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CSOs Calls For Sweeping Reforms In Nigeria’s Extractive Industry

Following the effect of the Covid-19 pandemic on the global economy and that of Nigeria in particular, a coalition of Civil Society Organisations (CSOs) has called on the Nigerian Government to urgently implement needed reforms in the country’s oil and gas sector.

In a communique jointly signed by 13 different organisations working to promote transparency and accountability in the sector, the groups observed that the immense fiscal pressure Nigeria is under as a result of low crude oil prices can only be reduced through the urgent implementation of critical reforms.

Recall that in response to the economic downturn Nigeria has implemented a few policy measures including the review of the Federal Government 2020 budget Benchmarks and cut of the overall approved appropriation Act by N1.5 trillion, in addition to announcement of fuel subsidy removal.

However, the organisations which include Nigeria Natural Resource Charter (NNRC), Budgit, Media Initiative for Transparency in Extractive Industries (MITEI), considered these measures to be inadequate, urging the federal government to take the opportunity to enforce a holistic industry reform.

To this end they recommend the privatization of the country’s four refineries in their present condition to avoid further revenue losses. “We suggest the adoption of a transparent merit-based model for privatization… We encourage the government to adopt favourable fiscal terms that bring about a renewed investors’ confidence and also help fast track the proposed 29+ refineries, which still have valid operating licenses,” the group said.

To clear the present confusion relating to fuel subsidy removal, the group also urged the government to lay out defined processes and regulatory guidelines to support the announced removal of fuel subsidy.

“These should be pushed forward and announced by the Presidency and the Minister of Petroleum Resources to give the policy an official seal of affirmation to all Nigerians that we are not in another false expedition,” the communique made available to e360 said.

Recall that the Group Managing Director of the NNPC, Mr. Mele Kyari, had on April 8, 2020 announced an end to fuel subsidy regime. But there has been no clear policy guideline in this direction since the announcement.

Consequently, to commit to the sustainability of the no-subsidy regime, the group emphasised the need to give the GMD’s policy statement legal backing either through a stand-alone legislation, or through appropriate clauses integrated into the Petroleum Industry Bill (PIB).

According to the group, there is also the need for government to transition the Petroleum Products Pricing and Regulatory Agency (PPPRA) and the Petroleum Equalisation Fund (PEF) into new roles to ensure the sustainability of the proposed ‘non-subsidy policy’. “Repeal of the PPPRA and PEF(M)B Act and transition them into efficient and competent institutions to support the reforms encapsulated in the proposed PIB are possible options to consider,” they stated.

Furthermore, to guide against exploitation of Nigerians when the downstream sector is liberalised, the CSOs urged government to prepare for a post-price regulation era by prioritizing consumer protection. “The interests of the people should not suffer exploitation in the hands of profiteering marketers. We suggest anti-trust or competition propositions using the Federal Competition and Consumer Protection Act 2019,” the group said.

With regards to the role of the National Oil Company, the CSOs advised against giving the NNPC any advantage, whether comparative or competitive, over other petroleum products marketers in terms of access to foreign exchange for products importation, to create a level playing field.

“If the NNPC must remain a player in the market, it must strive to operate under the same conditions and rules as other players in the sector regulated only by the prevailing market forces and competition,” the communique stated, adding that while the industry awaits passage of the PIB, steps should be taken to delineate the roles of policy formulation, regulation and enforcement as well as operation in the Nigerian oil and gas industry.

Other organisations which signed the communique include Civil Society Legislative Advocacy Centre (CISLAC), Women in Extractives, Connected Development (CODE) and Spaces for Change, amongst others.

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