New GMD, NNPC, Dr. Maikanti Baru

By Michael Eboh


ABUJA—The Federal Government’s draft National Oil Policy has proposed to consolidate Nigeria’s oil industry regulatory authorities into a single agency to be known as Petroleum Regulatory Commission, PRC, while scrapping all other regulators, including the Nigerian National Petroleum Corporation, NNPC, Department of Petroleum Resources, DPR, and Petroleum Products Pricing Regulatory Agency, PPPRA, among others.

According to the document released by the Ministry of Petroleum Resources, last weekend, the new regulator will incorporate the activities of the existing petroleum regulatory authorities and also cover some new regulatory activities not currently covered.

The document revealed that the existing institutional regulatory framework was weak, largely ineffective and inefficient, arising from a number of single-issue agencies; overlaps in regulation, gaps in regulation, mixture of policy, regulation and operations; and ineffective regulation.

It stated: “Although the agencies generally work well together, their roles, sometimes, overlap and there are significant information gaps within the government as, sometimes, one institution is unaware of what the other is doing.

“At the same time, policy making capacity has been weak, resulting in NNPC and its subsidiaries setting policy and regulation as well as conducting operations in the petroleum sector. The result is an ineffective and inefficient institutional environment in the petroleum sector in Nigeria.”

The draft policy is also proposing that, in order to reduce the inefficiencies in parastatals in the petroleum sector, the proposed single petroleum sector regulatory authority will operate under the policy supervision of the Minister of Petroleum Resources.

According to the document, the Minister will set the policy for the PRC; ensure monitoring of the implementation of the policy; and ensure monitoring of the performance of the authority.

“This does not mean that the regulatory authority will report to the Ministry on a day to day basis. The new single regulatory authority will be an operationally independent regulatory institution. The Minister’s involvement will be hands off and just to ensure that the regulatory authority properly carries out its roles of implementing the policy,” it explained.

Automatic oil licence renewal jettisoned

Meanwhile, the Federal Government is considering a policy that would rule out the automatic renewal and extension of oil and gas licenses, while it has listed stringent conditions which would be met before these can be granted.

This was also contained in the draft oil policy which indicated that the new oil and gas licensing processes would become more transparent in respect of allocations of oil blocs, mining licences and leases, while local communities would be able to compete in the bids.

According to the draft policy, licence renewals or extensions will now be based on progress made by licence holders in meeting their exploration or production targets.

It stated that licence holders, who do not meet licence conditions, including oil production, gas flare down, gas supply obligations, will risk losing the licence.

Regulate petroleum revenue spending

In addition, the document is proposing a policy that would ensure that certain percentage of petroleum revenue is set aside for capital expenditure and for savings for future generations.

According to the document, under the new policy, the government will agree to a cap on the proportion of petroleum revenues that can be spent on recurrent expenditure, while setting aside a percentage of the petroleum revenue for capital expenditure items and savings for future generations.

To give vent to this proposal, the document disclosed that appropriate legislation would be passed to back the policy.

Unprofitable refineries to be sold

The draft policy also stated that each of the country’s refineries will be given a transition period within which to become viable and profitable, adding, however, that the government intended to divest, sell off, concession or if necessary, close down any non-performing refinery that failed to make the transition.

It stated: “The aim is to make the NNPC refineries successful, high volume, commercially viable enterprises. They will be encouraged to become so and will be supported as much as it is within the government’s ability to do so.

“Of the three NNPC refineries (Port Harcourt, Warri and Kaduna), Port Harcourt is expected to be the best placed to succeed. It has installed its independent gas-fired power supply; it has undertaken its own turnaround maintenance; it is close to jetties and the pipeline length from crude oil suppliers is short (less of a pipeline security risk); it is operationally ready to produce refined products to international standards, although the cost structure is still not right.

“Of the three, Kaduna, is perhaps, the least ready currently because of its distance from crude oil supplies and reliance on a poorly maintained crude oil pipeline.”

Another measure planned under the new policy for revitalization of the refining sub-sector in Nigeria include the return of storage depot assets to the refineries.

It stated: “The storage depots were originally part of the refineries but had been subsequently transferred from the refineries to the Pipeline and Products Marketing Company, PPMC, (now Nigerian Petroleum Marketing Company, NPMC).

“This arrangement is not considered to have been successful. NPMC has failed to manage the depots effectively and the refineries have been denied an important part of their assets. The storage depots will, therefore, be returned to the refineries.

“In addition, the perimeter fence around the refineries will be set sufficiently far from the operations, including depots to ensure that proper security can be maintained. Everything inside the perimeter fence will belong to the refinery solely and will be on each refinery’s asset register.”

Again, the document noted that as part of their new independence, each of the refineries will be given commercial autonomy, meaning that they will be free to take crude oil from wherever and whoever they can.

According to the draft, they are not constrained to take NNPC deliveries only, as under the new policy, each refinery may choose to deal with any crude oil producer apart from NNPC or National Oil Company of Nigeria, NOCN.

“It should be commercially interesting for an International Oil Company, IOC, which has downstream operations in Nigeria, to have their own crude refined and sold in Nigeria, rather than exporting crude across the Atlantic and the refined product to be shipped back,” the document noted.

The Ministry of Petroleum Resources said the petroleum industry in Nigeria had been involved in the development of the petroleum policy, through their participation in industry fora and seminars, such as the Nigerian Chapter of the Society of Petroleum Engineers, the OPTS and the Petroleum Club.

According to the Ministry, the proposed petroleum policy, while driven by the government, is a joint effort of the government and the petroleum industry community in Nigeria, with domestic and international industry involvement.

http://www.vanguardngr.com/2016/11/fg-to-scrap-nnpc-dpr-pppra-others-to-sell-unprofitable-refineries/

as long as all excesses declines

This may likely make mockery of the NASS Petroleum Industry Bill. Who is/(are) APC Strategist self?

Ok

Sell those refineries abeg, they will never work no matter how much you pump inside it. Some people feed fat on it not working and nothing you can do to stop it but to just sell. I propose this formula in the sales:

General Public (through shares) 20%
State Government (Host) 20%
Private investor (Operator) 40%
Local Community where the refinery is located 5%
FG 15%

With the private investor not having up to 100%, they will not be able to do asset stripping like global infrastructure did at ajaokuta steel

This will be a welcome development.

Anything that's a drain on our meager resources should be scrapped and sold.

The problem has always been that oil tycoons(who are sometimes also political bigwigs) use their National Assemly contacts to frustrate all productive government reforms concerning our oil industry,due to selfish interests.
That is why these policies always look nice on paper,yet a few years later,we will still be wondering what went wrong,how did such good policies fail?,well, we must develop the political will necessary to push such reforms and deal with saboteuring oil "cabals".

We also need a transparent Ministry of Petroleum resources(I must commend the minister of state for petroleum,ibe kachikwu for making efforts to be more transparent).

Them no fit!

This same movie again? Story story........

The way FG is going about selling everything, i pray they don't sell the masses

[img]http://i./vtlqFxiYFW6Uo.gif[/img]

To sell or already sold to "them them"? After they are through with selling all our national assets..... They will eventually sell the two horses and the eagle.....

The dullard want to mortgage our future

In the next few weeks, they're likely to change their original statement.
Let's wait for their final decision.

Hope this isn't indirect way to sell NNPC and others?

I don't trust this government.

Confused dullard selling Nigeria.

Thisis2raw:
The way FG is going about selling everything, i pray they don't sell the masses

lol..nah all of us them go sell next..foolish government

abo~ki ti take over!! selling to who please??

They have proven to be bottomless pits.

Now shit is about to be real

DropShot:
This will be a welcome development.

Anything that's a drain on our meager resources should be scrapped and sold.

Scrapped and sold then give the money to you abi? or still borrow more money to fund the abstract budget?

Even if this government make silly policy, you will support.

they have been elected.... and though their policies falls short of expectations at times..... they should do what is best 4 us! some children on this forum open their mouth at any slightest opportunity 2 display their folly.

Very soon politics sef no go dey hungry people like b4 again ooo as they don dey sell the national cake small small

This one that the FG is OLXing everything, who are the buyers/bidders? The usual cabal?.

Clueless people.......

I am tired

Gre8

This is a good move . The downside to it is that the plans can be easily frustrated by the so called workers unions.

God dey sha hear the prayers of the poor and take us the promise land