OGFZA to cut tariff for free zone investors

The management team of OGFZA led by Umana Okon Umana (first right) along with officials of ANL

The Oil and Gas Free Zones Authority (OGFZA) has begun a downward review of tariffs paid by investors in the oil and gas zones in the country. The Managing Director of OGFZA, Mr. Umana Okon Umana, broke the news of the downward review during an interaction with investors in Onne, Rivers State, following complaints by licensed investors about high tariffs applicable in the free zones.

The licensees protested that the Industry Wide Standard Tariffs (IWST) being enforced in the free zones were negotiated and signed only by the National Petroleum Investment Management Services (NAPIMS), ExxonMobil, Shell, Intels, Addax, NOAC, Total and Chevron without the input or involvement of other investors in the free zones.

They argued that it was unfair to impose such a tariff regime on everyone when the process that produced it was not inclusive, and called for all parties, including NAPIMS, OGFZA, the IOCs and other licensees, to go back to the drawing board and agree on a new tariff structure that will take care of the interest of the IOCs and other licensed investors in the free zones.

According to Umana who told the investors that their case deserved a serious consideration, the downward review of the statutory levies is necessary to justify the very idea of a free zone as an enclave where investors enjoy low cost and ease of doing business, adding that the difficult economic times also call for a second look at the tariff regime in the free zones.

He told the investors that a meeting was ongoing with the NAPIMS, Intels and other relevant stakeholders to agree on a regime of tariffs that is fair to all the parties involved.

Umana explained that the schedule of the tariffs being implemented was approved by NAPIMS “without the input of the OGFZA,” contrary to Section 25 of the Oil & Gas Free Zone Act Cap 05, LFN 2010 and Section 11 and 39 (4) of the Oil & Gas Export Free Zone Regulations 2003.

Section 11 of the Oil & Gas Export Free Zone Regulations 2003 states that “The Authority shall issue schedule of tariffs which shall apply in the free zone and which shall be reviewed from time to time and copies made available to the licensees or operators,” while Section 32 (4) of the same regulation gives OGFZA the “right to review tariffs for operations in the free zone from time to time.”

The proposed reduction in tariffs is one of the measures being taken by OGFZA to boost economic activities in the oil and gas free zones. Last month, OGFZA launched its strategic roadmap to transform its operations, and a marketing brochure that unveiled a bouquet of incentives to free zone investors.

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Mr. Umana Okon UmanaOGFZA
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