With a new aggressive National Gas Policy, Nigeria is intensifying a push for a single regulatory agency for its petroleum sector in a move to reduce the current regulatory overlaps.
The National Gas Policy articulates the government’s vision of upscaling the gas sector through introducing an appropriate institutional, legal, regulatory and commercial framework which would hopefully remove those barriers affecting investment and development of the sector.
As contained in the draft policy document just concluded by the ministry of petroleum resources, the new regulatory agency will now cover the whole petroleum sector, incorporate the activities of the existing petroleum regulatory authorities and also cover some new regulatory activities not currently captured.
The agency would essentially be responsible for the economic and technical regulation of the gas sector and would have licensing, investigative, monitoring and dispute resolution powers, according to the draft document seen by BusinessDay.
The existing policy and regulatory institutions overseeing the oil and gas industry in Nigeria include, the Ministry of Petroleum Resources; Department of Petroleum Resources (DPR): Nigeria Content Development and Monitoring Board (NCDMB); Petroleum Products Pricing Regulatory Agency (PPPRA); Petroleum Equalisation Fund (PEF).
But there have been recent questions around the delivery of most of these institutions, a situation that had heightened calls for their merger or outright scrapping.
“The Federal Government is determined that there should be a new single regulatory agency for the petroleum sector in Nigeria, which will replace the existing regulatory agencies,” the ministry of petroleum notes in the draft document seen by BusinessDay.
Nigeria has proven gas reserves of 188 trillion cubic feet (tcf) the ninth largest in the world.
But the country is now experiencing a full-blown energy crisis in spite of its abundant gas resources. Experts say a new gas policy which is more effective and adjusted for the much harsher international gas business environment is required to drive the institutional reforms and regulatory changes necessary to attract investment into the sector.
The new policy therefore seeks to move Nigeria from a crude oil export-based economy to an attractive gas-based industrial economy. The draft document would be exposed for the first time to stakeholders’ input on Wednesday.
Government is also considering passing a new legislation which addresses gas issues, removes the anomalies and distinguishes between upstream, mid and downstream and ensures licensing of different activities in the gas chain. The law would ensure that going forward, gas would be treated as a fuel in its own right, rather than a by-product of oil production.
Strategic elements of the gas policy include governance; industry structure, developing gas resources, infrastructure, building gas markets, developing national human resources, communications and a road map action plan.
The vision is for Nigeria to “be an attractive gas-based industrial nation, giving primary attention to meeting local gas demand requirements, and developing a significant presence in international markets”.
The plans to set up a super regulatory agency is likewise captured in a Senate version of the new Petroleum Industry Bill (PIB) which passed second reading at the upper legislative chamber some two weeks ago. The bill is proposing a single strong, industry regulator- a one stop shop petroleum regulatory commission, which consolidates such roles presently resident with the Department of Petroleum Resources (DPR) and Petroleum Products Pricing Regulatory Agency (PPPRA).
The bill proposes that the new agency would be responsible for licensing, monitoring, supervision, of petroleum operations, enforcing laws, regulations, and standards across the value chain, and points to possible scrapping of DPR and PPPRA.
Ibe Kachikwu, the mister of state for petroleum resources, in a recent interview, had also talked about setting up a more responsive regulatory institution for the critical sector, but was silent on whether these two agencies would be scrapped eventually.
“ ..we are going to submit the PIB and we are going to work collaboratively with the National Assembly to find the best way to run these institutions, whether they will run collaboratively or collectively as one entity or multiple entities, time will tell; it is too early to begin to say that,” the minister simply told BusinessDay earlier, in an exclusive interview.
But in the new gas policy, the Federal Government envisages that divisions, departments or functions such as upstream oil and gas regulation; midstream and downstream gas regulation would form part of the new petroleum regulatory agency.
Also, midstream and downstream oil regulation, health, safety and environment compliance; consumer protection; would also be part of the agency.
However, the government says it is aware that while there are many benefits in consolidating into a single petroleum regulatory authority (and reducing the current number of disparate and sometimes overlapping regulatory agencies), there are also some challenges.
“The main challenge is likely to be in transitioning the current agencies into a cohesive new regulatory institution.
“This will require building institutional capacity and a strong and effective corporate culture within the new institutions, to ensure effectiveness of the institutional framework and sustainability of the policy,” according to government in the draft gas policy.
