Against the backdrop of the importance that the Petroleum Industry Act (PIA) has for Nigeria as a petroleum dependent economy, the Society of Petroleum Engineers (SPE), Nigeria Council, led by its Chairman, Prof. Olalekan Olafuyi, on May 26 held its annual symposium, where different experts made “An Overview of the Journey to PIA Implementation to Unlock the Potentials of the Midstream and Downstream Segments of the Petroleum Industry in Nigeria,” which was also the theme of the event.
During the summit, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) disclosed how it is trying to answer the question of what could clearly be the catalyst for unlocking the industry, especially within the context of gas as a transition fuel and the decade of gas. This is also one of the most important provisions of the PIA, which has established the Midstream Gas Infrastructure Fund.
However, the delay in inaugurating the Governing Board for this Fund, which has since been appointed and announced by President Muhammadu Buhari, may hinder the speedy progress that is required to be made in order for Nigeria to put its gas resources to economic advantage. This is because the country remains energy starved despite its abundant energy resources, and its over 200 million people are in dire need of energy for domestic use and sustainable industrial production.
The objective of the Midstream Gas Infrastructure Fund is to make equity investments in a manner that de-risks the midstream value chain and encourage private investments, as well as reduce or eliminate gas flaring, while promoting and increasing domestic and industrial consumption of natural gas in Nigeria.
This, Prof. Yinka Omoregbe, who is President of the Nigerian Association of Energy Economists (NAEE), hopes to see happen in the country as soon as possible, so that the delays that resulted in failures in the past would be avoided.
“It took 13 years to begin implementation of the Nigerian Electric Power Sector Reform Act, and we hope it doesn’t take more years while things get worse in the petroleum industry, such as the fuel queues that have been a regular feature for years,” she said.
Addressing these regulatory concerns, Engr. Farouk Ahmed, who is the Authority Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), explained that statutes as primary legislations and by their nature require regulations to address secondary details.
Represented by Ogbugo Ukoha, who is the Authority’s Executive Director, Distribution Systems, Storage & Retail Infrastructure, Engr. Ahmed further noted that the regulatory process itself is complex and far-reaching, and involves initiating and proposing a draft, consulting, reviewing, as well as issuing of a final regulation.
According to him, the two petroleum industry regulators, the NMDPRA and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), are currently at different stages of this regulatory process, and NMDPRA will always collaborate with all relevant stakeholders during the process.
The Authority says it sees its regulatory role or function as one that is transitioning from the traditional policing position to one that enables businesses. This relates to adjusting the implementation process where necessary, in the light of contemporary issues, particularly the transition from fossil fuels to renewables, as well as the geopolitical tensions, vandalism of energy infrastructure and the problem of insecurity in general.
Also calling for result-oriented implementation of the PIA, Prof. Wunmi Iledare, who is Professorial Chair of the Oil and Gas Institute at Cape Coast University in Ghana, observed that “we have a lot of gas reserves in Nigeria onshore, we have the capacity to develop it, we have the capacity to actually consume it. Egypt generates about 55,000 megawatts of electricity, South Africa generates about 60,000 megawatts of electricity but our economy in Africa is still number one, yet we generate just 4,000 megawatts of electricity. Could you imagine what would happen to our economy if we generate even just 25,000 megawatts of electricity.”
The Petroleum Industry Act (PIA) became a law in Nigeria on August 16, 2021 after about 20 years of a draft document – the Petroleum Industry Bill (PIB), and turning it into an economic driver through gas utilization is seen by many as an urgent task that must be carried out as soon as possible.
Now that the Bill has become a law, “the PIA may not be perfect but it is usable,” said Prof. Iledare.
This usefulness of the PIA, as advanced by Iledare, may be supported in the sense that the law offers certainty, transparency, competition and growth, and also provides the governance, administration, regulatory and fiscal frameworks. It further makes elaborate provisions on the powers of the Minister of Petroleum Resources, and has created NMDPRA and NUPRC, as well as the Nigerian National Petroleum Company (NNPC) Limited as a going concern. These institutions are empowered by the law as its implementation drivers.
According to the Ghana-based Nigerian Professor, “the future is bright and the PIA happened at the right time, and I am hoping that we will be able to implement it and unlock the market growth potentials through gas…because gas has been taken for granted in Nigeria since most of it was discovered accidentally as associated gas without looking for it.”
He also revealed his worries about the hasty implementation of the PIA, which he thinks may result in unintended results in the future.
In his own words, “we decoupled the upstream too quickly without preparing the midstream adequately. We started it with decoupling the midstream of the oil and gas sector, and at the end of the day, we ended up importing petroleum products because of the decoupling, and I am hoping that we won’t be making another mistake.”
However, Prof. Omoregbe reasoned that the new regulators established by the PIA, namely NMDPRA and NUPRC, are too young to be doubted or criticized, and that the disasters currently suffered in the Nigerian petroleum industry have come from the earlier years of the industry. She anchored her argument on the fact that “the new agencies are yet to pass any regulations and until the process is completed, judgement will have to be reserved.”