charged separately like Value Added Tax.
“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,” the regulator stated.
In addition to the Authority Fund levy, operators are also required to remit another 0.5 per cent of the wholesale price of petroleum products and natural gas to the Midstream and Downstream Gas Infrastructure Fund, also to be collected from wholesale customers at the point of sale.
The regulator stressed that both levies form part of the wholesale price and must be reflected in purchase agreements, invoices, receipts and all transaction documents between suppliers and wholesale customers.
According to the regulations, the levies become due immediately upon sale and must be remitted not later than the 21st day of the month following the transaction, or as otherwise directed by the authority.
Suppliers are also mandated to submit monthly reports to the NMDPRA, detailing volumes sold, prices, names of wholesale customers, and copies of transaction documents. Upon confirmation of payment, the authority will issue receipts, which suppliers must forward to their wholesale customers.
The NMDPRA warned that failure to comply will attract stiff sanctions. Defaulting suppliers will be liable to an administrative penalty of 10 per cent of the unpaid levy for each month of default, in addition to the outstanding amount.
The authority also reserved the right to suspend operating licences or halt operations at facilities where petroleum products or natural gas are processed, stored or discharged until all outstanding levies and penalties are fully settled.
