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  • Oil & Gas - News
  • Updated: May 09, 2023

PIA Nullifies Discretionary Award Of Oil Blocks In Nigeria

PIA Nullifies Discretionary Award Of Oil Blocks In Nigeria

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has assured the public that the Petroleum Industry Act (PIA) 2021 has completely eliminated the discretionary awarding of oil blocks to businesses and individuals in the Nigerian oil and gas sector.

The promise came from Komolafe at a press conference with media held in Houston, Texas, outside of the just finished Offshore Technology Conference (OTC).

According to him, now that the PIA is in effect, the days of awarding oil and gas licences to friends and associates as well as the presence of portfolio contractors in the Nigerian petroleum industry are long gone.

Before now, one of the issues that contributed to the collapse of the country's upstream sector was the presidents' discretionary awarding of oil blocks to family members, friends, and cronies while acting on the authority granted to them by the previous Petroleum Act and paying little attention to technical and financial competence and capacity.

Numerous indigenous Nigerian businesses have received oil blocks and marginal fields, but few have been able to advance their assets to first oil, leaving them stuck years after receiving the contracts.

However, in response to a query on the apparent return of portfolio contractors in the Nigerian oil and gas upstream industry, Komolafe said that such existed in the past since PIA does not provide for portfolio contractors that arise when assets are allocated on a discretionary basis.

“If you are talking about portfolio contractors, maybe that existed in the past and I will explain that within the precepts of the provisions of the PIA.

“Pre-PIA, you could be talking about the era of discretion. As a matter of fact, the PIA has completely nullified discretion. So post-PIA regime, there is nothing like discretion.

“So the processes and procedures are well encapsulated and well defined in the law.

“So that is the beauty of the PIA. As a matter of fact, even the regulations that are being made pursuant to the PIA take their oxygen from the PIA and are guided by the PIA.

“So whatever the commission is doing as a business enabler is anchored within the law. So the PIA does not allow for the issue of discretion.”

The PIA's concept focuses on three fundamental concerns that truly drive the whole industry: commercial opportunity, regulatory frameworks, and the business climate, according to Gabriel Aduda, Permanent Secretary, Ministry of Petroleum Resources.

He continued by saying that the present PIA administration does not engage in cronyism.

He said that concerns involving portfolio investors or the discretionary issuance of oil blocks were all things of the past now that the PIA was in place, creating investment opportunities and an enabling climate.

Since no new legislation is flawless, he acknowledged that there are still some ambiguities in the PIA that need to be clarified and that the government was resolving overlaps in the post-PIA rules being produced by the two bodies established by the Act.

“But as we implement it, we keep making adjustments here and there until we get what we want. So the investment climate has actually changed, it’s not like before.

“And that is why if you look at the current bid round that is ongoing, it is so clean, it is so transparent, everybody that wants to go and bid, there is no cronyism, there is no ‘I know this person or that person’, and it is absolutely transparent -in black and white.

“What are we doing? We are cleaning out the investment opportunities for people to be able to see that transparency has now been introduced to this thing that had before now been a mystery.”

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