Why we oppose single regulator for up, downstream sectors – NECA, others


By Victor Ahiuma-Young

NIGERIA Employers’ Consultative Association, NECA, and other members of the Organised Private Sector, OPS, have given reasons why they are opposed to a single regulatory body for the Petroleum industry as recommended in the Petroleum Industry Governance Bill, PIGB, pending before the National Assembly.

Other members of the OPS with this stance are Manufacturers Association of Nigeria MAN, 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.

At a briefing in Lagos,  on the imperative for reform in the oil and gas sector, the OPS said there was the need to avoid what it termed “costly mistakes” that could work against truly reforming the sector which is still the main stay of the Nigerian economy. One of such mistakes, OPS argued, is the provision in the PIGB seeking to create a single regulator for the industry.

Segun Ajayi-Kadiri, the Director General of MAN, alongside Olusegun Oshinowo, the Director General of NECA, at the briefing, contended that two regulatory bodies – one for the upstream, and another for the downstream, would better serve the sector and Nigerian economy better.

“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. We do not share the views of the National Assembly on creation of a behemoth regulator for a sector that is not necessarily homogenous in its activities and deliverables. Our reasons are, as follows: 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 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.”

Members of OPS  explained that a single regulator would “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.”

The OPS advocated 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.

“Being mindful of need to merge and streamline the number of existing regulatory agencies in the face of dwindling revenue of government. Specifically, we canvass a simplified arrangement where the Petroleum Products Pricing Regulatory Agency (PPPRA) which has been saddled with the responsibility of commercial regulation since 2003 and has the relevant experience, structure and personnel, should be strengthened to continue to superintend the downstream sector of the Petroleum Industry while the Department of Petroleum Resources (DPR) oversees the upstream sector.

The group however, commended the National Assembly for taking steps towards truly reforming the petroleum industry through the PIGB, and called for accelerated action to making it a reality.



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