MULLING OVER THE NEW PRODUCTION SHARING CONTRACTS FISCAL REGIME AS THE AMENDMENT ACT TO DIBPSA IS PASSED INTO LAW
In what may ostensibly be seen as a reaction to the Supreme Court judgment of October 2018, which ordered the Federal Government of Nigeria (“FGN”) to carry out an upward review of its revenue share under relevant production sharing contracts ("PSCs"), the Federal Government of Nigeria ("FGN") has, on 4th November 2019, passed an amendment (the "Amended Act") to the Deep Offshore and Inland Basin (Production Sharing Contracts) Act, No. 9 of 1999 ("DIBPSA" or "Principal Act"). The Supreme Court had on 17th October 2018 delivered a consent judgment in the case between the Attorney-General of Rivers State & 2 Others vs Attorney-General of the Federation (suit no. SC964/2016) in which the FGN was mandated to increase its share of revenue under the PSCs whenever the price of crude oil exceeds US$20 per barrel in line with Section 16 (1) of the DIBPSA. The suit was instituted by the Rivers, Bayelsa and Akwa-Ibom State Governments (in the names of their respective Attorneys General) who had approached the Supreme Court for the interpretation of Section 16(1) of the DIBPSA.
KEY FEATURES OF THE JOINT ADVISORY AND GUIDANCE ON MERGERS, ACQUISITIONS & OTHER BUSINESS COMBINATIONS NOTIFICATION
On the 30th of January 2019, President Muhammadu Buhari signed the Federal Competition and Consumer Protection Act 2018 (“FCCPA”) into law. The FCCPA repealed the Consumer Protection Council Act 1992 and created the Federal Competition and Consumer Protection Council (“FCCPC”) in place of the Consumer Protection Council. Prior to the enactment of the FCCPA, mergers and acquisitions (“M&As”) in Nigeria were generally regulated by the Investments and Securities Act, 2007 (“ISA”) with the Securities and Exchange Commission (“SEC”) having regulatory oversight. Presently, the FCCPA has repealed the provisions of the ISA that authorised the SEC to conduct assessments and approve M&As. These powers are now to be exercised by the FCCPC. Specifically, the FCCPC is vested with the powers to review all mergers and business combinations to ensure that such combinations do not distort or impede the markets; a function which was previously handled by the SEC.
MEMBERSHIP OF A COMPANY LIMITED BY GUARANTEE - KEY FEATURES
Introduction Among the different company types which can be incorporated in Nigeria pursuant to the provisions of the Companies and Allied Matters Act (“CAMA”)1, the company limited by guarantee appears to be the one with a less known and far less understood structure. Because it is called a “company”, many are quick to equate it with a company having share capital and shareholders. A company limited by guarantee (“Company Ltd/Gte”) has unique features which distinguish it from a company limited by shares, especially with regard to the liability of its members. The purpose of this article is to highlight these unique features of a company limited by guarantee and the provisions of Nigerian company law on its membership.
HIGHLIGHTS OF THE GUIDELINES FOR GRANT OF PERMIT TO ACCESS FLARE GAS
The Guidelines for Grant of Permit to Access Flare Gas (“PAFG Guidelines”) was issued by the Department of Petroleum Resources (“DPR”) on 27th December 2018 to, amongst other things, provide a framework for an open competitive bid process (“Bid Process”) for the grant of permits by the Minister of Petroleum Resources (“Minister”) to Nigerian registered companies to take Flare Gas on behalf of the Federal Government of Nigeria (“FGN”) from one or more specified sites (“Permit to Access Flare Gas”). The PAFG Guidelines also sets out the rights and obligations of a holder of a Permit to Access Flare Gas (“Permit Holder”).
THE FLARE GAS (PREVENTION OF WASTE AND POLLUTION) REGULATIONS, 2018 – WHAT IS NEW?
According to Maikanti Baru, the Group Managing Director of the Nigerian National Petroleum Corporation, petroleum operators currently flare about 700 million standard cubic feet (“scf”) of gas per day, which could generate 5,000 megawatts of electricity daily. At about $3.81 per 1,000scf of gas and using an exchange rate of N306.35 to $1.00, Nigeria loses an economic benefit of approximately N817million daily due to gas flaring.
HIGHLIGHTS OF THE REVISED INCOME TAX (TRANSFER PRICING) REGULATIONS 2018 AND THE GUIDELINES ON TRANSFER PRICING DOCUMENTATION
The Federal Inland Revenue Service (“FIRS”), on 19 March 2018 and 20 September 2018, released the revised Income Tax (Transfer Pricing) Regulations 2018 (the “Revised TP Regulations”) and the Guidelines on Transfer Pricing Documentation (“Guidelines”) respectively.
HIGHLIGHTS OF THE BILL FOR THE REPEAL AND RE-ENACTMENT OF THE COMPANIES AND ALLIED MATTERS ACT (“CAMA”)
The Companies and Allied Matters Act (Repeal and Re-enactment) Bill (the “CAMA Bill”) 2018, which seeks to repeal the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004, was passed by the 8th Senate after its third reading on 15 May 2018. The CAMA Bill is one of the most significant business reform bills in Nigeria in over 28 years. It was introduced to the Senate on 15 June 2017 and passed by the Senate within eleven months of its introduction.
NEW REGULATIONS FOR THE REGISTRATION OF CHARGES OVER MOVABLE ASSETS AND APPOINTMENT OF CORPORATE REPRESENTATIVES
The Corporate Affairs Commission (the “Commission”), in line with its statutory mandate and ongoing reform initiatives to improve the ease of doing business and the standard of economic activities in Nigeria, has issued new guidelines. The new guidelines relate to the registration of charges over movable assets and the appointment of corporate representatives. The new guidelines took effect in April 2018.
THE JOINT OPERATING AGREEMENT – ENFORCEABILITY OF THE FORFEITURE CLAUSE
The Oil and Gas industry and in particular the exploration and production sub-sector is incredibly capital intensive and attracts a great deal of risk, such that a reasonable forecast of financial expenditure and certainty as to how to meet this is a key consideration for any forward-thinking investor in its pursuit of profit.
NIGERIAN NATIONAL ASSEMBLY PASSES THE PETROLEUM INDUSTRY GOVERNANCE BILL
Almost 2 years after its first presentation to the Nigerian Senate, the Nigerian National Assembly has passed the Petroleum Industry Governance Bill (“PIGB” or the “Bill”). The PIGB was first introduced to the Nigerian Senate on 13 April 2016 and passed by the Senate on 25 May 2017. In accordance with the Nigerian legislative process, the Bill was forwarded to the House of Representatives (the lower house of the National Assembly) for concurrence and was passed by the House of Representatives on 17 January 2018. The Bill was thereafter harmonised and passed by the National Assembly on 28 March 2018.