A former Senior Technical Adviser, Upstream and Gas, at the Ministry of Petroleum, Gbite Adeniji, has said that the Petroleum Industry Act (PIA), which was signed by President Muhammadu Buhari last week, would cut wastages in the oil and gas industry.
Speaking on Arise Television, THISDAY’s broadcast arm, Adeniji, who was an adviser when Dr. Ibe Kachikwu was petroleum minister, said that the new law is not only a petroleum sector reform document, but an economic bill that could remarkably impact the country.
He explained that the Act will open the petroleum sector up to a new wave of opportunities, stressing that the country now has a basis for deregulating the downstream.
“ We can cut away all the subsidies that we have completely mismanaged in the last 20 or more years, and redirect some of that towards more useful social and economic needs in the country.
“It also creates the opportunity for leveraging on Nigeria’s main abundant natural resource, which is natural gas, because if you look at the law, it’s got provisions galore on natural gas.
“And this is the first time ever, we actually have provisions dealing with that endowment. So when you think of the energy transition, if you have clarity around the legislative framework for gas, I think that basically positions Nigeria for that future,” he said.
Adeniji emphasised that there was the need to move quickly into a gas-based industrialisation era, stressing that the new law also addresses issues around environmental regulation in the industry, both in the upstream, midstream and downstream.
He explained that as Nigeria liberalises its oil and gas industry, it also needs laws that curtail the potential for abuses and monopoly, which the new legislation substantially address, saying that aside the Nigerian National Petroleum Corporation (NNPC), the industry has a number of monopoly operators currently.
According to him, the fact that the executive has presented a bill that is effectively doing away with subsidies demonstrates its political will, saying it’s now a matter of law that the sector must liberalise.
“So, if it’s law, then there’s a statutory duty to move away from subsidies. We then have to now see how they set up the regulatory agencies, and how they actually go about implementing the mandate, which is to see that the wholesale transactions as well as seeing petroleum products being sold on a willing buyer, willing seller basis, as opposed to the way we are doing things currently.
“Any one of Nigeria’s 200 million people or 774 local governments now has the rights to actually file an action to require the agency to undertake their statutory duties,” he said.
He noted that there will be need to appoint some very experienced management consultants to support the process to see to the proper design of the new national oil company, which the law envisages.
While stressing that six months might be too short to do a proper job of assessing and unpacking the assets that are not critical to the future of the new national oil company, including the issue of liabilities, Adeniji noted that the competent hands should be hired to turn around the fortunes of the corporation.
On the refineries, he stated that although currently a liability, the facilities have the capacity to begin to add massive value to the operations of the corporation when they start working.
He added: “There’s been work in the last few months to ensure that these refineries get off the ground again, the refineries would come with their liabilities, certainly as loss making assets at this point in time.
In fact, they’re not operational and there is a huge amount of debt on them certainly, but once they start operating, then we now reverse the process of importing fuels into the country.
“So, basically, you then start plugging that hole and start supplying into the domestic Nigerian market and have the potential of supplying wider into the region and that potential exists.
“The key issue then will now be the quality of the management around these refineries and in the wider corporation itself to have the right strategies around what would happen when these refineries get off the ground.You’ve got to basically wipe out the backlog of the debt around refineries through exports and domestic supply, ”he said.