NNPC Limited should be a competitor and not a regulator.
The regulator is the downstream authority – The Nigerian Midstream and Downstream Petroleum Regulatory (NMDPRA) and their functions have been undermined by NNPCL’s overbearing role.
The investments held buy NNPCL (in trust for the Federal Government in entities such as the NNLG should be held by The Ministry of Finance Incorporated (“MOFI”) and the Ministry of Petroleum Incorporated (“MOPI”)
NNPCL is therefore acting over and above its mandate under the PIA.
That said, the PIA is clear about who should, and how pricing should be determined. It is not a function for the NEC or the President.
An addendum and CLARITY on the current confusion in the public space:
1. NNPC Limited should be a competitor and not a regulator.
Under the PIA, NNPC Limited is intended to function as a commercial entity and a competitor, not as a regulator. The role of regulation is assigned to distinct regulatory bodies like the NUPRC and the NMDPRA.
NNPC Limited, having transitioned from a government entity to a commercially-driven company is expected to compete in the market, focusing on profitability and efficiency, while the regulatory bodies should concern themselves with ensuring compliance with the law (PIA) and oversee activities in the sector.
2. The regulator is the downstream authority – The Nigerian Midstream and Downstream Petroleum Regulatory (NMDPRA).
In light of the recent controversy between NNPC Limited and the Dangote Refinery, it is a considered opinion that the functions of the NMDPRA have been UNDERMINED. From a legal position, and despite previous comments on same on account of their pronouncements; the NMDPRA is tasked with regulating the midstream and downstream sectors, including overseeing pricing, licensing and ensuring a level playing field for all operators including NNPC.
However, the continued involvement of NNPC Limited in negotiating prices and influencing market operations, instead of solely focusing on its commercial mandate, raises questions about whether the regulatory independence and authority of NMDPRA are not being compromised; or the entities involved in its governance themselves unable to exercise independence.
This situation blurs the lines between competition and regulation, which the PIA was designed to clearly delineate.
3. The investments held buy NNPCL (in trust for the Federal Government in entities such as the NNLG) should be held by The Ministry of Finance Incorporated (“MOFI”) and the Ministry of Petroleum Incorporated (“MOPI”)
NNPC Limited now holds and manages the government’s interests which allows it to operate as a commercial entity while remaining accountable for the government’s investments.
Basically, MOFI is responsible for holding and managing the shares of NNPC Limited itself, as shareholder, simpliciter. Then, MOFI acts as the custodian of Government’s equity in NNPC and ensures that the investments are safeguarded and managed to maximize returns. How did lays out in a legal claim is up for the imagination but reflects a clear case of a conflict of role, interest and responsibility.
Similarly, while MOPI holds some interests in NNPC, it primarily plays an oversight role by ensuring policy alignment and regulatory oversight. So, While MOFI holds the financial interest, the MOPI ensures that government policy is implemented in NNPC Limited’s operations and the sector at large.
The fact that this is not operational should concern those mandated with the governance of the transition, transformation and translation of the changes the government sought (MoF, NSA, ICPC, National Assembly and OAGF).
4. NNPCL is acting over and above its mandate under the PIA.
The operators’ role that is presently carried out by NNPC, is incongruent, to the extent that the PIA did not anticipate such, and if anything, it should be by the Authority.
5. The PIA is clear about who should, and how pricing should be determined. It is not a function for the NEC or the President.
Clearly, the role of the FEC or the President in pricing is limited to providing overarching policy direction. The PIA empowers the NMDPRA, to determine and regulate pricing mechanisms in the petroleum sector.
While the FEC or President may influence policy decisions, pricing is primarily driven by market forces, with NMDPRA ensuring compliance and oversight in accordance with the Act’s provisions. NNPC is to man those interest.
I invite the responsible agent to offer a clear-the-air comment on the submissions above.
Regards and Respect.
‘FA
END
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