PIB: Service providers want single regulator

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Nigeria's Minister of Petroleum Diezani Allison-Madueke speaks at a media briefing on a new gas price regime in the capital of Abuja

The Oil and Gas Service Providers Association of Nigeria (OGSPAN) has canvassed the provision of one strong, viable and independent regulator for both the upstream and downstream sectors of the petroleum industry in the Petroleum Industry Bill (PIB); as opposed to the two regulators proposed in the reform bill.

(OGSPAN) is a body incorporated under the Nigerian laws to protect the vested interests of companies and individuals that provide services to the oil and gas industry.

The National President of the body, Mr. Coleman Obasi, told THISDAY at the weekend that without a single regulator, the problems in the Nigerian oil industry would persist. “In Nigeria, the DPR is a regulator; NNPC is a regulator; the minister is a regulator; PPPRA is a regulator,” he said.

Obasi said since petroleum activities were interwoven; from exploration to exploitation, production to terminal operations, refining to marketing, it is critical for the country to have a one-stop-shop as a regulator for proper tracking and execution of these activities in a timely and prompt manner.

“It is imperative to state that most countries that hitherto had multiple regulators are presently making regulations that would fuse these regulatory bodies into one because of the complexity and high cost of operations. A case in point is Australia and Alberta government in Canada.

“The Alberta government in October 2012 introduced a legislation that would put a single regulator to oversee all future oil, gas, oil sands and coal development in the region because they came to realise that the multiple regulatory regime is onerous. This piece of legislation that has created the Alberta Energy Regulator (AER) just came into effect in June 2013,” he said.

In a presentation submitted to the House of Representatives, OGSPAN had identified other countries that have single regulators to include Norway, Brazil, Angola, Mexico, adding that “Nigeria should not be seen as taking two steps forward and 10 steps backward as the case in this proposal”.

Apart from ensuring seamless operations in the oil and gas industry, OGSPAN said the creation of dual regulators would result in the wastage of scarce resources being expended on two regulators for activities that could be effectively managed by one regulator.

According to the group, creating multiple regulators at this time of the country’s history, and at a time when President Goodluck Jonathan was looking at ways of merging and scrapping organisations with similar or overlapping functions, was an aberration.

“Let us not polarise the oil and gas industry as this is not the case in other sectors of the Nigerian economy, such as electricity, telecommunication and banking; just to mention a few that have single regulators,” said the statement.

OGSPAN also argued that creation of double regulators would be a serious disadvantage to the oil and gas service providers, as this would further strangulate people that are barely surviving in a highly sophisticated industry where the local content act has not fully bore the expected dividends.

The group stressed that multiple regulations would result in most service providers paying double for a permit/licence that could have been issued by one regulator.

OGSPAN submitted that the Department of Petroleum Resources (DPR), which currently regulates both the upstream and downstream sectors, should be strengthened as a single and sole regulator of the oil and gas industry to be called the Petroleum Inspectorate Commission (PIC).

According to the group, the DPR, which was created by the NNPC Act of 1977, was the inspectorate arm of the NNPC till 1988 when it was excised and made a Department in the Ministry of Petroleum Resources.

“However while some agencies and parastatals created from the DPR such as Petroleum Trust Development Fund (PTDF); Petroleum Products Pricing and Regulatory Agency (PPPRA); Petroleum Equalisation Fund (PEF) and National Content Development and Management Board (NCDMB) have been given executive status, the DPR still remains as it is, a mere Department in the Ministry of Petroleum Resources. This is the time to wrong the right by empowering the DPR and make it one of the leading regulators of the world in the 21st century,” the group added.

On the issue of funding of the regulator, OGSPAN said in as much as it appreciates the provisions for funding as captured by the PIB, especially as it concerns the power of the regulator to generate funds internally, it was averse to the provision of funds through appropriation by the National Assembly.

According to the services providers, this proposed funding arrangement is in no way different from the present practice in the DPR that has bedeviled its smooth operation.

“It is also a known fact that budgets are usually slashed depending on the state of the economy, and this makes it difficult for organisations to realise outlined goals. This is the case in DPR where funds appropriated are not sufficient to fund the activities of the Department, which has led to the DPR relying on the companies they are suppose to regulate for logistic and other sundry supports,” OGSPAN said.

 

Information from This Day was used in this report.