Orgnised private sector kicks against implementation of PIGB Bill

The Organised Private Sector (OPS), has arched its brow and strongly kicked against the downsides of the Petroleum Industry Governance Bill (PIGB) being deliberated on at the National Assembly.

The OPS which represents businesses and enterprises of all sizes in all sectors of the economy, has a membership strength of over 15, 000 enterprises in Nigeria and a formidable organisation structure that is connected to the grassroots enterprises whose voices and interest guide its modus operandi.

One of such interest is the Petroleum Industry Governance Bill (PIGB), developed by the current dispensation at the National Assembly.

Addressing pressmen in Lagos on Tuesday 5th December, the Director General of Manufacturing Association of Nigeria (MAN) Mr. Segun Ajayi, who represented the OPS, commended the initiative geared to enthrone reforms that would ensure greater transparency and accountability in the Nigerian oil and gas industry, but highlighted some downsides to the bills that will oppose the reforms.

Although the OPS noted that intent of the PIGB is to ensure that there is a high level of transparency in the Nigerian Petroleum Industry whilst at the same time ensuring that the industry is commercially driven and attractive to potential investors, the OPS opined that a cursory look at some of the provisions of the PIGB revealed the likely emergence of the Petroleum Regulatory Commission (PRC) – an omnibus or humongous commission that will be empowered to regulate the entire petroleum sector.

This did not lie well with the OPS who stated that ‘We do not share the views of the National Assembly on the creation of a behemoth regulator for a sector that is not necessarily homogeneous in its activities and deliverables, the reason being that the idea of a single regulator for the whole sector runs contrary to industry standards which by default already provide for an Upstream and Downstream Regulator.

The OPS stressed that the responsibilities expected to be handled by the proposed Commission is too wide.
‘It cuts-across various value chains in a key sector of the economy. For Instance, the weight and measures functions is expected to be solely vested in the Commission and all government agencies exercising powers and functions in relation to the petroleum industry would be required to consult with the Commission.’

‘The bureaucratic bottlenecks that will arise would clearly negate the ease of doing business policy vision being pursued by the present Administration.

We believe that an omnibus regulator will further result in cumbersome and constant delays in securing the necessary approvals to conduct business.’

Furthermore, the OPS said that a single regulator will create complexities and challenges for operators in the petroleum value chain because the structure, operation and nature of the downstream are totally different from that of the upstream sector.

‘There are different operators on the petroleum sector value chain with multifarious and diverse objectives – ranging from guarding against systemic risk to protecting the individual consumer from fraud. These diverse objectives will be too complex for a single regulator to effectively manage.

A downstream regulator should focus on all commercial & technical activities in the downstream sector, while an Upstream regulator should oversee the technical & commercial activities in the upstream sector.

They further argued that ‘An all-powerful single regulator will not be able to technically examine and appreciate the regulatory, commercial and other operating environment issues from the deserved different dimensions and from the different viewpoints of the stakeholders.

‘A single unified regulator is effectively a regulatory monopoly which in the long run will promote the usual monopoly related inefficiency. A particular concern about a monopoly regulator is that its functions by default would be more rigid and extremely bureaucratic than of specialized agencies regulating the downstream and upstream separately.

‘A single regulator will not spur competitiveness nor enhance the contribution of Upstream and Downstream sectors to the national economy.

‘The creation of a single regulator implies placing enormous responsibilities on a single entity of Government especially with regards to the complexities of the Upstream and Downstream sectors which require astute efficiency and monitoring to achieve the required productivity. A single regulator would not be able to effectively handle the enormous challenges and complexities of the Petroleum Industry as well as the vast sub sectors within its value chain.

To this end, the OPS concluded that to concentrate too much power in one body in a sector where there are different players will be unsuitable.

The sector also noted that, creating an omnibus commission to regulate the downstream and upstream with the same checklist and yardstick will not be industry-friendly. ‘Moreso, contemporary economic order favours decentralization as it brings about specialization, competitiveness and quality delivery. What is required is a slim, yet focused robust framework for effective institutional governance of the Nigeria Petroleum Industry.’

The OPS thus strongly canvassed for the creation of two regulatory bodies each focusing on the downstream and upstream sectors of the Industry and on the entire gamut of technical and commercial issues in each of the sub-sectors. And to Increase the number of Non-executive Directors and provide specific criteria to guarantee the independence of the non-executive directors.

The OPS also submitted that the composition on the Board should be reviewed to include Stakeholders to represent the interests of the Organised Private Sector and the Organized Labour.

The OPS comprises of the Manufacturers Association of Nigeria (MAN), Nigeria Employers Consultative Association (NECA), Nigerian Association of Chambers of Commerce, Industry, Mines & Agriculture (NACCIMA), National Association of Small and Medium Scale Enterprises (NASME) and National Association of Small Scale Industries (NASSI).

The sector, however, prayed that their recommendations will be duly considered before final actions are taken by lawmakers on the 2016 PIGB.

Adesola Afolabi