By Yange Ikyaa
The recently appointed regulatory heads of the Nigerian petroleum industry may not be able to exercise their mandate to the fullest if their leaderships are not given the necessary support by the Federal Government and allowed to run stable, full and long courses of tenure and also see their operational initiatives work and produce anticipated results in the nation’s energy sector.
Commenting on this subject under review, Dr. Terhemen Andzenge, who teaches energy reform at the University of Cape Town in South Africa and is also the Secretary/Legal Adviser of the Nigerian Society of Energy Economists (NSEE), said part of the reasons why the oil and gas sector has not done very well in this country is because we have had a huge dose of changes of leadership.
According to him, the fear now is that if we do not allow the tenures of the regulators of this industry to run well, the inconsistencies experienced in pre-PIA era will likely be repeated in the petroleum industry. Therefore, he thinks it is important to allow the leadership of the new regulatory institutions to have security of tenure and take decisions that impact positively on the sector.
“The last I was looking at Aramco, it has had a long history but the average tenure of a head of Aramco has been 4-5 years, but if you look at the history of NNPC for example, you hardly have a GMD that runs his entire course of leadership tenure, and this has been taken into even Nigerian Electricity Regulatory Commission (NERC),” he said.
Established 45 years ago on April 1 in 1977, the Nigerian National Petroleum Corporation, now Company (NNPC Ltd.), which previously performed both commercial and regulatory roles, is known to have an average office tenure for Group Managing Directors (GMD) of just two years and three months, according to an analysis of NNPC data conducted by Valuechain. A further breakdown of the data indicates that NNPC has hired and fired 18 GMDs in its history until the 19th and current one, Mallam Mele Kyari.
Since the inception of NNPC, the following people have led it as GMDs. They include Ramilekun Ayodele Marinho (1977-1980), Odiligi Lolomari (1980-1981), Lawrence Amu (1981-1985), Aret Adams (1985-1990), Thomas John (April 1990-June 1990), Edmund Daukoru (1992-1993), and Chamberlin Oyibo (1993-1995).
Others are Dalhatu Bayero (1995-1999), Jackson Gaius Obaseki (1999-2003), Funso Kupolokun (2003-2007), Abubakar Yar’Adua (2007-2009), Mohammad Sanusi Barkindo (2009-2010), and Shehu Ladan (April 2010-2010).
Also on the list are Augustine Oniwon (2010-2012), Andrew Yakubu (2012-2014), Joseph Dawha (2014-2015), Ibe Kachikwu (2015-2016) Maikanti Baru (2016-2019), and Mele Kyari, who took office from 2019 to date.
As a result of this high turnover of leaders at NNPC over the years, Andzenge believes that “we have a system of government that has stronger people over these issues, but the key to succeeding with the PIA is supremacy of the institutions over people. If we are not going to have a conversation that is not going to allow institutions to thrive and to lead the way, the PIA will not have the impact it was intended to have.”
His earlier mention of NERC highlights another energy regulator in the country, which is bedeviled by leadership instability and tenure inconsistency, thereby impacting negatively on the entire electricity industry and the national economy in general.
NERC was founded on October 31, 2007 and is now just over 14 years but has had four different Chairmen/Chief Executive Officers. They are Ransome Owan, Sam Amadi, James Momoh, and Sanusi Garba, who is currently in charge.
This means that the average leadership tenure at the Commission at any time is just two years and five months, having posted a CEO turnover of four people in just 14 years.
In the words of Andzenge, “we have a gamut of institutions that are beautiful on paper in the PIA but it is now left to be seen whether these institutions will be allowed to run their course.
“If what happened with NERC is anything to go by, we need to allow institutions to do their work, because NERC was supposed to be an independent regulator, but over the years, they have not been essentially able to be the regulator they were designed to be.
“And we are where we are because in the electricity sector, NERC doesn’t have the teeth to bite and to invoke the law without pressure from outside.
“So, I hope that the regulators in this sector, as outlined by the PIA, will be allowed not to be independent only on paper but to be independent indeed, and be able to carry out their functions in terms of enforcement of regulations, which must be done carefully, fairly, impartially and without interference from outside. If not, we will have the same challenges that we are having in the electricity sector at the moment.”
However, with the signing of the Petroleum Industry Act (PIA) in 2021, NNPC was privatized and moved away from performing regulatory functions to focus on commercial activities, while running as a CAMA company, meaning that its operations are now based on the Companies and Allied Matters Act.
The PIA also gave birth to two regulatory institutions to license and oversee the operations of energy firms within the Nigerian oil and gas industry. These are the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). Mr. Farouk Ahmed is the Authority’s Chief Executive of NMDPRA, while Engr. Gbenga Komolafe is the Commission’s Chief Executive of NUPRC.
NUPRC has the statutory responsibility of ensuring compliance to petroleum laws, regulations and guidelines in the upstream oil and gas industry in Nigeria. The discharge of these responsibilities involves monitoring of operations at drilling sites, producing wells, production platforms and flow stations, as well as at crude oil export terminals, refineries, storage depots, pump stations, retail outlets, and any other locations where petroleum is either stored or sold.
In addition, NUPRC also monitors operations at all pipelines carrying crude oil, natural gas and petroleum products. It is further involved in carrying out the following functions, among others:
u Supervising all Petroleum Industry operations being carried out under licenses and leases in the country.
u Monitoring the Petroleum Industry operations to ensure that they are in line with national goals and aspirations including those relating to flare down and domestic gas supply obligations.
u Ensuring that health safety and environment regulations conform with national and international best oil field practices.
u Maintaining records on petroleum industry operations, particularly on matters relating to petroleum reserves, production/exports, licenses and leases.
u Advising government and relevant government agencies on technical matters and public policies that may have impact on the administration and petroleum activities.
u Processing industry applications for leases, licenses and permits.
u Ensuring timely and accurate payments of rents, royalties and other revenues due to the government, and
u Maintaining and administering the National Data Repository (NDR).
On its own part, the NMDPRA was created in August 2021 in line with the PIA (2021), which provides legal, governance, regulatory and fiscal framework for the Nigerian Petroleum Industry, as well as for the development of Host Communities.
The Authority is responsible for the regulation of the midstream and downstream petroleum operations in Nigeria which includes technical, operational, and commercial activities.
NMDPRA’s encompasses a merger of three defunct regulatory agencies – the Petroleum Products Pricing Regulatory Agency (PPPRA), the Petroleum Equalisation Fund {Management} Board (PEFMB), as well as the Midstream and Downstream Divisions of the defucnt Department of Petroleum Resources (DPR).