Introduction

The Guidelines for Bunkering Operations in Nigeria 2004 were issued by the Department of Petroleum Resources pursuant to Sections 9(1)(e) and 4(1) of the Petroleum Act(1) and Section 48(7) of the Petroleum Regulations.(2) They apply to all vessels engaged in bunker fuel business or trade within any part of Nigeria's territorial or internal waters.

Any party intending to participate in bunkering operations must obtain a bunkering licence from the minister of petroleum resources.(3) Engaging in bunkering operations in Nigeria without a licence can incur a penalty of $1 million (or its equivalent in naira) and criminal prosecution.(4)

New application

An applicant for a new bunkering licence must submit:

  • a duly completed Department of Petroleum Resources application form;
  • a tax clearance certificate for the past three years;
  • a list of the approved communications equipment installed in its various business premises, along with proof of ownership;
  • a certificate of incorporation, memorandum and article of association and Forms CAC 07 and CAC 02;
  • the locations and capacities of the facilities to be used for storage (the minimum requirement is 5,000 megatonnes);
  • a full description of the vessel, including its name, age, tonnage and flag (the maximum permitted deadweight of a bunkering vessel is 5,000 megatonnes);
  • a current vessel fire-fighting certificate issued by the relevant regulatory agencies;
  • a certificate of inspection from the Nigerian Maritime Administration and Safety Agency (NIMASA);
  • a Nigerian Ports Authority certificate or permit;
  • an annual report on the vessel's condition by a Department of Petroleum Resources-accredited inspector;
  • a copy of an insurance certificate for pollution liability (the minimum permitted coverage is $20 million or its naira equivalent);
  • evidence of competence in bunkering operations relating to trained personnel and equipment from NIMASA;
  • a bunkering operations procedure manual;
  • an oil spill contingency plan; and
  • an emergency response plan.

In addition, the following fees (or their equivalent in naira) must be paid to the Federal Government of Nigeria - Department of Petroleum Resources Fees Account:

  • a $10,000 application fee;
  • a $50,000 accreditation fee; and
  • a $10,000 vessel or motorised barge licence fee.

The following fees (or their equivalent in naira) must also be paid to the Department of Petroleum Resources:

  • a $5,000 administrative fee; and
  • a $1,000 bunkering vessel inspection or verification fee.

Renewal application

The licences issued under the Guidelines for Bunkering Operations in Nigeria are valid for one calendar year. Every licensee that intends to continue engaging in bunkering operations after this must apply for a renewal at least one calendar month before its licence expires. Operating with an expired or otherwise invalid licence can incur a fine of $500,000 (or its equivalent in naira) and criminal prosecution.(5)

In applying for a renewal, the following documents must be submitted:

  • a duly completed Department of Petroleum Resources application form;
  • a copy of the expired licence;
  • annual returns of bunker fuel volumes and locations, with bills of lading for all cargoes loaded;
  • a tax clearance certificate for the past three years;
  • a current vessel fire-fighting certificate from the relevant regulatory agencies;
  • certification of the vessel's inspection by NIMASA;
  • a Nigerian Ports Authority certificate or permit for every vessel;
  • an annual report on the vessel's condition from a Department of Petroleum Resources-accredited inspector;
  • a copy of an insurance certificate for pollution liability;
  • a copy of the vessel's recertification, if due; and
  • evidence of the quantities of bunker fuel supplied in the past 12 months (ie, copies of bunker receipts with corresponding distribution data for each delivery).

In addition, the following fees (or their equivalent in naira) must be paid to the Federal Government of Nigeria - Department of Petroleum Resources Fees Account:

  • a renewal fee of $25,000 per year; and
  • a vessel or motorised barge licence fee of $10,000 per year.

The following fees (or their equivalent in naira) must also be paid to the Department of Petroleum Resources:

  • a $10,000 administrative fee; and
  • a bunkering vessel inspection or verification fee of $500 per vessel.

Types of facility

Oil bunkering facilities can be mobile (eg, vessels and barges) or fixed (eg, depots and dump-barges tied to jetties).

Mobile facilities

In addition to the standard requirements for bunker vessels and barges, a mobile facility must:

  • have a double hull and a steel or fiberglass body;
  • be equipped with modern tracking devices as specified by the Department of Petroleum Resources;
  • have an automated sampling system with real-time monitoring capability;
  • have a transfer or dispensing hose that is equipped with an emergency disconnect system;
  • have a well calibrated dispensing system that clearly indicates product prices (which will occasionally be checked for accuracy by the Department of Petroleum Resources);
  • be equipped with adequate fire-fighting equipment;
  • be equipped with an automatic emergency shutdown system;
  • have the word 'bunkering' boldly inscribed on the body; and
  • have a minimum of two fenders.

Fixed facilities

Where a fixed facility is sought to be operated, an application must be submitted to the Department of Petroleum Resources for a suitability inspection. The inspection will cover:

  • the location and size of the site, jetty or barge;
  • whether there is any similar facility within two kilometres;
  • a topographic survey of the site or jetty, as appropriate;
  • drainage from the site, which will be checked and certified by the Department of Petroleum Resources; and
  • an environmental impact assessment.

In addition to the standard requirements for depots and dump-barges tied to jetties, all fixed facilities must:

  • be made of steel, fiberglass or any material that satisfies acceptable international codes and standards;
  • be equipped with an automated sampling system with real-time monitoring capability;
  • have a transfer hose equipped with an emergency disconnect system;
  • be equipped with an automatic emergency shutdown system;
  • have the word 'bunkering' boldly inscribed on the side;
  • clearly indicate product prices;
  • be equipped with adequate fire-fighting equipment;
  • have dedicated storage tanks for bunker fuel;
  • have dedicated lines with back-loading facilities; and
  • be equipped with a minimum of two fenders (in the case of dump-barges).

Eligibility

Applicants must also prove that they have technical and financial capabilities, which will be verified by the Department of Petroleum Resources. They must give a presentation to the department on the planned bunkering operations, including a health, safety and environment plan, a proposed business plan and a three-year Nigerian content plan. In addition, they must have functional offices with technically efficient communications facilities and a well-equipped laboratory to undertake quality control of their products.

A company is not eligible for a licence unless it owns an adequately fitted vessel or a fixed bunkering facility constructed in line with the Guidelines for Bunkering Operations in Nigeria. In addition, such company must be registered for bunkering business in Nigeria and have the facilities and capabilities to render bunkering services.(6) Vessels to be utilised for bunkering operations in Nigeria must comply with the applicable international bunkering safety standards. Applicants must provide evidence that the vessel has a Lloyds, Bureau-Veritas or other internationally recognised classification. In addition, where motorised barges are sought to be used, applicants must provide evidence that the barge is registered with NIMASA.(7)

Every company licensed under the guidelines must display their licence during operations.(8) Licences cannot be transferred to third parties.

For further information on this topic please contact Emeka Akabogu or Enare Erim at Akabogu & Associates by telephone (+234 1460 55550) or email (emeka@akabogulaw.com or enare@akabogulaw.com). The Akabogu & Associates website can be accessed at www.akabogulaw.com.

Endnotes

(1) 1969 CAP P10 LFN 2004.

(2) 1967 CAP P10 LFN 2004.

(3) Section 1.5(1).

(4) Section 5(i).

(5) Section 5(ii).

(6) Section 1.5(ii).

(7) See (generally) Section 1.2.

(8) Section 1.5(5).

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