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  • Oil & Gas - News
  • Updated: June 22, 2023

FG, Legal Council Deliberate On Implementation Of Fuel Subsidy Removal, PIA Act

FG, Legal Council Deliberate On Implementation Of Fuel Subsi

The Federal Government met with the General Counsel and Legal Advisers' Forum of the Oil Sector's Mid and Downstream Operators on Wednesday to discuss the smooth implementation of fuel subsidy removal and other provisions of the Petroleum Industry Act 2021.

Officials from the Nigeria Midstream and Downstream Petroleum Regulatory Authority met with legal counsels from the oil and gas sector in Abuja, where they addressed, among other things, measures needed for the successful implementation of the PIA in a deregulated market.

"The purpose of this engagement is to deliberate on the current legal framework for the Nigerian oil and gas industry as intended by the PIA 2021, present clarity and insights to sections of the law with diverse/different interpretations, and provide insight to the sections of the law with diverse/different interpretations."

“For example, Sections 7ee and 8d, discuss value chain propositions in a deregulated market and propose a way forward for a seamless operationalisation of the objectives of the PIA.

“We are aware that stakeholders and potential investors require regulatory clarity to drive investment decisions and guide operations to ensure compliance with legal provisions and prevent reputational damage,” the Chief Executive, NMDPRA, Farouk Ahmed, stated.

He also stated that regulatory clarity will help regulators by allowing both institutions to focus on their missions as prescribed by law for the benefit of the business and Nigerians.

Ahmed went on to say that the PIA was created to restructure the sector by drawing a line between the upstream, midstream, and downstream value chains in order to promote development and efficiency.

“To fully achieve this key objective, it also created two regulatory bodies from the erstwhile regulators with clear, distinct functions and mandates.

"The NUPRC (Nigeria Upstream Petroleum Regulatory Commission) is mandated to fully regulate all upstream operations as defined in Section 318 in the PIA.

“It is to conduct measurement of crude oil and natural gas produced for the purpose of royalty determination and ensure an arm’s length transfer to midstream operations at measurement points, while the NMDPRA on the other hand is saddled with regulating the

"Whether or not related to a lease, midstream and downstream operations," Ahmed, who was represented by NMDPRA Executive Director Ogbogu Ukoha, remarked.

He did, however, acknowledge that he was aware of the fundamental policy shift that the PIA's adoption had demanded, which may have had a considerable influence on business models.

“I dare say it might take a while to fully adjust and change our modus operandi, but you will agree with me that to meet the objectives of the PIA we require complete commitment from all stakeholders.

“To fast track the implementation of the PIA, all stakeholders must adhere to the provisions of the law and in situation where ambiguities or lacunas exists, engagements such as this forum must be encouraged to seek clarity and deepen collaboration, the NMDPRA boss stated.

Earlier, the agency's Secretary and Legal Adviser, Joseph Tolurunse, said that the NMDPRA will publish four new rules for the midstream and downstream sectors on its website.

“Currently 12 regulations has been gazetted, eight are about to be gazetted, so we finalise about 20 regulations, but four are about to be gazetted now,” he stated.

Tolorunse provided further reasons for convening the forum, stating that it was “to discuss issues pertaining to deepening industry legal practitioners’ understanding of the authority’s powers, functions, and regulations.

“Provide clarity on perceived regulatory overlaps between the authority and commission; promote the business enabling and investment opportunities derivable from the licences, permits and authorisations issued by the authority.

“And addresse legal concerns arising from the implementation of the PIA and the authority’s regulations.”

He stated that the authority's goals in establishing the forum were to improve compliance, allow for more intimate conversations with legal practitioners in the oil industry about their areas of concern, and provide proper guidance to their respective managements on the distinction between upstream, midstream, and downstream petroleum operators.

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