The oil and gas industry is one of the most important sectors in Nigeria’s economy, which has contributed immensely to the country’s GDP and provides enormous business opportunities. Setting up a company in such a sector requires a good understanding of the regulatory framework in Nigeria and compliance with multiple legal requirements. Below is a step-by-step guide on how to set up an oil and gas company in Nigeria.
Proper registration is the first step towards setting up your oil and gas business in Nigeria.
Every business in Nigeria has to be registered with the Corporate Affairs Commission, which is the body responsible for the incorporation of businesses and ensuring the legal compliance of such a business. You can actually do this online through their portal.
2. Register with the National Investment Promotion Commission (NIPC)
If your business has foreign ownership, you will need to register with the National Investment Promotion Commission. This commission regulates and promotes foreign investment with a view to compliance with the laws of Nigeria. This is necessary and to be done before the actual operation of the business.
2. Tax and Employee Welfare Compliance
Every business in the oil and gas industry must comply with the provisions relating to tax and welfare of employees.
Register your business with the Federal Inland Revenue Service in order to get a Tax Identification Number. You will be required to have a Tax Clearance Certificate, showing that you are up to date in payment of taxes. In fact, you will hardly obtain any permit from the industry without the TCC.
2. Nigerian Social Insurance Trust Fund (NSITF)
Register with the NSITF to cater for employee welfare in case of accidents or injuries at work. This is a prerequisite for some key operational permits.
- Acquisition of Permits and Licenses
To operate in the oil and gas industry, there are various permits and licenses that must be obtained from the relevant regulatory bodies:
- Nigerian Upstream Regulatory Commission (NUPRC)
The NUPRC regulates the upstream segment of the industry, including exploration and production activities. Permits are categorized as follows:
- General: Services such as general maintenance and minor supplies.
- Major: Professional services requiring specialized technical expertise.
- Specialized: Explorative and drilling services among other professional services.
Ensure to apply based on your business operations.
- b) Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA)
The NMDPRA is responsible for the regulation of midstream and downstream activities that concern the refining, product distribution, and marketing. LPG retailers, companies involved in the importation of petroleum, or exporting crude oil must register under this authority.
2. Nigerian Content Development and Monitoring Board (NCDMB)
The NCDMB ensures compliance with the NOGIC Act that aims to encourage local participation in the industry.
- Other Certifications
Other certifications will be required to give credence to such a business and to also meet statutory requirements, such as:
- Industrial Training Fund (ITF) Certificate
Companies with a turnover of ₦50 million and above, or with more than five employees, are required to pay 1% of their payroll to the ITF. This certificate is mandatory for tendering for contracts in the industry.
2. Pension Fund Registration
For businesses with more than five employees, it is recommended to register with a Pension Fund Administrator. This is in compliance with the Nigerian pension laws, which have been put in place to provide retirement benefits for employees.
- Safety and Environmental Compliance
Considering the hazards involved in oil and gas, strict adherence to safety and environmental regulations becomes paramount:
- Health and Safety Compliance: Stringent safety measures must be implemented to protect employees and reduce workplace hazards.
- Environmental Standards: The company should be able to follow all environmental laws regarding pollution control, oil spill prevention, and waste management. Non-compliance may lead to significant fines and a loss of corporate image.
The oil and gas business in Nigeria is a complex regulatory jurisdiction to start an operation. Right from registration with the CAC and NIPC to getting permits from the NUPRC, NMDPRA, and NCDMB, each step is important in conducting legal operations. By meeting these requirements and securing the necessary certifications, your business can successfully enter the sector and leverage its immense opportunities.
Our Corporate law department has extensive experience in company registration and has successfully facilitated the establishment of oil companies for both individuals and corporate entities. contact us