PIA: IoD recommend ways to make deregulation work in Nigeria

The Institute of Directors (IoD) Nigeria which promotes corporate governance with a view to enhancing the economy for business development, has listed ways to make deregulation work in the country.

The institute commended the legislature and the president of Nigeria for signing into law the Petroleum Industry Act (PIA) on August 16, 2021, which according to it has not only removed fiscal uncertainty but has also improved policy clarity.

Following review of the PIA, the institute in a position paper signed by its President and Director General, Dr (Mrs) Ije Jidenma and Bamidele Alimi respectively, highlighted some areas of concern and matters of interest to its members.

Acknowledging the objectives of the Act, the institute revealed that recent events point to implementation ‘headwinds; expressing that five months after the signing of the PIA, the federal government considered it expedient to announce an 18-month suspension of the Act, presumably as it relates to the matter of subsidy removal.

The action according to IoD has effectively introduced a new and high degree of uncertainty for industry players and prospective investors.

“Importantly, the decision of the federal government raises further questions on section 53 (7) which inter alia requires NNPC Limited and any of its subsidiaries … to conduct their affairs on a commercial basis in a profitable and efficient manner without recourse to government funds.

“The sum

of

$341billion (N1.43trillion) was reported to have been spent in Year 2021 on petroleum subsidy,” the institute noted.

To make deregulation work, however, the institute stressed the need to create an enabling (social and economic) environment that makes implementation of deregulation easier and readily accepted as well as fast-track the ongoing full rehabilitation of refineries to ensure that the import freight element in the price of product is minimised pending their full privatisation.

The institute also urged the government to as a matter of urgency work on removing all the inefficiencies and distortions that are negatively impacting the landing costs of products as well as ensure stability in the foreign exchange rate as that removes the ‘pricing and inflationary burden’ it introduces.