PIB: Stakeholders, TUC reject limiting fuel importation to refiners

Stakeholders in the oil and gas industry and the Trade Union Congress (TUC) have frowned at the provision in the Senate version of the Petroleum Industry Bill (PIB) that allowed only active refinery licence holders to import petroleum products into the country.

The stakeholders, including the NUPENG and PENGASSAN, who spoke on the implications,  noted that the provision, though encouraged local development, might force existing players out of the market, leaving a monopolistic market for the national oil company and big refiners.  

According to them, the development is against business ethics and will deprive the nation all the potential in the recently passed bill.

Speaking, a former President of the Society of Petroleum Engineers Nigerian Council, Joseph Nwakwue, expressed concern that the provisions would create a duopoly in a price deregulated environment, thereby, destroying the Nigerian downstream industry.

Nwakwue said: “In the near term, only NNPC and Dangote will have domestic refining capacity for PMS for instance, so they will be the only importers. This takes the industry back and could not have been the intention of the Bill.

“Moving from a state-owned monopoly in a price regulated market to a duopoly in a price deregulated market is not what Nigeria needs now as it takes the industry backward and exposes Nigerians to exploitation and further hardship. This, in my humble view, is not reformatory.”

He said that rather than seek to protect refiners, the Nigeria should seek to protect consumers by liberalising and expanding petroleum product supply sources. 

According to him, that is the only way prices will be ‘market-determined’ and consumers made to pay fair value for the products they buy. 

"The viability of local refining is not determined or enhanced by locking out competition, it is rather achieved through price deregulation, which has been done in Section 205. This clause gives statutory unfair advantage to private players rather than through market competition,” he added.

Also, the Trade Union Congress of Nigeria (TUC)  described the planned move to limit fuel imports to only owners of refineries as monopolistic and a deliberate attempt to frustrate the challenges the Petroleum Industry Bill (PIB) is intended to solve

The TUC President, Mr Quadri Olaleye and the Secretary General, Mr Musa-Lawal Ozigi, said the country could not afford to continue toying with the oil and gas sector as it remains the only major source of foreign exchange.

“The labour chiefs are surprised, dismayed and irritated by the conspiracy to waste another opportunity to fix the sector, noting that from the lawmakers’ position and body language, one could infer they are serving the interest of some few individuals to the detriment of the over 97 per cent of the country’s population but the congress will not allow that to happen.

“The labour leaders urge the lawmakers to rise up and provide true leadership instead of serving the interest of few capitalists. It is high time ‘these principalities and powers’ removed their knees from the neck of Nigeria and Nigerians," TUC said in a statement jointly issued.

 

Reacting, the leadership of PENGASSAN and NUPENG, which appreciated the National Assembly for the passage of the PIB to unlock the fortune of oil and gas industry, called for removal of the clause restricting importation license to few operators.

"As we intensify effort to make our refinery work, we should ensure that the PIB does not monopolies the importation of PMS as currently provided in the senate version of the bill. This is to ensure that there is competition in the downstream oil and gas industry. 

"Leaving this national security issues to few individuals will shortchange the larger Nigerian populace. We should avoid running from one ugly scenario to an uglier situation that is avoidable," the NUPENGASSAN said in a statement jointly issued by Mr Lumumba  Okugbawa  (PENGASSAN General Secretary), Mr Festus Osifo, (PENGASSAN President), Mr Olawale Afolabi, (NUPENG General Secretary) and Mr Williams Akporeha (NUPENG National President).

According to the group, inclusion of PENGASSAN and NUPENG on the board of the industry regulator(s) is crucial for the attainment of one of the key objectives of this bill, which is to ensure accountability and transparency in the industry. 

"All Civil societies and labour strongly clamored for the inclusion of the two Unions in the sector to be on the board of the regulators for reasons of global best practice currently being practiced in most climes. 

"The needs and justifications for this are many and enormous as it will also ensure that the regulators are further strengthened in ensuring that issues bordering on the welfare of workers would have been championed from the cradle of the bill," the NUPENGASSAN said.

The union also advocated for a single regulator in the best interest of the industry and the nation at large, saying that it would serve as a one-stop-shop for current and aspiring investors.

According to the statement, the NUPENG and PENGASSAN are hoping that the grey areas, especially monopoly to be granted to few refiners, should be addressed by both houses of the Assembly before the Bill is sent to President Muhammad Buhari for assent.

The oil workers believe that if the grey areas are not addressed now before the Presidential assent to the Bill, it would hinder the full potential of the bill.

The workers said that the clause remained one of the major drawbacks of passed bill.

Speaking on the condition of anonymity, a respected industry player said that unless the clause is removed, there may not be a level playing field in the industry. 

“As price control is being removed, supply must be competitive, inclusive, transparent and seen to encourage efficiency,” he stated. 

On their part, the oil marketers said that any provision that did not guarantee a free and open market would give room to price inefficiencies and eventually kill off small businesses in the downstream sector.

The marketers said that allowing imports by major players across the supply chain would protect consumers by ensuring that local pump prices were not higher than regional or international prices.

“MOMAN and DAPPMAN remain committed to the sustainability and institutionalisation of a viable downstream petroleum industry for the social and economic growth of Nigeria," the marketers said.

The PIB and Nigerian Downstream: Crisis looms

The PIB and Nigerian Downstream: Crisis looms

By Jerry Lazarus, Public Affairs analyst

I finally had an opportunity to go through the senate and house committee reports on the PIB. 

The main thrust of the bill is to open up the Nigeria oil and gas industry to investment, strengthen industry governance and regulation to expand, grow and maximize value capture for Nigeria and her citizens.

This is long overdue and we must commend the Executive and the National assembly for prioritizing this bill.

I however, have some concerns about certain provisions of the bill as it affects the downstream. 

While the bill removed price controls on petroleum products in section 205, the senate version of the bill has a clause that constrains market competition by restricting importation of products to only players with local refining capacity. 

This clearly counters the provision of 205(1).

“Subject to the provisions of this Section, from the effective date, wholesale and retail prices of petroleum products shall be based on unrestricted free market pricing conditions.”

The inserted section 317(8) in the senate bill are here re-produced:

(1) The Authority shall apply the Backward Integration Policy in the downstream petroleum sector to encourage investment in local refining. 

(2) To support this, licence to import any product shortfalls shall be assigned only to companies with active local refining licences. 

(3) Import volume to be allocated between participants based on their respective production in the preceding quarter. 

(4) Such import to be done under NNPC Limited Direct Sale/Direct Purchase (DSDP) scheme.

(5) To safeguard the health of Nigerians, imported petroleum products shall conform to the Afri-5 specification (50ppm sulphur) as per the ECOWAS declaration of February, 2020 on adoption of the Afri-Fuels Roadmap.

I think the provisions above will create a duopoly in a price deregulated price environment thereby destroying the Nigerian downstream industry as we know it today. 

It limits importation of all petroleum products, including PMS, diesel, aviation fuel, lubricants, base oil – products which are already deregulated, to only players with local refining capacity. In the near term, only NNPC and Dangote will have domestic refining capacity for PMS for instance, so they will be the only importers. This takes the industry back and could not have been the intention of the bill.

Moving from a state-owned monopoly in a price regulated market to a duopoly in a price deregulated market is taking the industry backward and exposing Nigerians to exploitation and further hardship. This in my humble view is not reformatory.

Rather than seek to protect refiners, we should rather seek to protect the consumers by liberalizing and expanding supply sources. That is the only way prices will be “market determined” and consumers pay fair value for the products they buy. 

The viability of local refining is not determined or enhanced by locking out competition, it is rather achieved by price deregulation which has been done in section 205.

This clause gives statutory unfair advantage to private players rather than through market competition. Indeed, the law and the authorities have an obligation rather to protect the market (other players including Nigerian entrepreneurs) and the consumers rather than to encourage monopoly/duopoly by locking out competition.

This clause does not create a level playing field for all players in the sector, and can indeed destroy existing Nigerian businesses that engage in importation of other petroleum products like diesel, Aviation fuel etc with attendant loss of jobs and more economic misery for Nigeria and Nigerians.

Governments all over the world do not create and encourage monopolies or duopolies and that is why anti-trust laws are enacted and enforced to protect industries and consumers. 

Nigeria should not be doing the reverse. A case can always be made about protectionist policies for nascent or pioneer industries, but this is not the case with a long established, once-thriving Nigerian downstream. 

This clause needs to be expunged from the PIB. 

The Authority should be left to develop regulations that are fair, inclusive and transparent for petroleum product importation that ensures open and diverse market supply and hence competition, only then would the objectives of the bill be achieved.

 It is worth repeating that as price control is being removed, supply must be competitive, inclusive, transparent and seen to encourage efficiency. Then, and only then will Nigerians and Nigerians win.

DPR Boss Wins CEO of the Year Award at 2021 Valuechain Awards

Engr. Sarki Auwalu, Director, DPR

Engr. Sarki Auwalu, Director and Chief Executive Officer, Department of Petroleum Resources on Monday bagged the Chief Executive Officer of the Year Award at the Fourth Valuechain Lecture and Awards in Abuja.

A statement signed by Mr Paul Osu, Head, Public Affairs, DPR, said the organisers of the award, Valuechain Magazine, bestowed the award on Auwalu for his outstanding leadership of the agency.

The statement said the DPR under the able leadership of the awardee has been transformed from a regulatory agency to a business enabler and opportunity house for the Nigerian oil and gas sector.

It said under his leadership, the DPR has been able to establish the National Oil and Gas Excellence Centre, in Lagos inaugurated by President Muhammadu Buhari in January.

According to the statement, Auwalu also successfully conducted the bidding for 57 marginal oilfields in the country which has been rated as the most transparent so far. 

Responding, Auwalu thanked Valuechain Magazine for the recognition, stressing that the DPR would continue to bring innovation and creativity to add value to the industry.

He thanked DPR staffers for their support and hard work which had made it possible to achieve its set targets in the past few years.

Auwalu said the DPR would continue to

 create opportunities that enable 

businesses and investments for all stakeholders by using its

service instruments of its licenses that guarantee  investments, its permits that enable participation and its

approvals that authorise activities.

Nigeria to become marine petroleum products retail operations hub in Africa - DPR

Engr. Sarki Auwalu, Director, DPR

The Department of Petroleum Resources (DPR) says it has enhanced the Marine Petroleum Products  Retail Operations (MAPPRO) popularly known as “Bunkering” to ensure that the country becomes the principal MAPPRO hub in the region. 

Engr. Sarki Auwalu, Director and Chief Executive Officer, DPR, made the disclosure while delivering the lead paper at the Fourth Valuechain Lecture and Awards on Monday in Abuja.

The lecture has at its title: “Enhancing Effective Synergy Between Oil and Gas and Maritime Sectors for a Greater Value Creation."

Auwalu noted that the petroleum sector and the maritime sector were both vital to the economy and national development hence the need to continuously synergise their operations.

He said :"  Significantly, the DPR has enhanced MAPPRO popularly known as “Bunkering”. This measure is to ensure that Nigeria becomes the principal MAPPRO hub in the region.

"To this end, an international Bunkering conference will be held in the coming weeks to showcase Nigeria’s capacity and capabilities in this respect as well as attract investments and partnerships from across the world.

"Engagements and collaborations with all relevant stakeholders in top gear to make this intentional conference a landmark event that puts Nigeria on the global map for marine products retail."

He noted that  not only does the maritime and oil and gas industry 

share collaboration, but they also face similar risks and threats in the 

foreseeable future.

According to him, this include geopolitical tension, cyber-attacks, crude oil price, decarbonisation, climate-change adaptation, global economic 

crisis and piracy/theft. 

"However, with effective synergy and collaboration, both industries can surmount these challenges and turn them to opportunities for our common good and the health of the national 

economy,"the director said.

He said the recently commissioned Nigeria Oil and Gas Excellence Center (NOGEC) by President Muhammadu Buhari  provides Search 

Rescue and Surveillance Coordination Centre for Oil and Gas Industry which the maritime industry could leverage. 

Auwalu said the DPR has deployed the Crude Oil and LNG Tracking 

to Final Destination (COLT) platform, which complements the National 

Production Monitoring System (NPMS), to ensure that all petroleum 

cargoes from the nation’s shores are monitored and effectively tracked. 

He said: "This Platform provides credible data for surveillance, security 

monitoring, product accounting and international trade relationships. 

"The platform is also providing a lever for Advance Cargo Declaration ACD) programme and simplifies the obtainment of an Exit Summary 

Number (ESN) for any shipment.

" Furthermore, DPR shares vital 

intelligence with relevant agencies of government to ensure maritime 

safety and economic wellbeing. 

Auwalu said the Federal Government was putting policies and programmes in place designed to position the Nigerian oil and gas sector regionally and in the global arena. 

He said notable among the programmes are  the Refinery Revolution and Decade of Gas initiative.

Auwalu said they are both geared 

towards increased in-country utilisation of petroleum to drive Industrialisation, job creation, poverty eradication and additional contribution to the nation's Gross Domestic Product.

"The Department, being an Opportunity House and Business Enabler, has continually worked to reduce the erstwhile high barrier to entry in the refining business, and improved integration with established supply chain.

" In addition, the Department has gone ahead to pre-validate/ approve the technologies and processes of licensors and OEMs in a bid to cut the licensing/ approval timelines," he added.

DPR Bags Excellence Award at 2021 NOG

Mr Sarki Auwalu, Director, DPR

The Department of Petroleum Resources (DPR) on Wednesday bagged the Excellence Award at the Annual Nigeria Oil and Gas (NOG) Award Ceremony.

A statement issued on Thursday by Mr Paul Osu, Head, Public Affairs, DPR said the award was received by the Director of DPR, Mr Sarki Auwalu.

The statement said the award was presented to the regulatory agency for its achievements which included the establishment of the National Oil and Gas Excellence Centre, in Lagos inaugurated by President Muhammadu Buhari in January.

It said the DPR also got the recognition for successfully completing the bidding for 57 marginal oilfields in the country which helped the Federal Government to shore up its revenue.

According to the statement, the organisers of the award noted that the department's transformation from a regulator to a business enabler in the oil and gas space is what Nigeria needs to maximise the potential of the sector.

Responding, Auwalu thanked the organisers for the recognition, stressing that it would spur the DPR to greater heights.

The Director said DPR would continue to

 create opportunities that enable 

businesses and investments for all stakeholders by using its service instruments of  licenses that guarantee  investments, permits that enable participation and approvals that authorise activities

DPR to unveil Maximum Economic Recovery strategy for oil,gas sector soon- Director

Mr Sarki Auwalu, Director, DPR

The Department of Petroleum Resources (DPR) says it will soon unveil an industry collaborative strategy for Maximum Economic Recovery (MER) for the Nigeria Oil and Gas sector.

Mr Sarki Auwalu, Director and Chief Executive Officer, DPR, made the announcement on Tuesday while delivering a keynote address at the

ongoing Nigeria Oil and Gas (NOG) Conference and Exhibition in Abuja.

The conference has as its theme: ' Fortifying the Nigerian Oil and Gas Industry for Economic Stability and Growth.'

Auwalu said :  As part of its mandate to strengthen industry and ensure sustainability, the DPR will be unveiling an industry collaborative strategy for Maximum Economic Recovery (MER) for the Nigeria Oil and Gas sector soon.

"The strategy will articulate key delivery programmes to guarantee stability, growth, and development of the industry.

"As a department, we will continue to foster collaboration, influence, facilitate, enable  and promote industry growth, all for economic growth and in overriding national interest."

Auwalu also decried the less than 10 per cent contribution of the Nigeria's oil and gas sector to the nation's Gross Domestic Product (GDP).

He said the contribution was very low compared to other 

Organisation of Petroleum Exporting Countries (OPEC) member countries and need to be addressed in the interest of national development.

Auwalu said: " The main driver for economic transformation transcends revenues; contribution to national economy is more significantly measured in terms of contributions of a sector to the GDP.

" Herein lies the need to fortify the Nigeria oil and gas sector as the true enabler of national economy. 

"To put this in context,  it is appropriate to benchmark Nigeria with nations that we share similar national objectives with respect to petroleum resources management such as the OPEC member countries. 

"For instance, Saudi Arabia’s oil and gas sector contributes about 50 per cent to GDP, comparable to that of Nigeria.

In like manner, Libya, Kuwait, United Arab Emirates, and  Algeria contribute  some 60 per cent, 40 per cent, 30 per cent and 20 per cent to their respective national GDP.

 "In contrast, Nigeria’s oil and gas sector contributes less than 10 per cent to her GDP and ranks the low among OPEC member countries."

While thanking the organisers of the conference, he noted that the theme was very apt because strengthening the oil and gas industry would help the government achieve its vision of lifting millions of Nigerians out of poverty.

The director said the DPR has identified five broad areas in which the industry needs fortification to support national economic stability and growth. 

He listed them to include : Legal, Institutional, Financial, In-sector Diversification and Indigenous Capacity.

According to him, the focussed leadership of President Muhammadu Buhari and the Minister of State, Petroleum Resources, Chief Timipre Sylva, will entrench key fundamentals needed for industry growth.

Auwalu said the passage of the Petroleum Industry Bill ( PIB) by the National Assembly would enhance

clarity in legislative, regulatory, fiscal, and administrative framework. 

He added that the ongoing major capital projects of over $15 billion in the NLNG Train 7, the Ajaokuta-Kaduna-Kano (AKK) pipeline, Assa-North Ohaji South development projects, was an indication of improving business environment.

Buhari’s administration has demonstrated political will towards PIB passage- Expert

Mr Wilson Opuwei, Chief Executive Officer, Dateline Energy Services Limited

By Solomon Asowata

Lagos, July 4, 2021 (NAN) Mr Wilson Opuwei An oil and gas expert, says the President Muhammadu Buhari-led administration has demonstrated political will towards passing  the Petroleum Industry Bill (PIB) into law.

Opuwei, who is the Chief Executive Officer of Dateline Energy Services Limited, said this on Sunday when he spoke with the News Agency of Nigeria (NAN) in Lagos.

” I think we should commend the president, the Minister of State for Petroleum Resources, Chief Timipre Sylva and his team, as well as the National Assembly on the eventual passage of the PIB.

“They have demonstrated some level of political will for what it’s worth.

“Also commendable is that this bill seeks to restructure the Nigerian National Petroleum Corporation towards full commercialisation, while addressing the industry regulatory system,” Opuwei said.

According to him, the PIB will reposition the Nigerian oil and gas sector as one ready to compete in the global market place, especially as the world is transiting from fossils fuels to cleaner energy sources.

He noted that some grey areas in the previous drafts must have been addressed in this version prior to it’s passage.

“The initial draft did not quite address the environment and it’s attendant challenges such as gas flaring and commercialisation, and as it affects host communities who would be penalised for third party spillages and vandalism of facilities.

“This bill presents some palliatives for host communities.

“Though the percentage was reduced from twelve to ten per cent of profits as envisaged in the initial drafts, the three per cent of operating expenses as being proposed is also an improvement on the two and half per cent hitherto proposed by another school of thought.

“Other sensitive areas that must be addressed by the national assembly prior to Executive Assent, are, the Administration of the Funds, and the Description of Host Communities in this PIB,” Opuwei said.

He explained that the current bill only recognised communities as areas wherein oil and gas facilities were domiciled, forgetting that these communities were intertwined.

” The other communities through which pipelines and others facilities pass through are referred to as impacted communities, who are in most cases affected in event of oil spills and other hazards from nearby operations, as they practically live together.

“I think government should create clusters which would include hamlets and fishing camps in and around some operational areas,” he said.

Opuwei advised the government to set up a Management Board/Administrative Committee wherein representation would include all stake holders and representatives of government for the three per cent funds.

He said the functions of the committee should among others include ensuring that the funds were deducted from various sources as at when due, kept in a trustee-like funds, and disbursed to specific targeted projects predetermined by the people of the locality.

NAN reports that the PIB which has five parts, eight schedules and 319 clauses was passed by both the Senate and House of Representatives on Thursday after 20 years delay.

The legislation is aimed at promoting transparency, good governance and accountability in the oil and gas sector.(NAN) (www.nannews.ng)