Monday, August 23, 2021 / 10:28 AM /
Ottoabasi Abasiekong for WebTV / Header Image Credit: Olaniwun Ajayi LP
The Petroleum Industry Act is a welcome development to the Nigerian oil and gas industry. Still, it would be more effective if a "whistleblowing mechanism" was entrenched to ensure transparency and accountability in the sector.
Dr Tominiyi Owolabi, a Partner, Oil and Gas with Olaniwun Ajayi Legal Firm, stressed this while providing his perspective on "The Petroleum Industry Act and Improved Investments in the Nigerian Oil and Gas Sector".
According to him, the whistleblowing mechanism will allow Nigerians who have a stake in the oil and gas industry to complain if they have issues with processes like the award of licenses.
Speaking further, he believed it would put the citizens in a better position in demanding good governance from the government in managing resources. They should be able to hold the government to account in the area of licenses.
He also added that the industry was in dire need of a leadership structure that drives productivity and efficiency in the oil and gas sector.
He was giving further insight. He stated that with the new regulatory structure for the upstream, midstream and downstream sectors, competence should be prioritized in appointing the Heads of the regulatory agencies.
He also called for the independence of the regulatory agencies in the discharge of their duties, stating that there was a need for zero tolerance in the area of undue political interference.
Owolabi noted that with over 6 decades of crude oil exploration in Nigeria, it was time to entrench a system that ensures checks and balances encourage people to have a say in the industry's activities.
The expert pointed out that one of the exciting features of the PIA legislation is the support it will give for the extensive utilization of Nigeria's gas reserves. He welcomed the plan by the bill to build Nigeria's gas infrastructure.
Looking at the act, he said there is now a linkage between policy, regulations and operations, and hopefully, it provides opportunities for a level playing field in the sector.
On the proposed unbundling of the Nigeria National Petroleum Corporation, he said the NNPC is one of the most significant corporate set up and wealthiest entities in Nigeria.
He advised the PIA steering committee that the President constituted to work with a third party group of consultants that are well qualified to assist in areas like asset identification, (both in Nigeria and Offshore), determining the legal regime for the transfer of assets (especially in the case of liabilities), and maintenance of government guarantees on the penalties which requires a lot of specialized guidance.
He was of the view that there are immense opportunities for NNPC as an operator in the field. The state oil company, according to him, needs proper structuring and financial engineering to achieve viability.
Reacting to the issues raised around the 3% Host Community Trust Fund, he advocated for an independent third party of financial specialists mandated by law to support the process of ensuring transparency, proper accounting, and reporting.
"The Host Community Trust Fund should be made to work effectively for the community where oil is drilled. We need a third-party checking process for the implementation of key projects," Owolabi added.