Oil Sector Pushes Back as Reps Move to Expand South-South Commission Funding

The House of Representatives’ bid to strengthen the funding of the South-South Development Commission (SSDC) has met stiff resistance from petroleum regulators and oil industry operators, who warned against a proposed three per cent levy on oil and gas companies.

The opposition emerged on Wednesday at the resumed public hearing on a bill seeking to amend the South-South Development Commission (Establishment) Act, 2025, to expand the Commission’s funding sources.

Chairman of the House Committee on the South-South Development Commission, Rep. Julius Pondi, said the hearing was reconvened after several critical stakeholders missed the initial session held on July 8 due to the Nigerian Oil and Gas (NOG) Conference.

He said the committee considered it necessary to hear from all relevant stakeholders before finalising its recommendations, stressing that the House remained committed to a transparent and inclusive legislative process.

Pondi said the amendment is intended to strengthen the Commission’s financial base to enable it to effectively deliver its mandate of driving sustainable development across the South-South region.

He noted that despite serving as the nation’s economic backbone through petroleum production, maritime activities and industrial operations, the region continues to grapple with environmental degradation, infrastructure deficits and other socio-economic challenges.

“The objective is to produce legislation that is balanced, practical and capable of advancing the developmental aspirations of the South-South while protecting the national interest,” he said.

However, the proposed provision requiring oil and gas producing companies in the region to contribute three per cent of their total annual budgets drew strong objections from regulators and industry players.

Representing the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Commission Chief Executive, Mrs. Oritsemeyiwa Eyesan, through the Head of Regulations and Statutory Compliance, Kingsley Chikwendu, supported efforts to establish a sustainable funding framework but described the proposed levy as ambiguous.

He argued that the bill failed to define the term “total annual budget,” leaving uncertainty over how the contribution would be calculated, assessed and enforced, particularly for companies operating joint ventures or assets across multiple regions.

Chikwendu warned that the proposal could amount to another expenditure-based levy payable regardless of a company’s profitability or production level.

He further noted that upstream operators already bear several statutory obligations, including royalties, petroleum taxes, contributions to the Niger Delta Development Commission (NDDC), the Host Community Development Trust Fund under the Petroleum Industry Act (PIA), the Nigerian Content Development Fund, environmental remediation costs and abandonment fund contributions.

He urged lawmakers to thoroughly assess the potential impact of the proposed levy on investment, production costs and the competitiveness of Nigeria’s upstream petroleum industry.

Also making a presentation, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) called for any new funding mechanism to align with the fiscal objectives of the Petroleum Industry Act, 2021.

Its Senior Manager, Ahmed Laido, said any additional financial obligation should promote regulatory certainty, encourage investment and support the Federal Government’s ease-of-doing-business reforms.

Similarly, the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry opposed the proposed levy.

Speaking for the association, its Chairman, Bala Wudiri, argued that operators already make substantial statutory contributions under existing laws, including payments to the NDDC and the Host Community Development Trust Fund.

He warned that introducing another three per cent contribution would increase the financial burden on operators, duplicate existing obligations and weaken Nigeria’s attractiveness as an investment destination.

Wudiri urged the committee to adopt a funding framework that would strengthen the South-South Development Commission without discouraging investment in the oil and gas sector.

Despite the opposition to the proposed levy, stakeholders generally agreed on the need to strengthen the Commission’s capacity to deliver critical infrastructure and development projects across the South-South.