Two years after signing the Petroleum Industry Act (PIA), the projected gains for Nigeria’s oil and gas sector and by extension the economy, have remained elusive. Instead of acting as the gamechanger with the capacity to introduce best global standards in governance, open up investment opportunities and multiply government revenue, political interference and deliberate refusal to adhere strictly to the law have worsened fortunes of the sector to pre-PIA era when opacity, graft and tardiness reigned unchecked.

It took about two decades to draft the PIA because of the complex nature of the sector and more for the peculiarities of the Nigerian condition where everything is politicised, no matter how noble. Apart from the technicalities, there seemed to be deliberate efforts to leave loopholes in the law for the political leadership to intervene willy-nilly, in spite of an otherwise good corporate governance rule. That caused the delay in the passage of the law and has slowed its wholesale implementation, as implementers pick and choose what is convenient for them to operate, short-circuiting the gamut of an elaborate programme. Experts had projected that not less than $50 billion worth of investment in oil and gas would be unlocked once the law becomes operational. Instead of tapping into that potential, the Federal Government is looking for funds to borrow and pleading for investors for a resource the country no longer enjoys a substantial monopoly of. Besides, the world is going green and the time to tap oil resources is today.

To make operations seamless, the PIA has provided a new governance framework, having two regulatory agencies – The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to take charge of the technical and commercial aspects of the petroleum sector.

However, the envisaged synergy among the upstream and mid and downstream managers has not clicked as there are reported overlap of the jurisdictions of the NUPRC and the NMDPRA, which industry players blame on an unneeded supremacy rivalry between the two regulators. This hampers the needed speed required to open up the sector for investors. Decisions are slow and getting approvals is sluggish, thus prompting experts to suggest a merger or streamlining.

The PIA also commercialises what used to be the behemoth Nigerian National Petroleum Corporation (NNPC) to become a limited liability company to be listed on the stock market with a board appointed by shareholders. The ownership of the NNPC Limited shall be open to members of the public through sales of shares. Although the company has been commercialised on paper, the continued political oversight by the government is slowing NNPCL’s full operations as a commercial entity. Political interference will continue to neutralise the independence needed to drive NNPCL as a commercial outfit in the manner that other oil companies around the world have shown.

Also in the Law, there is the provision for 30 per cent of the profits of NNPCL to support the Frontier Exploration Fund, in explorations of other potential basins in the country. Nigerians are yet to be told the state of this fund and where it is lodged. There has also been a noticeable freeze in the development of new frontiers since the PIA was passed. NNPC Ltd and the relevant bureaucracy in charge of frontiers development will do well to explain where these funds are warehoused and the timetable for future explorations.

One experience that hobbles oil and gas development over the years is the damage done to environments around production activities. There is also the recurrent demand by oil producing communities for adequate compensation and employment opportunities that sometimes result in restiveness. This is additional to exposure of oil and gas assets to destruction by lawless and unpatriotic citizens.

The PIA recognises the need to close the gap between oil companies and host communities by creating the Host Community Development Trust Fund (HCDTF). Previous host community projects are to be transferred to HCDTF, and are to be funded from the equivalent of three per cent of oil companies’ operating cost for the previous year. In turn, host communities are expected to protect oil assets in their jurisdictions, failure of which they will be held accountable.

Host communities are lamenting that this aspect of the law has not seen any serious action since August 2021 when the law was signed. Only one International Oil Company (IOC) is said to have inaugurated a board of trustees for this purpose. Instead, both the NNPCL and IOCs are still using private security to protect their assets, which is not what the PIA recommends.

At a time when the country should be reaping huge dividends from the new law, it seems pretty much business as usual in attitudes of operators across the sector. Oil production has not recorded the expected boost, no thanks to oil theft and reluctance by investors to make new investments. The expected confidence on the part of investors has not happened because the old system of opacity has not given way to a new regime of transparency and accountability. Government has not, through the operations of NNPCL, assured new investors that things have changed. Government is still holding on to the company and refusing to let go in fulfilment of the law. There are still reports of corruption among operators who are slow to adjust their ways. Operators who should apply ease of doing business techniques in fast-tracking operations are yet to catch the new bug of efficiency and accountability.

It is for these reasons that the country is struggling to meet its daily OPEC quota of 1.742 million barrels per day, until recently. Nigeria has been struggling to go beyond one million bpd and this has affected revenue from the number one foreign exchange earner.

Most appalling is the failure of the four refineries to refine products for the local market. The continued dependence on imported petroleum products drains the available foreign exchange, thus creating an uneven playing field for the Naira. The PIA promises to make petroleum products easily available under unrestricted free market conditions. Nigerians are yet to see that because available data shows that the government is still capping prices of petroleum products to avoid backlash in the civil society. That is reasonable, but this government should learn to speak the truth at all times. Let the government be decisive on PIA and let the industry experience growth.

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