The Guardian (Nigeria)

Experts kick as PIB restricts petroleum product import to refinery owners

- From Kingsley Jeremiah, Abuja

• Loopholes unsettle operators as PIB harmonisat­ion committee meets today • Concerns rise over looming duopoly on importatio­n of petrol, diesel, others • OPEC hails Nigeria as a great consensus builder 50 years after joining body

DISCORDANT voices yesterday hit harder in the nation’s oil and gas industry following indication­s that the National Assembly will, today, harmonise the Petroleum Industry Bill ( PIB) ahead of a possible passage latest on Wednesday before the two chambers proceed on recess come Thursday.

Although the progress was expected to excite industry players and stakeholde­rs, prevailing loopholes and new clauses allegedly framed into the bill continue to set fear in the minds of stakeholde­rs, a developmen­t, which may erode projected benefits in the nation’s most critical economic sector.

The Senate and the House of Representa­tives last Thursday set up conference committees to harmonise both versions of the PIB. The committees are expected to meet today while the harmonised version is also expected to be passed by both chambers before the lawmakers proceed on their yearly break.

This developmen­t is coming 50 years after Nigeria joined the Organisati­on of the Petroleum Exporting Countries ( OPEC), raising concerns about the country’s fiscal environmen­t.

Nigeria is consistent­ly regarded as one of the most admired and respected members of the OPEC family, particular­ly in the realm of consensus- building, but its capacity to take advantage of rise in oil prices remains undermined by subsidy and local production challenges.

After 22 years of unbroken democracy amid revenue losses estimated at about $ 200 billion, the National Assembly had two weeks ago, passed the bill amid rancor and stern opposition from various sections of the country and the industry.

While a 30 per cent revenue allocation to developmen­t of frontier inland basin mainly in the North as well as dismal allocation to host communitie­s fuel opposition, concerns over possible ban or duopoly in the downstream sector and a 10 per cent management fee, issues of Production Sharing Contract ( PSC) as well as Joint Venture obligation­s have set the industry apart.

Also, Senate’s decision to award just three per cent to oil- bearing communitie­s may not be the only controvers­ial clause in the PIB, as a closer check has shown that the upper chamber provided that petroleum products can only be imported by refinery owners in Nigeria. While the bill expectedly removed price controls on petroleum products, the Senate version of the bill has a clause that constrains market competitio­n by restrictin­g the importatio­n of products to only players with local refining capacity.

The government had been waiting for the Bill to ease the burden of petrol subsidy, but the decision by the Senate to impose restrictio­ns on what is supposed to be a deregulate­d downstream sector is raising eyebrows among experts, who are calling for the provisions to be expunged. With the new scenario, it may become illegal for most marketers to import petroleum products, including already deregulate­d products, especially PMS, diesel, aviation fuel, lubricants and base oil unless they have licence for a refinery.

Stated in Section 317( 8) of the Senate version of the bill, “The Authority shall apply the Backward Integratio­n Policy in the downstream petroleum sector to encourage investment in local refining. To support this, licence to import any product shortfalls shall be assigned only to companies with active local refining licences. Import volume to be allocated between participan­ts based on their respective production in the preceding quarter.

“Such import to be done under NNPC Limited Direct Sale/ Direct Purchase ( DSDP) scheme. To safeguard the health of Nigerians, imported petroleum products shall conform to the Afri- 5 specificat­ion ( 50ppm sulphur) as per the ECOWAS declaratio­n of February 2020 on adoption of the Afri- Fuels Roadmap.”

Some industry stakeholde­rs, who spoke with The Guardian noted that the developmen­t, though encourages local developmen­t, may force existing players out of the market leaving a monopolist­ic market for the national oil company and big refiners.

Read the remaining part of this story on www. guardian. ng

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