The Senate passage of the Petroleum Industry Bill (PIB) on Thursday, July 1st, 2021, predictably, brought to fore, the dissension of some stakeholders on certain extant provisions in the much-anticipated document. The Upper House decision to peg the allotted funds to host communities at 3 per cent (to be sourced from the operating expenditure of oil and gas prospecting companies), for instance, generated a lot of furore in the hallowed Senate chambers, as that resolution drew the ire of some Senators representing the Niger Delta region.
Even though the Senate President, Ahmad Lawan had remarked that, with the bill passage, “…PIB demons have been defeated…”, it became instantly clear that the “demons” may have been weakened, they are certainly, not down and out!
The Senate Joint Committee on Petroleum Sector – Downstream, Upstream, and Gas – had inputted a 5 per cent provision for host communities in the Bill. This was even a 5 per cent decrease from the 10 per cent for which the community leaders had been clamouring.
Deputy Senate President, Ovie Omo Agege, even momentarily, shed his toga as the Number 2 man in the Senate, and appealed to his colleagues in the normal garb of a fellow Distinguished Senator (he represents the good people of Delta Central Senatorial District), to uphold the 5 per cent earlier earmarked by the Committee, all to no avail. Ditto for James Manager (representing Delta South Senatorial District. His reconsideration plea of the 3 per cent provision, fell on deaf ears.
Others such as Bassey Akpan (Akwa Ibom North-East Senatorial District), and George Sekibo (Rivers East Senatorial District), invoked similar sentiments, but it appeared the die is cast, at least for now, until the two Houses decide otherwise, when they converge for the harmonisation of the Bill, sometime in the foreseeable future.
Some other key provisions of the Bill read:
● NNPC to be reworked as a limited liability company
● Approval of 30 per cent fund from NNPC Limited profits to fund exploration in ‘frontier basins’.
For weeks, as the quest for signing the much-awaited Petroleum Industry Bill (PIB) into law, by the National Assembly gathered momentum, not a few were worried that its passage, would again, be kicked down the road due to some unresolved issues by various stakeholders.
Part of the issue threatening the bill passage (which had been in the works for 2 decades), was the demand by community leaders for an increase in revenue allocation from the proposed 2.5 per cent to 10 per cent for host communities. The leaders believe this is the only way that the standard of living of the people in their domains (most of whom are already suffering immense economic deprivation, due to the flip side of various oil exploration activities), could be improved upon. Other stakeholders were seeking a public sale of some shares of the National Petroleum Corporation (NNPC), whilst some still, believe market-based prices should be charged for gas earmarked for power generation; a move which will, definitely, further impact adversely, the disposable income of the average Nigerian.
However, something more germane, urgent, and worrisome to industry watchers long before the recent Senate bill passage, was the idea of merging some Government Agencies such as the Petroleum Equalisation Fund (Management) Board (PEF(M)B), Department of Petroleum Resources (DPR), and the Petroleum Products Pricing and Regulatory Agency (PPPRA) in the PIB.
The Senate Joint Committee, in its report, had proposed that the three Agencies be merged under an entity to be known as “The Authority”. This new organ is to be saddled with tackling the onerous responsibilities of the three agencies and it is expected to run efficiently and effectively.
To be sure, some of the Agencies do have a few overlapping functions but it’s important to weigh their roles in getting premium motor spirit (petrol) to the final consumer and how that plays into the socio-economic stability of the nation at large before any pruning and/or aggregation are even considered.
Out of the three Agencies, the one that has a direct impact on the day-to-day life of the ordinary person is PEF(M)B. Today, the fact that petrol is being sold at a uniform price all over Nigeria is due to the ‘equalisation’ activities of PEF(M)B. The system of price uniformity, put in place since the inception of this all-important organisation in 1975, has been hugely modernised and is working perfectly. Incidences of losses and phoney claims by marketers have been largely plugged through immense investments in Information Technology and Truck Tracking.
To dig deeper, PEF(M)B has the most accurate data on activities in the downstream sector according to industry watchers. Its robust Downstream Automated Fuel Management Information System (DAFMIS) puts it in a pole position to provide near real-time information on vessels, refineries, pipelines, tank farms, depots, trucks, and filling stations. This unique system is structured to cut waste, improve efficiency, and plug loopholes in the petrol distribution chain.
Also, DAFMIS, modelled after the procedures and processes, guiding and guarding the operations of the highly regarded Saudi Arabian oil company, Aramco, accommodates an Operations Control and Command (OCC) Centre that monitors field operations round the clock, year in, year out, thereby ensuring that untoward incidents are dealt with immediately.
The socio-economic benefits of DAFMIS are multifarious. The system provides for on-time data that is germane to making critical decisions in the downstream segment of the petroleum sector. It provides a veritable plank for the nation’s economic planners, lends itself to the maintenance of energy security and the promotion of local content among other functions, all in line with best global practices and management systems. PEF(M)B’s position in the Petroleum Industry Bill should therefore be unambiguous.
For PPPRA, a body that determines the prices of petrol products within the polity, it’s the vision of running a smooth and resilient downstream sub-sector of the petroleum industry, with the ultimate goal of engendering self-financing and sustenance, should not be muddled by a merger.
Also, the DPR has its job cut out. The Department functions cut across the upstream and downstream activities of the petroleum sector.
Lately, DPR has been working overtime to ensure that wanton and widespread crude oil theft is reduced drastically. In February this year, the Nigerian National Petroleum Corporation (NNPC) affirmed that crude theft had risen to an average of 200,000 barrels per day. That works out at 6 million barrels per month or 72 million barrels per year. That is mind-boggling and the economic losses, quite colossal.
The activities of the oil thieves is a dampener, direct threat and also runs counter to the avowed mission of the current Petroleum Minister, Chief Timpriye Sylvia, to shoring up crude production to some 3 million barrels per day during his ongoing tenure.
Aside that, the DPR is responsible for licensing and monitoring Filling Stations’ activities. Even carrying out these functions is not without drama. For instance, there was a strike action carried out recently by an arm of the Independent Petroleum Marketers Association of Nigeria (IPMAN), at Suleija, Niger State. Some members of the association had accused DPR Officials of unethical practices. The strike action was resolved later when the IPMAN Abuja Chairman, Alhaji Ahman Yahaya Alhassan was quoted as saying ” the suspension is sequel to an understanding we had with the Department of Petroleum Resources”, according to Daily Trust Newspaper of June 24, 2021.
In effect, merging the three Government Agencies of PEF(M)B, PPPRA, and DPR under an amorphous juggernaut tagged “The Authority”, is bound to worsen the already straining socio-economic fabric of the nation.
Everyone is familiar with the problems the nation had been experiencing over the years with government bureaucracy. Merging these entities is bound to create strife, engender unnecessary bottlenecks, and hamper efficiency. Needless to say, everything that will threaten the prevailing tranquillity of petrol supply all over the nation, should be nipped in the bud straight away. A popular Yoruba adage posits that one starts avoiding a sharp object hitting one’s eye, right from afar.
Nearly everyone is keenly aware of the galloping prices of food items all over the country at the moment. Housewives and even the unmarried, are scrambling on how to work their food budget to last the long haul. Many cannot even afford to feed themselves anymore. The other day, a clip, showing a long line of able-bodied individuals of both sexes queueing for food being shared by a Church in Surulere, Lagos, circulated widely on social media. The situation is that dire.
A program segment on Arise TV- The Morning Show – recently conveyed that Nigeria had the highest percentage -17.5 per cent – of headline inflation (year-on-year), among four African nations polled for May 2021. Others such as South Africa, Ghana, and Senegal recorded only single-digit inflation of 5.25, 7.5, and 1.3 per cent in that order. Anyone could easily sum up that all is not well with the economic well-being of our dear nation at the moment.
Merging PEF(M)B therefore with other agencies, or the emergence of “The Authority”, will no doubt bring in its wake, an inefficient system that is guaranteed to disrupt the smooth supply of petrol with attendant consequences, in tow. These consequences do not require further elucidation. Anything that will further depress the already parlous and pitiable economic condition of the average man on the street, could result in a public disorder of cataclysmic proportions.
James Baldwin, the world-renowned essayist, poet, and activist got it right when he affirmed that “the most dangerous creation of any society is the man who has nothing to lose”.
The Federal Government is currently saddled with finding solutions to the seemingly intractable insecurity bedevilling the country apart from other problems such as power paucity, burgeoning youth unemployment, and lately, various and persistent agitations for self-determination by some indigenous groups, all of which are quite daunting! Merging PEF(M)B with other agencies would therefore be “adding petrol to fire”; something the nation cannot afford at this moment in its history.
Eniola Olakunri, a Director of Oats Global Energy and public sector analyst writes from Abuja.
