In October 2015, following consultation with the industry, an industry levy was introduced to fund the OGA, in line with the established principle across regulation and service delivery of ‘user pays’, whereby the Authority recovers its costs from the companies benefitting from its services.
During the financial year 2019–20 the OGA will be funded mainly by the OGA Levy (£26.4 million; an overall increase from the 2018-19 figure of £22.8 million) with a smaller amount (£1.8 million) of funding expected to be raised through application of fees and charges. An additional £2 million of funding was made available by the Department for Business, Energy and Industrial Strategy (BEIS) for programme and capital expenditure, and a grant of £0.55 million was awarded to the OGA by the Better Regulation Executive from its Regulators’ Pioneer Fund.
There is a two-tier levy mechanism with the annual levy apportioned between pre-production (11%) and in-production (89%) licence holders, based on an assessment of the costs that the OGA occurs in relation to each group. This apportionment is regularly reviewed to ensure it remains appropriate.
For the purposes of the levy we consider ‘producing’ licences to be those licences to which the OGA has given consent to start production, i.e. where the licence has an approved Field Development Plan. Exploration licence holders and licence holders with no approved Field Development Plan are subject to a lower ‘non-producing’ levy rate. Additionally, the OGA is allowing a ninety or eighty per cent discount on some ‘Promote’ licences and ‘Innovate’ licences in Phase A or B of their initial term, if held by companies which qualify as micro-businesses.
The OGA levy does not currently apply to the onshore sector.
Over 99% of the levy of £22.8 million for the financial year 2018-19 was collected. An underspend of the levy received in 2017-18, totalling £828,000, is being paid back to the industry.
The OGA remains very focused on delivering a high-quality service and providing value for money to the industry. We are committed to setting the levy in a fair and transparent manner and our intention is to reduce the running costs of the OGA over time.
The OGA Levy rates for the 2019-20 financial year are as follows:
|Licence Category||2019/20 Levy|
|Microbusiness & Promote/Innovate Phase A Licensee (Non-Producing)||£ 1,128.18|
|Microbusiness & Innovate Phase B Licensee (Non-Producing)||£ 2,256.37|
|Other Non-Producing and Innovate Phase C Licensee||£ 11,281.83|
|Exploration Licence||£ 11,281.83|