06 February 2012, Sweetcrude, Lagos – The rally against the removal of subsidies has not solved the root cause of problems in the Nigerian Oil and Gas Industry which is primarily corruption and the over bloated cost of governance. If an all encompassing National Petroleum Regulator Body (NPRB) is created and empowered as a regulator with a target to achieve a specified % return on investment vis-à-vis the value of our natural resources (oil and gas) through upstream, midstream and downstream activities, Nigeria would move forward.
The NPRD would have to tackle the following issues:
1. lack of an auditable regulatory process for the supply of goods and services, especially in the midstream and downstream sectors
2. Violation of the Public Procurement Act in the purchase of goods and services
3. Accountability and transparency, especially in public service.
What would this mean to the industry?
1. Adequate funding will be required for the NPRD without recourse to NNPC Management, the Minister and the Presidency
2. Publishing of Annual Audited Accounts would become mandatory
3. Publishing of Work Programmes of Asset Holders
4. Assessment of players, their facilities and activities to ensure value added and Nigerian Content.
The NPRD would operate a National Data Repository (NDR) System that would be live, active and accessible from anywhere in the world if investors are to take any meaningful interest in the Nigerian Oil and Gas Industry. Information on assets (Pipelines, Facilities, Concessions, Oil and Gas Wells, Oil and Gas Fields as well as Exploration and Production Data), fiscal and tax regimes must be readily available to investors. Production, sale and refined volumes as well as imported products should be known whilst the purchased, delivered and dispensed volumes at every filling station in Nigeria would be tracked, monitored and published. From the national budget and that of NNPC, the Central banks disbursements to the major and minor marketers through PPPRA, PPMC and NNPC we would be much closer to understanding where there are leakages, what the short falls are and if Nigeria needs more refineries, where they should be strategically located to meet demand realistically.
Whilst Clause 2 of the NOGICD Act states that:” All regulatory authorities (DPR & PPRA inclusive), operators, contractors, subcontractors, alliance partners and entities involved in ANY project, operation, activity or transaction (buying of finished products) in the Nigerian oil and gas industry shall consider Nigerian Content as an important element of their overall project development and management philosophy for execution”, this is not the case in the downstream of the Nigerian petroleum industry. The Act has failed to capture the midstream and downstream sectors functionally. PPPRA has failed in delivering Nigerian Content (Value Addition) and many of the goals and objectives captured its original mission
A fully empowered and all encompassing NPRD would through collaboration with NCDMB be the best regulator of the activities of the IOCs, NOCs, Independents and Indigenous contractors through stakeholder evaluation, assessment and monitoring programmes that are tied to license renewal. Permit renewal should encourage and stimulate value addition with evidence of impact on national development and economic transformation. These laudable activities may never materialise if the NPRD lacks the capacity or viewed as a toothless bull dog regulator. The NPRD must be well staffed with well rounded industry technocrats who have international experience and exposure that would enable the ing of Nigeria’s performance against its international counterparts. Training, learning, development, mentoring, coaching and knowledge sharing by retired experts would go a long way to achieving a balanced regulation of the industry.
Following the Fuel Subsidy Removal Strike, it is now clear that there is a gap in the Nigerian Content Act in the midstream and downstream which should be captured by the NPRD, who must act as the bonafide industry regulator. It would be interesting to see how the likely empowerment of the NPRD, in the Petroleum Industry Bill (PIB) would play out over the next few months and how the excesses of the Executives and Cartel can be curbed through the laying of emphasis on Nigerian Content development and Value Addition.
About the Author
Dr. Ibilola Amao is the Principal Consultant with Lonadek Oil and Gas Consultants, a firm of technical consultants with their core competence in the area of human capital and vendor development. For more information or to reach Dr. Amao you can email her at [email protected] or visit www.lonadek.com