The long-awaited Petroleum Industry Governance Bill (PIGB), is set for a second trip to the presidency following its passage by the National Assembly. A joint Conference Committee headed by Senator Donald Alasodura- Ondo Central, presented its report to a joint seating of the National Assembly, after which the bill was passed.
A bill to reform the petroleum industry was first sent to the Presidency in 2003, but it was not assented to by former President Olusegun Obasanjo.
It returned to the sixth National Assembly under President Yar'adua and remained there till a harmonized copy was agreed on by the blue and red chamber on the 28th of March 2018.
The new bill gives legal backing to the possibilities of regulated pricing with the creation of the Petroleum Equalization Fund (PEF).
The regulatory commission is empowered to determine fair pricing for petroleum products, while the equalization fund will be used to set a uniform fee all over the country.
The fund will be raised from a five percent levy on petroleum retailers. It will be administered by a board to be headed by the Minister of Petroleum Resources. This new charge on petroleum products will likely lead to an increase in prices, without allowing market forces to come into play.
However, Major Oil Marketers Association of Nigeria (MOMAN) and the Organised Private Sector (OPS), want the President to create two regulators before appending his signature to the bill.
Femi Olawore, the Executive-Secretary of MOMAN, said a single regulator was in place prior to the set-up of the Petroleum Product Pricing Regulatory Agency (PPPRA):” Our position is that one regulator is inadequate for the entire industry. Historically, from the beginning, we had one regulator, but we found out that the regulator was not able to police the industry very well. That was why PPPRA came up to deal with pricing. The upstream deserves one regulator because the activities are very massive. The downstream deserves one regulator because activities in the downstream are quite different from the activities in the upstream. Each of them requires different specialists as the regulator. The two have little or nothing in common. One regulator for both will lead to excessive bureaucracy. Having one regulator will be detrimental to the industry and the Nigerian economy.”
The new regulatory Commission will take over the work of the Petroleum Inspectorate, (PI), the Department of Petroleum Resources (DPR) and PPPRA.
Reginald Odiah, Chairman of the Economic Policy Group of the Manufacturers Association of Nigeria (MAN), representing OPS, said the composition of the board of the regulatory commission, has no space
for the private sector. “As OPS, we are interested in having two regulators for the oil and gas industry. The board of PPPRA has critical stakeholders as members and this gives OPS voice and capacity to make a contribution.”
While we wait for the President’s action on the bill, it would be left to see how the commission will organize itself to cope with the demands of the up and downstream sub-sectors of the petroleum industry.