The new petroleum industry law does not specify exactly when the Nigerian National Petroleum Corporation will cease to exist, a development that could impact how quickly the corporation can be reformed to run more efficiently, an expert has said.
Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at leading global services firm PwC, during the 2021 edition of the company’s Capacity Enhancement Workshop for Journalists on Wednesday, said this was a major omission in the PIA which could affect how quickly reforms progress.
“This is no specific timeline for the old NNPC to cease, does it mean it will continue to operate like this year from now, what then will change,” Oyedele said.
The Petroleum Industry Act (PIA) provides a legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities, and related matters.
It was signed into law by President Muhamadu Buhari on August 16, and among other things mandated that the NNPC would become a commercial entity.
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The PIA provides for the incorporation of NNPC limited and the transfer of assets and liabilities of NNPC to NNPC limited. The assets and liabilities not transferred will remain with NNPC until they are extinguished or transferred to the government.
Oyedele said the concern is that the inefficiencies associated with the NNPC will persist longer than is necessary without a concrete date to turn it into NNPC Ltd.
According to him, if NNPC were efficiently operated like its peer, Saudi Aramco, it should be recording profits of up to $10bn yearly. With this kind of revenue, Nigeria will have enough to pay teachers and doctors, build roads and schools, create jobs, and ultimately improve the wealth of the country.
In March, Saudi Aramco paid the government, its major shareholder $75billion in dividends, an amount twice the size of Nigeria’s 2021 budget.
The NNPC declared N287 Billion profit in September, saying it is the first in its 44-year history but Oyedele said the profit was possible due to its efforts to retrieve debts that it had previously thought were impossible to recover the past.
Oyedele also said that the quick amendment of the PIA raises further uncertainties as more amendments may also be suggested by different parties and further impair the new law.
He also said the government should be concerned with the effective implementation of the new law and appoint technocrats rather than politicians to lead the reforms.
