TheCable

“Sound judgement, with discernment, is the best of seers” – Euripides (famed Ancient Greek Tragedian)

Since President Muhammadu Buhari signed the petroleum bill into law on August 16, 2021, there has been growing unease among oil industry workers, most of whom are anxious about what the future holds for them in the immediate.

Timipre Sylva, petroleum resources minister, in order to douse the tension occasioned by some aspects of the newly enacted Petroleum Industry Act (PIA), took it upon himself recently to address the concerns of staffers of the Department of Petroleum Resources (DPR), Petroleum Products Pricing Regulatory Agency (PPPRA) and Petroleum Equalisation Fund (Management) Board.

At each stop, he explained that workers have nothing to fear as their jobs, emoluments and entitlements are protected by law. He also assured all that all assets and liabilities of the now-defunct agencies would be absorbed by the two newly formed Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), in line with the provisions of the Act.

Sylva also seized the moment to assure contractors that all subsisting obligations with the now outed agencies would be met and there was no need for the seemingly panic blitz spreading over certain areas of the oil industry.

Industry observers have commended the ministers move to a large degree as workers could now heave huge sighs of relief given the fact that they are not about to be thrown into the unemployment market. It was also reassuring that the chief executive officers of the NUPRC and NMDPRA – Gbenga Komolafe and Farouk Ahmed respectively – accompanied the minister on the visits with other important executives of both organisations also present.

To be sure, the PIA has been long in coming and most industry stakeholders have lauded its enactment; engineered to bring a sound legal, fiscal and regulatory framework to bear on the business activities within the Nigerian petroleum industry.

No sooner was the bill signed into law that President Buhari sought an amendment to the PIA through the national assembly, on the administrative structure(s) of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). The president requested an increase in the number of non-executive members on the boards of both institutions from 2 to 6 apiece.

“I am of the view that this membership limitation does not address the principle of balanced geopolitical representation of the country. I, therefore, pray for the intervention of the ninth national assembly to correct this oversight in the interest of national unity,” he said in defence of his position. He went on “…if this amendment is approved, it will now increase the number of non-executive members from two to six. That is one person from each geo-political zone”.

The commander-in-chief further proposed to remove the petroleum and finance ministers from the boards of the NUPRC and NMDPRA. According to him, “the two ministers already have constitutional responsibilities of either supervision or intergovernmental relations that will continue to perform such roles without being on the board”.

To underscore the seriousness the Buhari administration places on the speedy implementation of the PIA, the president was presented with the certificate of incorporation of the newly minted Nigerian National Petroleum Company in line with the provisions of the new law, on October 8th, by the group managing director of the extant Nigerian National Petroleum Corporation (NNPC), Mele Kyari, at the state house, Abuja.

For the president, the incorporation of the successor company to the NNPC represents “a significant milestone in our quest to create an enduring National Energy Company that can compete with its global peers and deliver value to shareholders, the Nigerian people”.
He noted that he expected a speedy transfer of assets, human and material “without wasting time to capitalise the company as required by the Petroleum Industry Act”.

The registration of the newly sculptured NNPC took 24 hours to accomplish according to Garba Abubakar, the registrar/chief executive officer of the Corporate Affairs Commission(CAC), and it is the company with the largest capitalisation ever (₦200 billion) in Nigeria.

For emphasis, a steering committee was constituted by the federal government not long after the enactment of the PIA and was given one year to implement its (PIA’s) provisions. That timeline must have been decided upon, given the daunting tasks the alignments and re-jigging of the workings of the relevant ministries, departments and agencies would entail. Needless to say, the committee has its job cut out.

Besides, the operations in the downstream sector are not without their challenges. The NNPC is currently the sole importer of petrol and it is in charge of its storage to a large extent. Yet, figures on the daily consumption of the product vary depending on the organisation the question is directed at. The PPPRA in April this year gave a figure of 80.23 million litres a day; the NNPC, barely two months after, indicated that daily consumption has risen to some 103 million litres. The petroleum minister later walked that back, attributing the jump as a “flash” due to the increased activities of smugglers. He gave a 52 million daily consumption figure as appropriate. Yet, the inner workings of PEF(M)B peg Nigeria’s daily consumption at 30 million litres a day. It is believed that better and more harmonious figures could now be reached on Nigeria’s daily fuel consumption pattern, given the fact NMDPRA is now directly in charge.

As a measure of curtailing the activities of nefarious goons in the downstream sector, the NNPC had initiated “Operation White” in October 2019 to track fuel importation/distribution, and to check smugglers and diversion of petrol. This initiative needs to be given the necessary pump in order to bring the issue of petrol smuggling and diversion to the barest minimum.

The salient issues posited above and sundry others need to be addressed by the steering committee and its implementation working group/coordinating secretariat, to make for efficient, effective and robust full PIA implementation. Anything short of systematic and well-rounded implementation processes would hamper the delivery of a sound post-PIA enactment delivery at a greater cost to the nation.

Another area of concern that should be of utmost interest to those in charge of petroleum affairs is the need to attract needed long-term investment into the nation’s oil industry. According to a July 2021 KPMG report, “only 4 percent of the $70 billion investments made in Africa’s oil and gas industry was in respect of Nigeria, even though it is the biggest producer and has the largest reserves on the continent”.

Going further, the PIA is silent on the widely-anticipated world’s transition from fossil fuels to clean energy. The International Energy Agency (IEA) is aggressively pushing for “net zero” carbon emissions by the year 2050.

Even though Vice-President Yemi Osinbajo lately affirmed that Nigeria is aboard the IEA 2050 transition train to zero emissions, great attention and commitment must be made in this regard by the federal government as this is the way of the future. 2050 is just 29 years away, and it won’t be augur well for the nation to still continue the old ways of doing things when the rest of the world is taking advantage of new opportunities.

The IEA, in its May 2021 report, unveiled “a cost-effective and economically productive pathway, resulting in a clean, dynamic and resilient energy economy dominated by renewables like solar and wind instead of fossil fuels”.

According to the executive director of the highly influential Agency, Fatih Birol, “the IEA’s pathway to this brighter future brings a historic surge in clean energy investment that creates millions of new jobs and lifts global economic growth. Moving the world onto that pathway requires strong and credible policy actions from governments underpinned by much greater international cooperation”.

Oil production, which accounted for more than 50 percent of Dubai’s gross domestic product (GDP) some years ago, now contributes less than 1 percent of her GDP currently. That nation has greatly diversified her economy and is a tourist and technological haven today. Dubai’s economy is poised to grow by 3.1 percent this year and 3.4 percent next year according to world economic experts.

True, much traction has been gained with the enactment of the new petroleum law. However, the journey to tomorrow’s future outside PIA should start today. The world is not waiting.

Eniola Olakunri, a director of Oats Global Energy and public sector analyst, writes from Abuja. He can be reached via [email protected].