The Nigerian House of Representatives is set to debate a bill that aims to establish a policy framework for the development of the biofuels energy industry in the country. The bill, sponsored by the Deputy Speaker, Hon. Benjamin Kalu, and six others, proposes the creation of the Biofuels Regulatory Commission and Biofuels Research Agency.
The main objective of the bill is to promote the establishment of a thriving fuel ethanol industry using agricultural products as a means of improving the quality of automotive fossil-based fuels in Nigeria. Additionally, the bill aims to stimulate foreign investment in the biofuels industry, streamline the roles of different levels of government, and involve the oil and gas industry in the development of other sectors of the economy.
To support investments in the biofuel industry, the bill introduces the Biofuels Industry Equity Fund, which will be funded by the federal government with the equivalent of US$50 million. The fund will be managed by the Central Bank of Nigeria and disbursed by participating banks upon approval from the Biofuels Regulatory Commission.
The bill guarantees the blending of biofuels with fossil-based fuels and empowers the Commission to determine the proportion of biofuels in the blend. It also requires all biofuel manufacturers to be duly registered and licensed by the Minister, with the license allowing companies to add the capability to co-generate electric power. Investment in the biofuel industry will be treated as an agro-allied activity and will benefit from incentives designed for the development of the agro-allied industry.
The Biofuels Regulatory Commission will be responsible for managing the Energy Development Fund and implementing strategies for the growth of the biofuels industry in Nigeria. It will register biofuel plants/projects, issue licenses to biofuel operators, formulate incentive policies, review the impact of biofuels, monitor supply and utilization, and provide regular reports on the status of the industry.
The proposed bill also establishes the Biofuels Research and Development Fund, which will receive contributions from biofuels companies, the federal government, and the Petroleum Technology Development Fund. The fund will be managed by the Biofuels Research Agency, disbursing funds upon approval from the Biofuels Regulatory Commission.
In terms of tax benefits, biofuels companies will have pioneer status for a period of 10 years, exempting them from income tax relief. They will also be exempt from taxation, withholding tax, capital gains tax, and duties on certain imports. Additionally, biofuels companies involved in the production of biofuels feedstock or electricity generation from biomass will be exempt from Value Added Tax.
Overall, this bill aims to create an enabling environment for the development of the biofuels energy industry in Nigeria, attracting investment, promoting job creation, agricultural development, and technology transfer.
Sources:
– Tribune Online