The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and oil industry operators have opposed a proposal seeking to compel oil and gas producing companies in the South-South region to contribute three per cent of their total annual budgets to the South-South Development Commission (SSDC).

The stakeholders warned that the levy could increase operating costs and discourage investment in the petroleum sector.

The concerns were raised at the resumed public hearing organised by the House of Representatives Committee on the South-South Development Commission on a bill seeking to amend the South-South Development Commission (Establishment) Act, 2025, to strengthen the Commission’s funding framework.

The hearing, which brought together government agencies, petroleum regulators, oil industry operators and other stakeholders, focused on proposals to expand the Commission’s funding sources to enable it to deliver infrastructure and development projects across the South-South region.

Chairman of the Committee, Rep. Julius Pondi, said the public hearing was reconvened after several key stakeholders were unable to attend the initial session held on July 8 because they were participating in the Nigerian Oil and Gas (NOG) Conference.

He said the committee considered it necessary to provide all critical stakeholders, particularly those in the oil and gas industry, an opportunity to contribute to the legislative process.

Pondi said the proposed amendment was intended to strengthen the Commission’s financial base in view of the developmental challenges confronting the South-South despite its enormous contribution to Nigeria’s economy through petroleum production, maritime activities and industrial operations.

According to him, the House remains committed to an inclusive and transparent lawmaking process and would carefully review all submissions before presenting its recommendations.

Presenting the position of the NUPRC, the Commission’s Chief Executive, Oritsemeyiwa Eyesan, expressed support for establishing a predictable, transparent and sustainable funding framework for the Commission.

Eyesan, represented by the Head of Regulations and Statutory Compliance, Kingsley Chikwendu, however raised concerns over the proposal requiring oil and gas companies operating within the South-South to contribute three per cent of their total annual budgets, arguing that the phrase “total annual budget” was not clearly defined in the bill.

She said the ambiguity could create uncertainty over the basis for assessment, payment obligations, deductibility of the levy, timelines for remittance, enforcement mechanisms, treatment of joint venture operations and companies with assets across different regions.

She warned that the proposal, if passed in its current form, could amount to another expenditure-based levy payable regardless of profitability or production levels.

Eyesan noted that upstream operators already shoulder numerous statutory obligations, including royalties, petroleum taxes, the Niger Delta Development Commission levy, Host Community Development Trust Fund contributions under the Petroleum Industry Act, the Nigerian Content Development Fund, environmental remediation obligations and abandonment fund contributions.

The Commission urged lawmakers to undertake a comprehensive assessment of the likely impact of the proposed levy on production costs, investment decisions and the competitiveness of Nigeria’s upstream petroleum industry before taking a final decision.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) urged the committee to ensure that any additional funding mechanism aligns with the fiscal philosophy and investment objectives of the Petroleum Industry Act (PIA) 2021.

Representing the Authority, Senior Manager Ahmed Laido said any new financial obligation should strengthen investor confidence, provide regulatory certainty and support the Federal Government’s ease-of-doing-business reforms in the petroleum sector.

He advised lawmakers to carefully consider the broader economic implications of the proposal to ensure that the Commission’s funding objectives do not undermine the sustainability and competitiveness of Nigeria’s petroleum industry.

Also opposing the proposal, the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry cautioned against imposing another statutory levy on oil and gas operators.

Its Chairman, Bala Wudiri, argued that operators were already making substantial statutory contributions under existing laws, including payments to the Niger Delta Development Commission and the Host Community Development Trust Fund established under the Petroleum Industry Act.

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

Wudiri urged the committee to adopt a balanced funding framework that would strengthen the South-South Development Commission without discouraging investment or imposing overlapping statutory obligations on industry operators.

The resumed hearing highlighted broad support among stakeholders for the development of the South-South region but also exposed divergent views on the most sustainable funding model for the Commission.