Oil industry operators and petroleum regulators have strongly opposed a proposal that would require oil and gas producing companies to contribute 3% of their annual budgets to the South-South Development Commission (SSDC).
They warned that the new levy could discourage investment, increase operational costs, and reduce the competitiveness of Nigeria’s petroleum sector.
The concerns were voiced on Wednesday during a resumed public hearing organised by the House of Representatives Committee on the South-South Development Commission.
The session focused on a bill to amend the SSDC (Establishment) Act, 2025, aimed at strengthening the commission’s funding framework.
Committee Chairman Julius Pondi explained that the hearing was reconvened to accommodate key stakeholders who missed the initial session due to the Nigerian Oil and Gas Conference. He emphasised the need for broad input, given the petroleum sector’s critical role in the proposed amendment.
Pondi noted that the amendment seeks to expand the commission’s funding base to better address infrastructure deficits, environmental challenges, and underdevelopment in the South-South region, despite its pivotal contribution to Nigeria’s economy through oil production.
However, industry stakeholders raised significant objections to the 3% levy provision:Nigerian Upstream Petroleum Regulatory Commission (NUPRC): Chief Executive Oritsemeyiwa Eyesan (represented by Kingsley Chikwendu) supported sustainable funding for the commission but criticised the vague “total annual budget” phrasing.
The NUPRC highlighted uncertainties around calculation, deductibility, joint ventures, and multi-region operations. It stressed that upstream operators already face multiple obligations, including royalties, petroleum taxes, NDDC levy, Host Community Development Trust Fund contributions under the Petroleum Industry Act (PIA), and others.
Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA): The authority called for any new levy to align with the PIA’s fiscal framework and support investor confidence and ease of doing business.
Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry: Chairman Bala Wudiri argued that operators already make substantial statutory contributions and warned that an additional 3% levy would duplicate obligations, raise financial burdens, and deter investment in Nigeria’s oil and gas industry.
Stakeholders broadly agreed on the need for adequate funding to drive development in the South-South addressing issues like poor infrastructure, environmental degradation, and unemployment stemming from oil exploration. They urged lawmakers to explore alternative, balanced financing models that avoid undermining investment or duplicating existing payments.
The House Committee is expected to review all submissions and memoranda before presenting its report to the full House of Representatives.
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