THE UNVEILING OF A NEW TESTAMENT IN CAMA 2020: A NEED FOR THE CHURCH TO CALM DOWN (SECTION 839 CAMA 2020)

   INTRODUCTION

The Nigeria Constitution by virtue of Section 40 provides for the right to freedom of association, giving the religious bodies the power to establish churches and mosques without the need to register.

However, in a bid of creating a legal structure around the association, the religious bodies are advised to register under Part C of CAMA to enable them enjoy numerous benefits for growth and sustainability amidst the benefits are;

a.    They become a corporate body

b.    They enjoy perpetual succession

c.    They have an enhanced corporate image

d.    They can apply to the relevant government authority to be granted license as a place of worship

e.    They can access loan facility from financial institutions

f.     Protection of name

g.    They can open and operate a bank account with the registered name.

Furthermore, On the 7th of August 2020, President Muhammadu Buhari assented to the Companies and Allied Matters Act, 2020 (CAMA 2020), which in effect repeals the Companies and Allied Matters Act, 1990 (the “Repealed Act”). By popular opinion, the passage into law is a welcome development and both the 9th Assembly and the President are duly commended.

The new act however introduces a section that affects the Non-governmental organizations (Church Included) which has led to a call for amendment of the section by agitators with more aggressive rebuttal from the religious bodies, noting that the new section is a sneaky way of introducing the Unpopular NGO Bill into CAMA and seen as an uprising of the Antichrist against the church. 

It is worthy to note that the Act did not specifically mention church or any particular religion, the act aims at introducing long overdue reforms in the conduct of business of all classes which includes association, charitable organization such as Churches, Mosques, educational institutions, social clubs etc. 

 

THE SECTION 839 CAMA 2020

It is a well known fact that the guaranteed fundamental human right enshrined in the Nigerian constitution is not absolute, it’s still subject to certain checks and limitation that is reasonably justifiable in a democratic society in the interest of public safety, public order, public morality etc (See Section 45 of the 1999 Constitution as amended).

The introduction of Section 839 CAMA 2020 can be described as a form of check on the registration of Incorporated Trustees in Nigeria. The introduction of this new section is long overdue to reflect the international standard and practices as seen in other jurisdictions.

However, the misconception of the section can be traced to the faulty interpretation of the section by non-lawyers. A proper analogy is when a carpenter decides to sew Christmas cloth in a bid to impress the public, an utter colossal damage.

One of the misconceptions is the view that the Corporate Affairs Commission possess a sole arbitrary power to suspend at will the Trustees and appoint interim mangers. Another misconception is that the section is seen as a sign of end time through which the government would control churches.

 

THE ANALYSIS

Section 839 (1) empowers the Commission to suspend trustees of an association and appoint interim managers to manage the affairs of the association where it reasonably believes that-

(a) There is or has been misconduct or mismanagement in the administration of the association;

(b) it is necessary or desirable for the purpose of;

i. Protecting the property of the association

ii. Securing a proper application for the property of the association towards achieving the objects of the association, the purpose of the association of that property or of the property coming to the association,

iii. Public interest; or

(c) the affairs of the association are being run fraudulently.

This section provides for reasonably justifiable grounds in which the commission can validly suspend trustees of an association, a proper definition of no smoke without fire. If the law had ended with this section, we would have presumed that the decision to suspend rests solely on a commission controlled by the government.

However, subsection 2 of 839 provides that;

‘’The trustees shall be suspended by an order of Court upon the petition of the Commission or members consisting one-fifth of the association and the petitioners shall present all reasonable evidence or such evidence as requested by the Court in respect of the petition’’

This section gives a clear procedure on how trustees can be suspended thereby resolving the misconception that the commission possess a sole arbitrary power to suspend trustees. It’s crystal clear that the suspension of trustees of an association can only occur when a competent court of gives an order on same.

The section states the condition precedent upon which the order can be made;

a.    Petition from the commission

b.    Petition from 1/5^th of the members of the association

c.    Presentation of reasonable evidences

N.B: The petition must detail the infractions committed by the trustees which has been laid down in subsection 1.

Thus, the Registrar General of the commission can not  wake up on the wrong side of the bed and decide to suspend trustees of an association to calm his nerves. Subsection 2 curtails the power of the commission to suspend trustees of an association. Any action done without recourse to Subsection 2 would be null and void.

Consequently, subsection 3 of 839 further provides for the appointment of the interim managers and their functions which must be approved by the court. It’s crystal clear that the suspension of trustees and appointment of interim managers rests on the shoulder of the court and not the commission as generally misconstrued by the public.

 

WHY THE CHURCH NEED TO CALM DOWN??

The church is not the only one affected by the new enactment but all charitable organisation registered under this part of CAMA (Now Part F). Pastors are not trustees of the church, therefore the belief that the government wants to control the church is wrong, the replacement of the trustees won’t stop the church from holding on Sundays nor will they bring a Non-Christian to head the church and preach during our cross over night. 

I am surprised at the sudden blackish on the new enactment from prominent men of God when same laws exist in other jurisdiction, they have branches. We read the report from UK of the appointment of interim managers to replace the trustees of 2 prominent churches known in Nigeria on the allegation of mismanagement and misconduct.

I am of the opinion that if we (Churches) could abide by the charity laws in other jurisdictions similar to this section why the hypocritical attitude when same is introduced in Nigeria?? 

This new enactment has been in existence in other jurisdictions for years aimed at checking excess of charitable organization. The law is clear, once you submit to it you ought to abide by it. By registering under CAMA, you are bound by the law to comply with it.

The aim of the enactment is for transparency of the management of the association. It is worthy to note that the Section does not in any way suggest that churches are liable to pay taxes as argued by some agitators. The law is trite that Non-Profit organizations are not taxable.

However, where the charitable organization (Inclusive of Church) decides to diversify their fund into a commercial venture aimed at making profit, they would become liable to tax. The taxable income would be limited to the business aspect of the organization. 

 One of the greatest problem of the church today is lack of information, members are ready to take in everything said from the pulpit without recourse to verify the information. 

Are we scared of living by what we preach? Are we scared of transparency and accountability? if No, the Church need to calm down.

CONCLUSION

If the agitators of this section base their argument on lack of faith in the Judiciary to perform its role without bias, well taking into consideration recent happenings in the country I might pitch a tent with the agitators.

However, the aim of the article is to clear the misconstrued interpretation that the commission holds a sole arbitrary power to suspend and appoint new interim managers without fair hearing from the association. The presentation of the petition to the court is not an exparte application both sides will be heard before an order is made.

In my opinion the new enactment is a welcome development to the extent that the tenets of rule of law will be adhered to by the commission and the court. We all know that the government has done nothing but look away at the contravention of the application of income and property of the NGOs from time immemorial.

Will this section be used as a tool to witch hunt antagonist of the government??

Will this section be used to fish out the judas amidst the registered NGOs??

Will this section cause a change in the administration of NGOs (Churches Included)??

For the 1^st and 2^nd Question I a not a prophet that can see into the future and answer same but for the 3^rd Question Yes. Trustees will be kept on their toes now that the law is like a lamp aimed at revealing the skeleton in our cupboards.

Egbetola Sola is a budding business lawyer, based in Lagos, he is passionate about helping business owners maximize their opportunities using legal tools. He works as an In-House Counsel with an Investment Bank; Cowry Asset Management.

He is also a tech enthusiast with a commitment towards legal and tech innovations.

E-mail: solaegbetola@gmail.com

Read More...

WHY HIRE A LAWYER?

INTRODUCTION

The enthusiasm of starting a business oftentimes cloud the founders from seeing the need to hire/consult a lawyer. There is a popular saying that ‘an ounce of prevention is worth a pound of cure’ but some entrepreneurs are easily starry-eyed optimist ignoring any foreboding waiting till something bad happens before they consult a lawyer. 

Legal guidance in setting up of a business is of great importance in ensuring the success of the business.

''I have never met a successful business person who never had a brilliant lawyer''.... Olufemi Awoyemi (Founder and Chairman of Proshare Nigeria Limited)

An entrepreneur needs to be legally guided in every facet of his business from; incorporation procedure, regulatory compliance, trademark and copyright protection, insurance, raising capital, obtaining patent.

3 REASONS WHY START-UPS NEED LAWYER

1.   Legal Structure for the Entity

2.   Safeguard Intellectual Property

3.   Drafting and reviewing contractual agreements

1.   Legal Structures for the Business Entity

Start -Up founders sometimes make the mistake of taking on many roles in the setting up of their business. They want to act as the lawyer, accountant, marketing analyst, sales rep. etc, neglecting the availability of professional advice. A lawyer is knowledgeable in the legal issues which pertains to the right legal structure to adopt for business.

The notion of saving money and time by not contracting professionals for advice can far outweigh the possible expense of going astray when selecting the business structure for your firm. The dynamism of law makes it of utmost important to consult a lawyer who is abreast with the latest regulations and requirements necessary for the choosing of the right business structure.   

 The choice of the best business structure depends on factors such as; liability, taxation and record-keeping. The form of business under the law to be chosen from are;

a.    Sole Proprietorship

b.   General Partnership

c.    Corporation

These business options have their advantages and disadvantages, its best the lawyer relates the pros and cons

                   2.Safeguard Your Intellectual Property

Start-Up founders make the mistake of relegating the idea of having a good IP strategy for their business but focus on other aspect of their business. They are oblivion to the fact that the most important aspect of the business is the Intellectual Property which must be safeguarded and avoid the risk of third-party intellectual property issues.

Safeguarding your IP will mean different things to different start-ups the common aspects are protection of your software, Industrial designs or brands, patents, copyrights, trademarks. The less common IP related rights include, database rights, trade secrets etc.

A lawyer understands the fact that having an IP strategy that aligns with the ideation of the startup business is very crucial and it aims at ensuring the new venture has a solid foundation for future growth, expansion and investment.

His role is to ensure he identifies and register your idea, designs, technology or artwork under respective copyrights, trademarks, and patents. This will prevent the unlawful use or reproduction of the idea you have under IP, and where it’s discovered that someone copying your idea, the lawyer would push for legal steps against the violator.

 

3.   Drafting and Reviewing Contractual Agreement

One of the greatest pitfalls of startup founders is the Bartimaeus attitude while entering contractual agreement at the initial stage of the business mostly due to the enthusiasm of starting a business oftentimes cloud the founders from seeking for a second view on the contractual agreement before executing same.

Having a lawyer either draft or review your contract before it is executed ensures that your business’s best interests are protected. He will draft in the favour of his client, coupled with his expertise knowledge in the industry, he can offer advice on typical contract terms that would benefit the business.

Having a lawyer helping with the drafting and reviewing of contractual agreement, would pay far more and prevent lose of valuable property, or exposure to unnecessary business and financial risks, including costly lawsuits.

While some startup founders cultivate the habit of drafting contractual agreement by self, risking leaving out key terms that are necessary to make the contract enforceable. A template agreement found on the internet may be outdated or may not consider the laws of your state or the specifics of your transaction.

 

CONCLUSION

We all can agree that it’s best to seek legal advice and have safety net before you need it. The aim of the article is to lay emphasis on the fact that start-up founders need not learn the hard way by falling into unobvious traps in the early stages of their startups. In the words of JAMES CAAN, he posited that;

‘’ Regardless of the nature of your business, industry or sector, when it    comes to establishing a startup, you will come across legal issues’’

The aforementioned reasons are inexhaustive as we have other reasons why you need to hire a lawyer as a start-up founder. It is worthy to note that just like a lawyer can help form the business, it can help develop policies and guidelines on how the business can come to an end.

 

 

 

 

Read More...

THE ESTABLISHMENT OF SPECIALIZED COMMERCIAL COURT: A TOOL FOR EASE OF DOING BUSINESS IN NIGERIA

INTRODUCTION

Considering the need to enhance commercial activities in Nigeria, taking into cognizance the complexity of these activities and the inevitability of disputes arising from such commercial activities involving large amounts of money. It is therefore of great importance that in the attainment of justice and efficient use of economic resources, a strategic mechanism needs to be deployed to ensure speedy resolution of such disputes.

Doing business measures the time, cost and procedural complexity of receiving a commercial lawsuit between 2 domestic business. Foreign direct investment will increase where the cost of contract enforcement in debt collection and properly eviction cases is low.[1]

The likelihood of commercial disputes cannot be abrogated with a well drafted contractual agreement, because the agreement doesn’t provide certainty for every eventuality. One of the parties might seek to take advantage of an uncertainty or loophole from the agreement thereby leading to dispute between the parties. The pursuit of speedy dispensation of justice at the court is short-lived due to congestion of cases in courts. The strategic mechanism is creation of special courts to adjudicate only on commercial dispute.

Therefore, the argument for the creation of special courts for adjudicating commercial disputes in Nigeria is an advocate of a tool (special court) for sustainable economic development in Nigeria and the creation of haven for foreign investors.

LEGAL FRAMEWORK FOR COMMERCIAL DISPUTE IN NIGERIA

Most of the commercial transactions entered into in Nigeria are necessarily governed by Nigerian laws to wit; constitution, statutes, rules of court, judicial decisions on litigation procedure as found in the procedural rules of the different levels of court, statues on litigation procedure and practice directions. Nigerian commercial litigation was developed from English common law. Under this system, the law develops through the judges who play a non-inquisitorial role in adjudication while the parties seek an outcome most favorable to their position.[2]

The National and State Houses of Assembly enacted different legislations that apply to business which include importantly the law of contract and other aspect of law, company law, agency, sale of goods, banking, intellectual property, competition law, taxation law, insurance, hire purchase, oil and gas etc. 

The Constitution of the Federal Republic of Nigeria 1999 as amended provides for the establishment of courts in Nigeria, where commercial disputes are adjudicated upon from the court of first instance to the appellate court and finally to the supreme court. The choice of the aggrieved party on the appropriate court to approach is determined by different factors, basically the issue of jurisdiction of the court to adjudicate the matter brought to it.

However, one of the militants against the attainment of justice under this framework is the congestion of our regular court, which causes delays in the attainment of justice thereby becoming a clog in the wheel of our economic development. Some states have tried to resolve this issue of congestion through fast track court, however it was discovered that there was still delay in delivering of judgment, after careful examination on the cause it was discovered that the judges hadn’t had any specialist training on a variety of complex topics being discussed in courts due to the complex financial cases and tax litigation.[3]

JUSTIFICATION FOR THE ESTABLISHMENT OF SPECIAL COURT FOR COMMERCIAL DISPUTES IN NIGERIA

The creation of special courts is a growing trend globally, it is considered to be an important reform initiative to advance the development of a successful judicial system. Studies from the United States, Australia and other countries have shown that specialization can be helpful in improving the processing of court cases that are more complex or require special expertise beyond the law, or cases that must be handled differently to better reflect the needs of a particular court user group such as business cases.[4]

The specialization of commercial dispute courts simply means the creation of courts to adjudicate only commercial disputes. The judges assigned over this matter are those with requisite knowledge and expertise on the governing laws on commercial transaction.

The justification of a specialized court in settling commercial disputes in Nigeria are;

1.   

    Efficiency: The desire to speed up the process of adjudicating cases has been one of the main justifications for the creation of special courts globally. The creation of special court headed by judges with requisite knowledge in governing laws on commercial transaction will lead to a streamlined operation and more efficient processing, reducing the burden of caseloads in the regular courts.

A specialized court handling only commercial dispute will have a more favorable ratio of judges to cases and will therefore be able to process cases more quickly, taking into consideration that judges that will be assigned to these courts are those with requisite knowledge thereby increasing their efficient resolution.

It is sacrosanct that the main cause of judicial inefficiency is the congestion of our regular court which tend to sabotage economic development through the delay in the settling of commercial disputes thereby stalling litigants from concluding with their financial transactions which would have boost our economy.

2.       Expertise: A judiciary of specialists leads to higher-quality decisions, especially in complex areas of law. Their greater expertise and experience will lead to better decisions, better outcomes for the litigants and the greater user satisfaction[5]. The desire for a more expert adjudicative body to promote not just efficiency but accuracy, is a justification for the creation of specialized tribunals (Gramckow and Walsh 2013)

Therefore, the establishment of commercial court will build a strong and capable special judicial body having the capacity to adjudicate complex commercial disputes that requires special competence and technical expertise. The lack of judicial expertise in the settlement of complex commercial disputes contributes to the delay of dispensation of justice. For example in Lagos State, fast track court was established for the expeditious of settling commercial disputes, it was discovered that  some judgment were still taking too long, these delays were happening because the judges hadn’t had any specialist training on a variety of complex topics being discussed in their courts, the judges were giving long adjournments so they had time to read up on these complex financial cases and tax litigation.[6]

3.    

        Uniformity of Decisions

The creation of special commercial courts with exclusive jurisdiction over commercial disputes and ancillary matters would enhance uniformity of decisions in this area, which will result into greater predictability and assurance in the courts thereby reducing the rate of appeal by litigants.

The main drive behind the proposition of creating a commercial court is due to the positive effect it will have on our commerce and promotion of business and investment prospects through the resolution of commercial disputes in a quick, efficient and effective manner that ensures economic growth.

THE MODE OF OPERATION AND IMPACTS OF COMMERCIAL COURTS IN OTHER COUNTRIES

A review of the establishment of commercial courts in other jurisdictions for the past decades reveals common trends and the economy impact on these nations.

In England the commercial court has existed for a very long time. It grew out of a notice issues to judges of the Queen’s Bench division in February 1895, the main purpose at that time was to bring speedy determination to such cases. The mode of operation was through the appointment of a particular judge dedicated to handling commercial disputes. It was very successful in bringing cases to a speedy and satisfactory determination without undue technicality or unnecessary expense.[7]

The Republic of Ireland established the commercial court in January 6 2004, the Minister of Justice, Equality and Law Reform described it as ‘’A very significant development of the Irish court system’’ The court operated through a fast track and pre-trial procedures to speed up trails, electronic evidence and the use of standardized IT formarts are also in place. Feedback from irish lawyers indicates that the Irish commercial court has lived up to its expectation resolving commercial cases effectively, efficiently and quickly.[8]

Ghana after decades pf political turmoil that disrupted its judicial system thereby making investors loose confidence in doing business in Ghana, established the commercial court on March 4 2005 with the purpose of sustaining and maintaining high level of investor confidence through the efficient and effective resolution of commercial dispute.

To assure expeditious proceedings, these commercial courts are fully computerized, and routinely provide parties with transcripts of proceedings within 72 Hours. Its jurisdiction is not restricted territorially i.e cases from over Ghana can be brought before it.  Strict deadlines exist for the trial, from the first hearing, it must be conducted on a day to day basis. Adjournments can only be granted for good cause and cannot exceed 72 Hours. [9]

South Africa established commercial court 15 years ago but it was never fully operational. On the 3^rd of October 2018, the office of the Judge President of the Gauteng division of the High Court of South Africa released a commercial court practice directive which comes into effect immediately, creating a specialized commercial court administered as part of the High Court.[10]

The court aims at promoting efficient conduct of litigation in the high court and resolve dispute quickly, cheaply, fairly and with legal acuity.

The report from the World Bank/IFC publication, ‘Doing Business 2009’ which compares the ease of doing business in 181 countries worldwide (pages 51-52) observes that the most popular judicial reform in Africa over the last five years has been the introduction of specialized commercial courts or commercial sections within the existing courts.

In 2019, the World Bank/IFC publication ‘Doing Business 2019’ (page 54) reported that having a specialized commercial jurisdiction can result in shorter resolution times; solving commercial disputes is 92 days faster in economies with a specialized commercial jurisdiction.

CONCLUSION AND RECOMMENDATIONS

The bottleneck of expeditious settlement of commercial dispute has prompted many countries to develop specialized commercial courts. The major argument for the creation of special judicial body to address commercial dispute is the need for efficiency in resolving commercial dispute and the associated need to signal to both domestic and international audiences that the country is keen on economic development thereby creating a haven for foreign investors.

To achieve this, we need to create a viable structure for the special courts with timelines in the adjudication of commercial disputes including interlocutory applications that tend to delay the administration of justice. The judges assigned to these courts must be constantly trained to become better adjudicators of commercial disputes.

However, I would be recommending the following;

a.     

          The place of the commercial court in the judicial hierarchy: The court should serve as a both court of first instance and also an appellate court and appeal from this court should lie to the Court of Appeal.

b.   The composition of the court: The constitution of the judges to adjudicate on the commercial disputes.  The Chief Justice of Nigeria should appoint dedicated judges who are versed in the area of commercial transactions to handle commercial disputes.

c.     The scope of jurisdiction of the court: The jurisdiction of the court should be exclusive to commercial matters related to company law, agency, sale of goods, banking, intellectual property, competition law, taxation law, insurance, hire purchase, oil and gas and other incidental matters.

d.      The rules that would govern the procedure of the court and the adjudication of commercial disputes; A Commercial Court Practice Directive should be introduced to administer the court.

The creation of special commercial court in Nigeria will definitely record great success in the administration of commercial justice in Nigeria, if the right structures and policies are deployed it will greatly impact the ease of doing business in Nigeria.

---

[1] https://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB13-Chapters/Enforcing-contracts.pdf

[2] https://www.lexology.com/gtdt/tool/workareas/report/complex-commercial-litigation/chapter/nigeria accessed on the 4/08/19

[3] https://www.britishcouncil.org/voices-magazine/how-lagos-judges-are-now-resolving-disputes-more-quickly

[4]http://documents.worldbank.org/curated/en/688441468335989050/pdf/819460WP0Devel00Box379851B00PUBLIC0.pdf

[5] ibid

[6] https://www.britishcouncil.org/voices-magazine/how-lagos-judges-are-now-resolving-disputes-more-quickly

[7] https://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?article=1031&context=jbel The development of the Commercial Judicial System in Uganda: A study of the commercial court division, High Court of Uganda by Justice Geoffrey Kiryabwire

[8] ibid

[9] https://www.doingbusiness.org/content/dam/doingBusiness/media/Reforms/Case-Studies/Smart-Lessons/DB07-SL-Ghana-Commercial-Court.pdf

[10] https://www.cliffedekkerhofmeyr.com/en/news/publications/2018/Dispute/dispute-resolution-alert-10-october-a-commercial-court-a-blessing-or-a-curse.html

Read More...

NIGERIAN OIL AND GAS INDUSTRY: A HOLISTIC VIEW OF MARKETING UNIT

INTRODUCTION

The Oil and Gas industry occupies a prime position in the economy of several nation, it has attracted to itself certain features which are rarely found in other sectors of any nation’s economy. Its backward and forward integrative implications are reflected in the development of other sectors and industries such as; petrochemicals, agriculture, transportation and even human resources development

The oil and gas industry constitute a service industry that can only be productive through the aid of aggressive strategic marketing behavior. Marketing is important for the success of any organization whether service or product-oriented. The indigenous Nigerian Oil and Gas Marketing companies were not profoundly entrepreneurial at the beginning for the following reasons: Lack of trained manpower, poor infrastructural development, lack of adequate or sufficient capital base on the part of the indigenous oil and gas marketing companies and intense competition from superior foreign companies[1].

This study is intended to discuss the strategies, legal framework and challenges of marketing in Nigeria oil and gas sector.

MARKETING STRATEGIES IN THE NIGERIAN OIL AND GAS INDUSTRY

Marketing has been defined and conceptualized in various ways. According to Webster dictionary it means;

                ‘’The process or technique of promoting, selling and distributing a product or service’’

An Author (Osuagwu) defines it as;

                ‘’A matrix of business activities organized to plan, produce, price, promote, distribute and megamarket goods, services and ideas for the satisfaction of relevant customers and clients’’

While, Marketing Strategy can be defined as;

                ‘’A consistent, appropriate and feasible set of principles through which a particular company hopes to achieve its long run customer and profit objectives in a particular competitive environment’’

Marketing is one of the outstanding and imperative natural functions which help to overhaul organizations to congregate their organizational challenges and to attain their set objectives and intent. There are two concepts that form a good marketing strategy choice;

a.       Marketing Strategy Assessment and

b.       Execution.

We have plethora of marketing strategies but the marketing strategies of petroleum products looks peculiar. According to Ehinomen and Adeleke (2012) they highlighted some strategies involved in petroleum marketing to include;

a.       Price reduction

b.       Proper distribution of products

c.       Information dissemination

d.       Promotion of product through sign post

e.       Contact of customers

f.        Matching of product with normal price limit

g.       Negotiation influence

h.       Physical distribution of product

i.         Financing of quantity of products and risk taking.

REGULATORY FRAMEWORK GUIDING MARKETING IN NIGERIA OIL AND GAS INDUSTRY

This means the necessary legislative enactments, rules and regulations that serve as compulsory supporting structure upon which petroleum marketing rests. These includes;

a.       The Petroleum Act

b.       The Petroleum Equalization Fund Act

c.       Oil Pipelines Act and

d.       Directorate of Petroleum Resources Regulation.

v  The Petroleum Act: The most significant part of the Act that has impact on petroleum marketing is SECTION 4 which makes it an Offence for any person to import, store, sell or distribute any petroleum product in Nigeria without a license granted by the Minister.

In other words no activity in respect to petroleum marketing will be complete without recourse to Section 4, the sanction is spelt out in Section 4(6) of the Act; any person who does, without the appropriate license, any act for which a license is required shall be guilty of an offence and shall be liable on conviction to imprisonment for two years or a fine of N2,000 (Two Thousand Naira Only) or both and in addition, the petroleum product in respect of which the offence was committed will be confiscated by the federal government.

However, this law does not apply to;

a.       The storage, sale or distribution of not more than 500 liters of kerosene and such other categories of petroleum products as may be exempted from the application of sub section (1) of Section 4 by the Minister, by order published in the federal gazette.

b.       The storage of petroleum products undertaken otherwise than in connection with the importation, sale or distribution of petroleum products.

This is aimed at encouraging the growth and development of small business and to make the products available in far flung and remote places in Nigeria.

v  The Petroleum Equalization Fund Act: This Act establishes the Petroleum Equalization Fund which is applied to the reimbursement of petroleum marketing companies for any loss suffered or likely to be suffered by them arising from the sale of petroleum products at uniform prices throughout Nigeria.

v  The Oil Pipelines Act:  This act makes provisions for licenses to be granted for the establishment and maintenance of oil pipelines incidental and supplementary to oil fields and for purposes ancillary to such pipelines.

v  Department of Petroleum Resources (DPR) Regulations: This department is a statutory creation in the Nigerian Petroleum Corporation (NNPC) saddled with the responsibility of laying down rules and regulations of the different spheres of petroleum activity in Nigeria which includes;

a.       Procedure and conditions for granting approval for construction of petrol station

b.       Guidelines on importation of petroleum products into Nigeria

c.       Guidelines for the importation, storage, transportation and distribution of biofuel in Nigeria and

d.       Conditions for granting approval for the operation of a petrol filling station.

CHALLENGES OF MARKETING IN NIGERIA OIL AND GAS SECTOR

The challenges facing marketing of petroleum products in Nigeria behooves on the callous operating business environment. Amidst the challenges are;

a.       Political problems of some questionable interventions of the government in the operation of the petroleum industry through NNPC

b.       Volatile changes in pump prices

c.       Adulteration of products

d.       Fire outbreak in refineries and fuel stations.

e.       Distribution problems with the resultant scarcity of the product supply.

                             

CONCLUSION

The sensitivity of petroleum resources is clearly reflected in the fact that it has remained the goose that lays golden eggs for the Nigerian economy as well as the supreme foreign exchange earner contributing over 80% of government revenues and helps the development of Nigeria’s infrastructures and other industries[2]. The above discuss gives a detailed on strategic, legal framework and challenges of marketing in Nigeria Oil and Gas Industry.

---

[1] Strategic Marketing and Firms’ Performance: A study of Nigerian Oil and Gas Industry access through http://www.upg-bulletin-se.ro/archive/2010-4/3.%20Akinyele.pdf

[2] Strategic Marketing and Firm’s Performance: A study of Nigeria Oil and Gas Industry accessed through hhttp://www.upg-bulletin-se.ro/archive/2010-4/3.%20Akinyele.pdf. 

Read More...