REGULATING GAS SUPPLY AND ELECTRICITY – ISSUES IN RESOLVING POWER SHORTAGES IN NIGERIA

and electricity markets in both regulatory and operational dimensions in the manner that it now operates, to date.

Where are we in Nigeria, by comparison? The development of the regulatory framework for the gas – within the petroleum - sector in Nigeria has not evolved with the desired importance or even urgency. The key legislation regulating the oil and gas industry includes the Petroleum Act 1969, and all amendments, subsidiary legislation, regulations and instruments; the Nigerian Oil and Gas Industry Content Development Act 2010, the Oil Pipelines Act 1965; the Oil in Navigable Waters Act 1968; the Associated Gas Reinjection Act 1979; the Petroleum Profits Tax Act 1958 and the Environmental Impact Assessment Act 1992. The Federal Ministry of Petroleum Resources has primary supervisory oversight over the oil and gas industry. It is responsible for formulation, implementation and co-ordination of government policy for the industry. It also exercises its regulatory functions through the Department of Petroleum Resources (DPR). which is responsible for the day-to-day monitoring of the petroleum industry and for supervising all petroleum industry operations. Within the Ministry, the Department of Gas Resources (DGR), established under the National Gas Supply and Pricing Regulations is responsible for regulating the gas sector. All this space is heavily dominated by a crude oil theme. 2008 produced the National Gas Policy comprising, largely a downstream gas policy and giving rise to the much vaunted National Gas Master Plan. Emerging in a manner that portended hope, these fall woefully short when placed beside the examined comparisons.

The Federal Government of Nigeria's response, hitherto, has been captured in provisions set out in the much debated draft Petroleum Industry Bill (PIB), which, when enacted should improve the situation. An attempt to amalgamate under a single legislation, the various legislative, regulatory and fiscal policies, instruments, structures and institutions that govern the petroleum industry as a whole, it falls into the continuing error of seeking to administer gas as an appendage to petroleum. There are a number of reasons why this is wrong. It is common knowledge that Nigeria has the 7th largest Gas Reserves in the world in the region of 187 Trillion Cubic Feet of gas. A large proportion of this is largely unexploited. 90 Trillion Cubic feet of this is unassociated gas, namely gas isolated in natural gas fields alone. This is a multi-billion dollar industry of immense potential. To continue to consider gas an adjunct product to crude oil should present real concerns. The draft PIB contains, for gas, a number of key changes to the management of the country’s vast resources. These include as part of the proposed unbundling of NNPC, hiving off the National Gas Company; carving out natural gas from the exploitation and exploration of crude such that a distinct licensing and authorization regime is put in place. All these are to be achieved by the enactment of separate legislation including a Downstream Gas Act (DGA). The DGA would establish a proposed Gas Regulatory Commission with functions including regulating the price of gas downstream as well as monitoring and imposing pricing restrictions on licensees.

Essentially therefore, with Nigeria, the landscape is still markedly different. The electricity market is really at this stage beset with so much fluidity if not uncertainty. This is largely because although the reform underpinned by the Electric Power Sector Reform Act 2005 is in advanced stages of implementation, its effect on the provision of regular electricity is still delivering limited visible impact especially the transition from public owned to private, privatization-driven ownership and control of electricity assets. The merging of the regulation of gas and electricity has occurred in other jurisdictions after years of sustained effort culminating in virtually settled markets emerging from those prolonged periods of high resource commitment. These features are decidedly absent here. Which is why, as inherently beneficial as a joint regulatory approach would be, this will be very premature.

Dr Amadi has, in dealing with a slightly narrower feature of conjoined regulation, flagged a situation of huge national significance. Critically, the development of the Gas Sector, given its staggering potential as a huge revenue earner, has been slower than would have been desirable. The causes of this situation are numerous, most of all Nigeria’s historical dependence on crude oil alone and the effect of creating the one-dimensional economy that we have operated for the best part of the last century. The enormity of gas as a significant contributor to the country’s revenue has been under valued for so long that, fundamentally, this approach must change. And this must begin to happen so much sooner than later.

Andrew Obinna Onyearu, Lawyer and Energy Consultant writes from Abuja