The Federal Government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority, is proposing fines of up to five per cent of the annual turnover of petroleum operators found guilty of serious anti-competitive practices in the midstream and downstream sectors.
This was disclosed in the draft regulations of the proposed Midstream and Downstream Petroleum Prevention of Anti-Competitive Practices and Behaviour Regulations, 2026, analysed by our correspondent on Wednesday.
Under the proposed regulations, companies involved in serious offences such as price-fixing, bid-rigging, market allocation, abuse of market dominance and other conduct capable of causing significant harm to competition could be fined between three and five per cent of their annual turnover.
Persistent or serious offenders may also have their licences suspended or revoked, while the Authority may impose daily penalties on operators that fail to comply with its orders or continue prohibited conduct after being directed to stop.
The draft regulation states, “Where the Authority determines, after investigation and due process, that a licensee or any other person has engaged in anti-competitive conduct or breached any provision of this Regulation or the Act, it may impose administrative fines as provided herein.”
It further states, “The maximum administrative fine shall not exceed five per cent of the annual turnover of the offending undertaking for the preceding financial year.
“For purposes of these regulations, ‘annual turnover’ means gross revenues or sales derived from the regulated business activities in Nigeria. Where multiple entities or group structures are involved, the Authority may consider the turnover of the group, subsidiary, or segment most directly involved in the infringement.”
The proposed framework classifies competition infringements into three categories, with Category A covering severe offences, Category B moderate offences and Category C minor or technical breaches.
Category A offences attract indicative fines of between three and five per cent of annual turnover. They include cartel agreements involving price-fixing, bid-rigging and market allocation, as well as abuse of dominance with foreclosure effects, such as predatory pricing and refusal to supply an essential facility.
Aggravating factors would include repeat offending, obstructing an investigation, having a large market share or causing significant harm to the market. Mitigating factors include voluntary self-reporting, cooperation beyond legal obligations, early termination of prohibited conduct and an established compliance programme.
Category B offences attract fines of between one and three per cent of annual turnover and include exclusive dealing without clear foreclosure, tying or bundling with minor market harm and unfair discrimination between trading partners.
Category C offences could attract fixed penalties ranging from N5m to N50m or less than one per cent of turnover. These include failure to submit required competition reports, delays in submitting compliance reports and inadvertent data omissions or misstatements.
An operator that fails to comply with a final cease-and-desist order could face a daily penalty of between N5m and N25m until compliance is achieved. The proposed rules provide, “Where a licensee or person fails to comply with an order or directive of the Authority, a daily penalty may be imposed for each day the violation continues.”
Where a prohibited practice continues after a final order, the daily penalty could rise to between N10m and N50m. Before imposing a fine, the NMDPRA would issue a Notice of Intention to Fine setting out the facts and findings, the nature of the infringement, the basis for calculating the proposed fine and the proposed deadline for payment.
The affected operator would have at least 30 days to make written representations or request a hearing.
It states, “Before imposing a fine, the Authority shall issue a Notice of Intention to Fine, specifying: (a) The facts, findings, and nature of the infringement; (b) The basis for the proposed fine, including its calculation; and (c) The proposed deadline for payment. The respondent shall be granted no fewer than 30 days to make written representations or request a hearing.”
The proposed framework also extends accountability to individuals who knowingly participate in serious anti-competitive practices. Directors, managers and officers could face personal sanctions, including referral to the Federal Competition and Consumer Protection Commission for personal liability under the Federal Competition and Consumer Protection Act.
Persistent or serious violations could also result in the suspension or revocation of an operator’s licence or permit. Operators would generally be required to pay penalties within 30 days of a Final Penalty Order. The framework preserves the right to appeal, while unpaid fines would constitute debts recoverable by the Authority.
Meanwhile, stakeholders and operators have up to 21 days to submit comments, approval or objection on the proposed regulations, in compliance with Section 216(1) of the Petroleum Industry Act 2021, which requires stakeholder consultation before regulations are finalised.
Discover more from Ameh News
Subscribe to get the latest posts sent to your email.
