DPR: REFORM A LA SARKI

The introduction of technology in the nation’s oil and gas industry will enhance transparency and accountability, writes Jackson Onyukwu

The Department of Petroleum Resources (DPR), is the statutory regulatory agency for petroleum in Nigeria. Oil is the main foreign exchange earner for the nation. Therefore oil is the fiscal breath of Nigeria.

This explains why all eyes are on crude oil. Government officials are watching. Nigerians can’t stop talking crude and its value chain. This places a huge burden on DPR. It must be alert and alive to its duties otherwise the nation loses. From its journey in 1971 functioning with different names under different ministries through 1988 when it was renamed DPR and given full autonomy to regulate the petroleum industry till late 2019, DPR has discharged its responsibility to the best of its ability. But question marks still persisted on its ability and courage to stop the haemorrhage in both the upstream and downstream sectors of the industry globally associated with scam and opaque dealings. Oil business is globally regarded as messy and murky. The miasma that hallmarks its operations is not limited to Nigeria. Different countries have tried to innovate various ways to contain cases of theft in the industry.

In Nigeria, DPR appears to have entered a new phase of transparency since December 2019 when President Muhammadu Buhari appointed an engineer and seasoned industry person, Sarki Auwalu, as the Director and Chief Executive Officer of the all-important regulatory and revenue-generating agency. His appointment was hailed as one of the best thought out appointments made by President Buhari. Here comes a well-heeled Chemical Engineer, management strategist with global certifications in petroleum matters from the best training institutions in the world including Chevron Academy, PetrolSkill USA, and PETRAD of Norway. Indeed, his appointment quietened the disquiet in the agency following a lacuna created by a lack of substantive head.

So, how has his appointment helped the nation? In many ways. First, being an industry person, he hit the ground running. But more importantly, he brought to the table two essential traits much desired and needed for efficiency in the discharge of his duties: integrity and courage. To succeed as regulator of a big money industry you must have integrity as your collateral, the ability to remain un relenting in the enforcement of good corporate governance especially in an industry globally regarded as slippery, full of dangerous twists and turns and one that lends itself to bribery and graft. The second trait is the courage to act. Regulating the petroleum industry all over the world is not for the garrulous, it’s for doers; men and women who must be bold enough to walk the talk.

Sarki has since showcased these two critical qualities for the good of the nation. To properly situate his laudable contributions, it’s important to state what has been before his appointment. A December 2019 report published by the Nigeria Extractive Industries Transparency Initiative (NEITI) revealed that crude oil and refined products worth $41.9 billion have been stolen in Nigeria since 2009. The report, titled ‘Stemming the increasing cost of oil theft in Nigeria’, recommended the introduction of modern technologies to combat oil theft and pipeline vandalism.

A breakdown of the losses according to NEITI’s report shows that $38.5bn was lost on crude theft alone, $1.56bn on domestic crude, and another $1.85bn on refined petroleum products between 2009 and 2018. The report says that Nigeria loses an average of $11 million a day, around $349 million a month, due to theft, process lapses and pipeline vandalism.

Another 2019 report released by Nigeria Natural Resources Charter (NNRC) revealed how International Oil Companies (IOCs) operating in the Niger Delta region steal and siphon large volumes of crude oil from the country stealthily and steadily. The report estimated that Nigeria lost N995.2 billion annually to oil theft which comes in different shades either by the IOCs, illegal bunkering by some criminal elements using hot or cold-tapping techniques to divert crude from pipelines, artisanal refining of crude in the creeks or plain diversion of refined products through the distribution chain in the downstream sector.

The NNRC report explained that when the IOCs steal, they always deploy a high-wired network of onshore and offshore operators, sellers, financiers, as well as logistics and security firms to perfect their devious acts which is nothing short of economic sabotage. This has precipitated so much discrepancies in the crude business leading to loss of huge revenue by the country.

The latest case of such discrepancies, theft and larceny allegedly perpetrated by oil majors was the matter in which a Federal High Court in Ikoyi, Lagos granted an interim Mareva injunction directing 20 commercial banks to block Shell Petroleum Development Company of Nigeria Limited accounts in a bid to recover the cash value of more than 16 million barrels of crude oil said to have been diverted by the oil giant from AITEO Eastern E & P Company Limited, an indigenous player in the industry. Aiteo is one of the indigenous companies fulfilling the Local Content Act, also known as the Nigerian Oil and Gas Industry Content Development Act. It was enacted in 2010 to promote indigenous participation in the nation’s oil and gas industry. It represents one of the best milestones in the industry from which foreigners, not Nigerians, have made the most money. The emergence of Aiteo and others has therefore ensured that more Nigerians are employed, upskilling of Nigerians in oil and gas technologies and more revenue to the national treasury. They deserve to be encouraged, not emasculated.

Justice Oluremi Omowunmi Oguntoyinbo, gave the order, following an ex parte application in suit no FHC/L/CS/52/202 where AITEO Eastern E & P Company Limited is the plaintiff/applicant and SPDC Ltd is the first defendant. Royal Dutch Shell Plc, Shell Western Supply and Trading Limited, Shell International Trading and Shipping Company Limited and Shell Nigeria Exploration and Production Company Limited are second, third, fourth and fifth defendants while 20 banks where the Shell companies operate accounts in Nigeria are the respondents in the suit.

Obviously, Sarki and his team at DPR are aware of the stealing in the industry. He’s taking steps to mitigate, if not eliminate, the aberrations. One of such steps is the infusion of technology into the operations of DPR.

Recently, it launched the Downstream Remote Monitoring System (DRMS), also known as e-Station. It is an inventory and regulatory tool that tracks product level across retail outlets and depots nationwide as well as track the movement of product from depots to retail outlets using a USSD code *7117#.

Sarki says the introduction of technology into the nation’s oil and gas industry is in line with President Buhari’s mandate for transparency, accountability and domestic energy security. The digitalisation of DPR operations also addresses the ministerial priorities for products sufficiency and availability. Petroleum products diversion is common in the downstream sector. Cases of trucks leaving depots and heading illegally outside the country had been reported. In some cases, the trucks are diverted to another station order than the originally allotted station. These and many more constitute the basket of criminal acts that signpost the industry. And DPR is already rising to the occasion. Sarki says the e-Station will provide real time data for investment purposes and optimized business decisions. Nigerians have over the years cried for reforms in the industry. In Sarki, we see a modern day reformer who understands the landscape and has the courage to birth a new order. He needs our prayers.

Onyukwu, public policy analyst, wrote from Lagos