Komolafe: PIA Has Nullified Discretionary Award of Oil Blocks in Nigeria

Peter Uzoho

Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mr. Gbenga Komolafe, has reassured that the advent of the Petroleum Industry Act (PIA) 2021 has completely nullified discretionary award of oil blocks to companies and individuals in the Nigerian oil and gas industry.

Komolafe made the reassurance during an interview with journalists on the sidelines of the just-concluded Offshore Technology Conference (OTC), in Houston, Texas, United States.

He explained that with the PIA now in force, the era of giving out oil and gas licenses to friends and cronies as well as the existence of portfolio contractors in the Nigerian petroleum sector have all gone.

Before now, the discretionary award of oil blocks to family members, friends and cronies by presidents acting on the powers bestowed on them by the previous Petroleum Act, with little attention to technical and financial competence and capacity had been part of the problems that led to the collapse of the nation’s upstream sector.

Many Nigerian indigenous companies have been awarded oil blocks and marginal fields but only few have been able to progress their assets to first oil, leaving the assets stranded years after award.

But responding to a question bordering on the perceived return of portfolio contractors in the Nigerian oil and gas upstream sector, Komolafe said such existed in the past as PIA does not allow for portfolio contractors that arise when assets were given on discretion.

He explained: “If you are talking about portfolio contractors, maybe that existed in the past and I will explain that within the precepts of the provisions of the PIA. Pre-PIA, you could be talking about the era of discretion. As a matter of fact, the PIA has completely nullified discretion. So post-PIA regime, there is nothing like discretion.

“So the processes and procedures are well encapsulated and well defined in the law. So that is the beauty of the PIA. As a matter of fact, even the regulations that are being made pursuant to the PIA takes their oxygen from the PIA and are guided by the PIA. So whatever the commission is doing as a business enabler is anchored within the law. So the PIA does not allow for issue of discretion.”

Also adding his voice, the Permanent Secretary, Ministry of Petroleum Resources, Gabriel Aduda said the whole idea of the PIA touches on three basic issues that actually drive the entire industry: business opportunity, regulatory frameworks, and the business environment. He added that there is no cronyism under the current PIA dispensation.

He said with the PIA now in existence, investment opportunity and an enabling environment have been created, adding that issues around portfolio investors or discretionary award of oil blocks were all in the past.

He admitted that the PIA still has some grey areas that needed to be amended since no new law is perfect, and that the government was addressing overlaps in the post-PIA regulations being churned out by the two agencies created by the Act.

Aduda said: “But as we implement it, we keep making adjustments here and there until we get what we want. So the investment climate has actually changed, it’s not like before.

“And that is why if you look at the current bid round that is ongoing, it is so clean, it is so transparent, everybody that wants to go and bid, there is no cronyism, there is no ‘I know this person or that person’, and it is absolutely transparent -in black and white.

“What are we doing? We are cleaning out the investment opportunities for people to be able to see that transparency has now been introduced to this thing that had before now been a mystery.”