Oil Industry Stakeholders Divided over Proposed Reforms by Tinubu’s Policy Advisory Council

Peter Uzoho

Stakeholders in the Nigerian oil and gas industry have expressed divergent views on some of the proposals put forward by President Bola Tinubu’s Policy Advisory Council, which are intended to reposition the sector for rapid growth and increased value addition.

While some industry players backed all the proposals totally, others advised the government to jettison some of them in order to avoid causing chaos in the sector, particularly on the proposal to merge the regulatory agencies.

THISDAY had reported penultimate Sunday that the council proposed the sale of the major stakes of the Nigerian National Petroleum Company Limited (NNPC) in the upstream, midstream and downstream sectors of the oil and gas industry.

The Policy Advisory Council Report dated May 2023 had stated that the federal government would earn about $17.4 billion from the sale of the NNPC’s majority stakes in the oil and gas assets.

The council equally advised Tinubu’s administration to consolidate the regulatory agencies by merging the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian Content Development and Monitoring Board (NCDMB) under a single regulator, among other proposals.

But speaking with THISDAY, Subsurface Manager, Energy and Mineral Resources Limited, Mr. Collins Ibekwe, who commented on the proposals relating to improving NNPC’s commercial viability as a going concern, stressed the need to consider whether it has a historical record of maximising profit for its shareholders.

Ibekwe said there was the need for NNPC to be reorganised or reformed if it was clear that it didn’t have the capacity to maximise profit for it shareholders.

He explained: “Per the Petroleum Industry Act (PIA), the NNPC has been reformed to function as a commercial entity but some gaps still exist. A commercial entity seeks to optimise its resources.

“This includes minimising overheads and general operating cost. Such an entity will seek to operate lean and mean. NNPC is not yet such a company. All that seem to have happened with the PIA is that the organisational structure has been replaced with a new one.

“Organisational structure alone does not run a business. It’s people that run a business. This means that even with the best organisational structure, without the right quality of manpower, the organisation will still not function efficiently enough to deliver the best commercial output. A company bound by the federal character principle will lack the freedom to staff itself with the best quality of manpower.”

Managing Director, Entek Integrated Resources Limited and Lead Promoter, EnergyhubNG, Dr Amieyeofori Felix, told THISDAY that there were lots of merit in the recommendations by the Tinubu advisory council, noting that government actually needed to turn things around drastically to move the country and the economy forward.

Felix stressed that Nigeria truly must work to increase its production capacity now if it wanted to avoid stranded assets underground because of the energy transition.

Warning that 2060 was not a long time, he stated that unless Nigeria shored up its production, lots of oil might be left as stranded asset.

“I think the suggestion to restructure NNPC is okay – they have to make them fully private and remove any long-arm government agency from them. I also agree that they should pay, just like every other operator, all the taxes and rents accruable to government,” he stated.

He, however, expressed some reservation on the idea of an omnibus regulator by merging NCDMB, NURPC and NMDPRA, arguing that “it’s like forcing food through the throat of a man that just came out of coma.

“ That will create another monster that may take the industry and the country in the part of erstwhile NNPC.

“I think the regulators themselves should be regulated closely by the National Assembly – they should provide a close mark on their activities to ensure that they stay with the PIA – as a matter of fact, the petroleum committees in the National Assembly – Senate and House of Rep must be structured to police these regulators,” he argued.

On the proposal to increase Nigeria’s oil production capacity and reserves potentials, Felix said that has to be confronted with all might and political will.

He said there has to be a solution to stop or minimise vandalism of pipelines and facilities and even kidnapping as well as crude theft, as no investor will agree to put his money into a leaking basket.