The resort to setting up two regulators is an unnecessary duplication of the cost of governing the oil and gas sector. Nigeria has wasted too many resources in recurrent expenditures, and so many panels set up by the Federal Government to review the public service have recommended downsizing and the merger of existing ministries, departments and agencies of government.
It’s confusing that Nigeria’s response to every perceived challenge in a sector or industry is rushing to create a committee or duplicate agency. This approach has been the guiding principle of our policymakers, and it has hindered the growth of existing structures or public institutions designed to address problems. It’s also ironic that Nigerians have been yearning for strong institutions and yet we are unable to establish that this retrogressive culture of creating and balkanising existing governing institutions, instead of strengthening them, occurs as setbacks. This has been responsible for our inability to achieve target objectives.
Although I have a few reservations about the recently passed petroleum industry bill (PIB), none bothers me as much as the clauses proposing two chief regulatory agencies in the oil and gas sector. The bill sets out to disband the existing Department of Petroleum Resources (DPR) and have it replaced by two regulators: the Nigerian Upstream Regulatory Commission (NURC) and Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA). The former, as the name implies, is to regulate operations in the upstream sector, and the latter in the downstream sector. This has been Nigeria’s style of fixing problems. It’s either banning or setting up a committee, and in such chaos, we fail to see the roots of the problem.
My major reservation about the PIB is built on four overlapping reasons: one, institutions take time to grow and they require sensitivity to perceived loopholes to be better and strong; two, the proposed two-regulator model is an unnecessarily costly practice for a country aspiring to cut the cost of governance; three, a two-regulator system is going to frustrate coordination between the administrative oversights of the downstream and upstream operations; four, the current regulator, DPR, is a victim of this culture of disbanding existing agencies for so-called efficiency. This is our trademark committee mentality, and the proposed regulators are going to take years, if not decades, to find their balance and become effective. This is happening in a planet struggling to completely relegate investment in fossil oil in a few decades. Our policymakers’ insularity shows in all their decisions, and it’s scary.
The existing regulator, from which so many agencies, were created, didn’t happen by chance. As the chief regulator of Nigeria’s oil and gas sector, DPR has undergone drastic transformations since it became a standalone organisation in 1971. It was created in response to the expansion of Nigeria’s upstream and downstream sectors to: Ensure compliance to petroleum laws, regulations and guidelines; monitor operations at drilling sites, production platforms and flowstations, crude oil export terminals, refineries, storage depots, pump stations, retail outlets, among others; and oversee the safety and other regulations that relate to the exportation and importation. It has functioned as a sole regulator and midwifed various agencies, including the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Nigerian National Petroleum Corporation (NNPC) itself.
Disbanding DPR, an institutional framework built in the span of 50 years, is sincerely not a progressive idea. Under it, Nigeria has been able to keep together the operations of both the downstream and upstream sectors and monitor them closely. This has allowed for the ease of decision-making based on harmonised data and management of the oil sector. It has driven transparent and accountable operations. A single regulator, therefore, keeps the administration of Nigeria’s oil and gas sector, whether in tackling managerial or commercial operations, in one book and, ultimately, offer easy services to stakeholders in the sector.
The resort to setting up two regulators is an unnecessary duplication of the cost of governing the oil and gas sector. Nigeria has wasted too many resources in recurrent expenditures, and so many panels set up by the Federal Government to review the public service have recommended downsizing and the merger of existing ministries, departments and agencies of government. It’s only a sensible thing to do, and it’s even more ironic that Nigeria is wasting this much resources in investing in fossil oil, when progressive countries are finding an alternative to it in renewable energy, and cutting down the budget earmarked for administrative functions of oil and gas administration.
With downstream and upstream sectors being managed separately, Nigeria has only rubbished its ambition to achieve the ease of doing business. What this means is, companies that operate in both sectors are now tasked with the arduous processes of being accountable to two operators. For instance, ConOil, which operates in both the upstream and downstream sectors, will be forced to go through two regulators to secure services it once obtained from one regulator. This means that the Federal Government is also going to have a harder time harmonising the data of ConOil’s operations under the two-regular regime. So much for the ease of doing business.
The elephant in the room as Nigeria awaits the President to assent to the PIB is this seeming expectation of a sudden transformation in the oil and gas sector in the years ahead. The irony is that the same set of people are going to still be responsible for managing the two regulators proposed to succeed. We are not inviting aliens to come to Nigeria and run the two proposed regulators. We would only have succeeded in stressing stakeholders and inflating the cost of regulating the oil and gas sector, instead of strengthening the existing single regulator to achieve the desired objectives. I pray the Nigerian public is listening attentively to this elite ploy to waste resources that ought to have been earmarked for redeeming the life of the ordinary citizen.
Awaal Gata, a media practitioner and public affairs analyst, writes from Abuja.