The Federal Government has commenced enforcement of a 0.5 per cent levy on the wholesale price of petroleum products and natural gas, tightening oversight of Nigeria’s downstream petroleum sector.
The levy, provided for under the Midstream and Downstream Petroleum Operations Regulations, 2025, requires suppliers of petroleum products to deduct and remit the charge at wholesale points. Compliance has now been formally linked to licensing and the continued right to operate in the sector.
Under the Petroleum Industry Act (PIA), the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is mandated to manage an Authority Fund, which is financed partly through 0.5 per cent of the wholesale value of petroleum products sold in Nigeria. The regulations clarify that the levy is to be collected from wholesale customers by suppliers, whether the products are imported or locally refined.
The government’s move follows months of debate between industry players and the regulator over responsibility for collecting the levy.
Fuel traders had previously argued that the NMDPRA should collect the charge directly to avoid placing additional administrative burdens on suppliers. The regulator, however, maintained that the law requires suppliers to collect the levy from wholesale customers and remit it accordingly.
According to the regulations, the levy forms part of the wholesale price rather than being charged separately, as is done with Value Added Tax. Suppliers are required to remit the funds to the Authority Fund within 21 days after the month of sale, or within any other timeline specified by the regulator.
In addition to the Authority Fund levy, operators are also required to pay another 0.5 per cent of the wholesale price of petroleum products and natural gas into the Midstream and Downstream Gas Infrastructure Fund. This second levy follows similar collection and remittance timelines.
The NMDPRA has also introduced stricter reporting obligations.
Suppliers must submit monthly reports detailing volumes sold, prices, and the identities of wholesale customers, alongside supporting documents such as invoices and purchase agreements. Upon confirmation of payment, the regulator will issue receipts, which suppliers must pass on to their wholesale customers.
The authority warned that failure to comply will attract penalties, including a monthly surcharge of 10 per cent on unpaid amounts. Persistent non-compliance could also lead to suspension of operating licences or the shutdown of facilities where petroleum products or natural gas are processed, stored, or discharged.
