How To Set Up A CNG Gas Plant in Nigeria: A Guide for Foreigners
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Tel: (+234) 8023200801, (+234) 8075765799
E-Mail: info@qeeva.com
Office Address: 5, Ishola Bello Close, Off Iyalla Street, Alausa, Ikeja, Lagos state, Nigeria.
Introduction
CNG is an up coming fuel that is taking the market since it is cheaper in the long run and its advantages towards the environment. There are several qualifications that may be looked at by the foreign investors who are willing to venture in setting up a CNG gas plant in Nigeria and one of the qualifications is the regulatory and legal requirement that are in this sector.
Legal Environment and Business Organization
Selecting Business Form
It is not advisable for foreign investors as it was found that the FDI in Malaysia is restricted with maximum 30% foreign equity.
Limited Liability Company (LLC): Recommended because it permits Foreign Ownership. Section 18 & 19, Companies and Allied Matters Act (CAMA) 2020.
Registration and Incorporation
Registering the Company
Company Incorporation: It is obligatory to register with the Corporate Affairs Commission (CAC). According to CAMA 2020, Section 178, all business entities should be registered.
Business Name Registration
This means that the company name should be unique and recognized by the CAC. To register a business name, the CAMA 2020, section 179 has provided the procedures on how this can be done.
Licensing and Permits
Obtain Relevant Licenses
Petroleum Licensing: Acquire license from the Department of Petroleum Resources, DPR. This consist of Gas Processing Plant License and other necessary permits as provided under Petroleum Act Cap P10 Laws of the Federation of Nigeria 2004.
ENVIRONMENTAL EFFECTS STUDY
Carry out an environmental impact assessment where necessary depending on provisions of the National Environmental Standards and Regulations Enforcement Agency (NESREA). Find in the NESREA Act, CAP N164: Laws of the Federation of Nigeria 2004.
Compliance with CNG Regulations
Comprehensive Compliances with the Safety and Standards
Comply with the safety regulation as provided by the DPR and other regulatory authority in the safe operation of the CNG plant. Obey rules on equipment dimensions and safety precautions based on the NIS that came into force in Nigeria.
Current Taxation and Financial Policies
Adhere with the taxes set by the Federal Inland Revenue Service (FIRS).
This includes registration for Value Added Tax and Company Income Tax as provided in the Companies Income Tax Act of 2004 among others.
Operational Considerations
Infrastructure and Logistics
Purchase property for the location of such plant and acquire necessary permits in line with zoning requirements of the area. Consult with the local stakeholders for permits.
Hiring and Employment
Follow all local requirements and legal regulation rules and policies that are related to employment and hiring practices. This include conformant with the labor act of the federation of Nigeria 2004 – CAP L1.
Local Partnerships
If a foreign company is interested in investing in Nigeria, it is advisable to engage the services of a Nigerian counterpart in order to understand and be in good standing with the regulatory frame work. It can also be helpful in obtaining insights about the business practices in a given location and help to run such business more effectively.
Compliance with international Standards
Make certain that the CNG plant as related to the processing of gas and plant safety conforms to best practices on a global basis. This can add to the credibility of the plant and increase of the efficiency of the operation.
Insurance and Risk Management
Ensure that an adequate, detailed and suitable insurance policy is taken over the plant. This should include property that repairs and operates losses due to interruptions that a business faces and liability. Contact insurance related companies in Nigeria to familiarize with the working environment in the country.
Community Engagement
Partner with the community which the plant is to be established. It is necessary to establish positive relationships and take into account people’s negative views so that opposition can be minimized to promote local development.
Annual and Monitoring
Continuing integration of audit and monitoring of the operations ensures they meet all the regulatory measures at all times. These are environmental, safety and financial audits.
Ongoing Compliance and Reporting
Daily Reporting to the Authorities
Develop routines for periodic or other reporting to the relevant bodies including CAC, DPR, and FIRS. This entails providing financial statements and operation reports every year in line with CAMA 2020, Section’s 379 & 380.
It means that most of the companies are still siding the margins of safety regulations with just two points being in direct contradiction.
Ensure that safety and operational regulation set down by the DPR and other regulating authorities is complied to naturalistically. Some measures to be taken include; Developing safety drills and safety protocol update as a regular business practice of the plant in a bid to avoid such incidents.
Environmental Monitoring
Carry out long term monitoring of the environment to check whether the operations of the plant are having any harm on the environment. This is in line with the EIA requirement in line with the National Environmental Standards and Regulations Enforcement Agency (NESREA) guidelines.
Legal and Financial Support
Engage Legal Counsel
Hire lawyers from Nigeria familiar with Nigerian business law and specifically in the course of oil and gas industry to address sundry legal issues, legal compliance to avoid legal troubles and legal representation in the case of Legal Disputes.
Financial Management
Make sure good financial and accounting control should be having in the business organization. This entails; compliance with the country’s accounting standards and tax laws. It is important to check methodically various financial statements and tax returns in order to prevent or expose inaccuracies and violations of Nigerian tax legislation.
Investment Incentives
Identify possible investment sweeteners offered by the Nigerian government, that could include tax incentives, or exemption from customs duty. Make an appointment with Nigerian Investment Promotion Commission (NIPC) to get to know possibilities of incentives for a foreign investor.
Future Growth and Expansion
Scalability
As part of the expansion program, prospects on the future scale of the CNG plant. Think about future market plans and possibilities of the plant’s development for answering the demand or implementing new technologies.
Innovation and Technology
New technologies are continuously being developed for CNG and these must be incorporated in the process in order to enhance efficiency and minimize costs. carrying out research and development activities can help open up competitive opportunities and develop better results in the functioning of the plant.
Conclusion
Foreign investor wishing to invest in CNG gas plant in Nigeria must follow certain legal framework and other regulatory requirements to had the success. When setting up a CNG Plant, it is recommended to adhere with the legal requirements contained in the CAMA 2020, Petroleum Act, NESREA Act and other rules and regulations.
You as an entrepreneur can increase likelihood of success of your business by aligning with local organizations, being relevant to the international standards, and communicating with the community often. Bearing in mind that Nigeria is a developing country, right planning and hardworking approach towards these steps will lead to a good, stable and productive investment in the Nigerian energy sector.
Call To Action
When planning to install your CNG gas plant, it is advisable to seek the services of local consultants in the field who will assist you in the legal requirements to be complied with. For further information, please feel free to contact us through 08023200801, 08075765799 and info@qeeva. com or register with us on www. qeeva. for custom services to make sure that your business is compliant with all required legal and environmental regulations. Choose wisely, make better your existence and sustain the future in the Nigeria growing energy market.
Do you want to expand your ground in providing CNG gas plant in Nigeria, this is a good start you can try. Get in touch with us today to liaise with the best professionals in dealing with the laws that govern the market. Let us assist you to develop a profitable and ISO 9000/14001 compliant business in the expanding energy industry in Nigeria. The potential of CNG investment could be beneficial to the realization of sustainable energy solutions and enhancement of the economy in the region.
Tel: (+234) 802 320 0801, (+234) 807 576 5799
Email: info@qeeva.com
Office Address: 5, Ishola Bello Close, Iyalla Off Street, Alausa, Ikeja, Lagos, Nigeria
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