We will be looking at establishment of the environmental remediation fund, utilization of the fund, financial contribution and procedure for the fund.
INTRODUCTION
A statement signed by the authority’s General Manager, Corporate Communications and Stakeholders’ Management, Mr Kimchi Apollo, stated that the regulations aimed to address environmental and safety concerns in the midstream and downstream petroleum sector.
He listed one of the specific regulations as the Midstream and Downstream Petroleum Environmental Regulation, 2023, designed to ensure that environmental standards and practices are upheld across midstream and downstream petroleum operations.
Midstream and Downstream Environmental Remediation Fund Regulation 2023: This regulation sets out the establishment and financial contribution of the fund for midstream and downstream operations.”
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The aim of the Environmental Remediation Fund, he noted, was to provide resources for the cleanup, rehabilitation or management of negative environmental impact from petroleum operations nationwide.
Establishment Of the Environmental Remediation Fund
The Regulation sets up an environmental remediation fund (“Fund”), which will be used to rehabilitate adverse environmental effects resulting from midstream and downstream petroleum operations in the following ways:
- The Authority shall administer and manage the Fund in accordance with these Regulations and other applicable laws.
- The Authority shall within six months from the effective date of these Regulations establish an interest yielding account to be known as the Midstream and Downstream Environmental Remediation Fund Account.
- The Account shall be funded by contributions from licensees engaged in midstream and downstream petroleum operations under the Act in accordance with the criteria set out in these Regulations and the accrued interest from the Fund.
- The Account shall be administered by the Authority for the specific purpose of rehabilitation and management of negative environmental impact resulting from midstream and downstream petroleum operations.
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- The administration of the Account shall be in accordance with the procedure and criteria set out in these Regulations, Guidelines and Rules made by the Authority and published on its website which shall be consistent with the financial rules set by the accountant-General of the Federation for the administration of such funds.
utilization of the fund
The Fund shall be utilised to provide funding for the management of environmental impact, rehabilitation of negative environmental impacts caused by midstream and downstream petroleum operations, except where such operations are in accordance with section 8(d) of the Act.
Where a licensee fails to rehabilitate, manage or is unable to undertake rehabilitation or management of any negative impact on the environment, the Authority may write a notice to the licensee to apply for Fund.
Where the Authority determines to apply the Fund, the procurement of goods, works or services required for the utilisation of the Fund shall be subject to the laws applicable to public procurement.
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Financial Contribution and Procedure for The Fund
The financial contribution shall be paid on or before 31st December of every calendar year for each licence including the year in which a licence has been granted. For the purpose of these Regulations, petroleum operations under each licence, shall fall under one of the following categories of areas where operations are located such as the following:
- Onshore high-risk area being areas which includes —
- land,
- mangrove areas,
- wetland and swamp areas,
- a zone of 500 meters along any river or lake, or
- such other areas as the Authority may determine as high-risk;
- Shallow water high-risk area being—
- a zone of 10 km seawards of a high-water mark, and
- such other shallow water areas as the Authority may determine as high risk
- Other onshore areas being the part of Nigeria that is defined as onshore and frontier acreages in the Act, other than onshore high-risk areas;
- Other shallow water areas, being the part of Nigeria that is defined as shallow water in the Act, other than shallow water high-risk areas; or
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- Deep water areas, being the part of Nigeria that is defined as deep offshore in the Act.
The Authority shall, prior to the first payment of the financial contribution, notify the licensee of which category the license falls, such that where all or part of an asset is situated —
- in an area that is considered an onshore high-risk area, the entire licence shall be considered as being located in an onshore high-risk area;
- in a shallow water area that is considered a shallow water high-risk area, the entire licence shall be considered as being located in a shallow water high-risk area;
- onshore and part in shallow water, the entire licence shall be considered onshore; or
- in shallow water and part in deep offshore, the entire licence shall be considered shallow water.
Payment of the financial contribution by a licensee as set out in the Schedule to these Regulations, shall be made in the following manner —
- existing licensee shall, on the coming into effect of these Regulations, commence payment by contributing an amount equal to the fixed cost relating to a licence in their operational area multiplied by the remaining days of that year, and an annual financial contribution for any succeeding year that a licence is in effect. This shall be paid on or before the 31st of March of every year, and the contribution shall consist of the fixed contribution, the capital expenditure and production or volume where applicable;
- prospective licensee shall pay an initial contribution prior to the granting of a licence in the first year of a grant, and the initial financial contribution shall consist solely of the fixed contribution provided for in these Regulations multiplied by the remaining days in the year of the grant of license;
- An annual financial contribution for any succeeding year that a licence is still in effect, should be paid on or before the 31st of March of every year, and the contribution shall consist of the fixed contribution, the capital expenditure and production/volume where applicable.
- The applicable financial contribution shall be paid prior to the termination of a licence where the licence terminates prior to the 31st March of the relevant year.