March 2013

Event

NNRC Business Lunch: What would the Charter say about the Petroleum Industry Bill (PIB)?

16 March 2013

Lagos-7 March- A Nigerian Natural Resource Charter (NNRC) steered business lunch on the 
Petroleum Industry Bill (PIB) brought together prominent members of the media and some members of the Expert Panel of the NNRC at the Regent Hotel in Lagos.  The event was held to evaluate the key provisions and objectives of the Petroleum Industry Bill (PIB) against best practices outlined in the Charter.

Presentations were made by two members of the Expert Panel of the NNRC- Mr. Tunji Lardner and Ms. Lois Laraba Machunga.

In his presentation, Mr. Lardner – a prominent public policy analyst and Executive Director of WANGONeT – discussed how the objectives of the present PIB addressed issues of social development, equity and transformations as proposed in Precepts 1, 2, 11 and 12 of the Charter. He analyzed how the provisions of the current PIB ensure that every transaction in the oil and gas value chain culminates into the transformation of the lives of Nigerians.  The precepts examined by Mr. Lardner suggest best practices aimed at ensuring that the greatest social and economic benefits accrue to the people of Nigeria from the exploitation of its national resources.

Ms. Lois Laraba Machunga- an industry expert and founder of JALZ Energy Ltd- benchmarked the provisions of the PIB against the guidelines in Precepts 3 to 6 of the Charter. These precepts suggest best practices for activities on the value chain regarding the fiscal regime, award of contracts, local impacts and the workings of the national oil company. Ms. Machunga highlighted issues in the PIB which do not satisfy international best practices as suggested in the Charter and which need to be addressed.

A key observation made during the presentation was that there are overarching institutional challenges in several sectors beyond the petroleum sector. For instance there is a significant gap between legislation and implementation of legislation. Should these larger systemic issues continue to go unaddressed; even the best PIB will not be a success. A lively discussion followed the experts’ presentations. From prominent bloggers to television personalities, journalists focused on strategies for a better way forward, keeping the NNRC best practices in mind.

The members of the Expert Panel of the NNRC came together in November 2012 to discuss and score the Nigerian oil and gas industry as it stands against international best practices suggested in the Charter. The result from this scoring was compiled into a report called the “Benchmarking Report”. This report was disseminated to participants at this event. The report provides a comprehensive overview of the state of the industry against international best practices. Future scoring reports will serve as a useful analytical tool in order to track the progress made in the sector. Click here to access benchmarking report: http://nigerianrc.org/content/benchmarking-exercise-report

How do you think Nigeria is doing in governing its oil and gas sector? We invite the public to provide their opinion on the state of the industry against the precepts by conducting their own scoring here: http://nigerianrc.org/have-your-say

There are more NNRC events planned for April that will facilitate discussions with stakeholders on the fuel subsidy dilemma and the local content challenge. Visit the website for updates on these events.

 

To read the presentations made at this event, click here: http://nigerianrc.org/content/expert-panel-presentations  

 

 Fuel Subsidy: New Report with Facts

A new piece of research from NOI Polls sought to find out how people buy fuel, where they buy it from and how much they buy for. The results confirm what we as Nigerians can probably guess – that people are paying more at the pump than they should. Now, for the first time, we have hard evidence to push forward the stagnant debate over subsidy removal.


This research shows that the official selling price for fuel, which is N97 per litre, is only observed in the regions that include Lagos State and Abuja. More than 40% of people surveyed purchase fuel at the official selling price in those areas. More than 38% of the people surveyed in the rest of the country pay between N110 to N120 for fuel.


Despite the fact that a majority of the geo-political zones pay more than the official selling price for fuel, there is still an aversion to complete removal of the subsidy. 59% of the people surveyed are not in support of the government’s decision to remove fuel subsidy. This is likely linked to the fact that 70% of respondents interviewed nationally say that reduction of fuel subsidy has increased spending in their households.


This research reiterates the fact that the fuel subsidy regime as it is in Nigeria is ineffective. This is demonstrated especially by the evidence that shows that many Nigerians purchase fuel at prices way above the official pump price stipulated after partial-subsidy removal by government. In effect, fuel marketers benefit twice with every Nigerian that purchases fuel above the fuel pump price of N97.


Various reasons were given by respondents as to why they think fuel is sold at different prices in different states. A majority of the people interviewed blamed the differences in fuel pump prices on lack of government monitoring of filling stations outside Abuja and Lagos. 24% attributed the variation in pricing to the cost of importing fuel, which might differ for fuel marketers. 14% blamed the price variations on greedy operators of filling stations who exploit the public by hoarding fuel. .


The reason for the continued aversion to complete removal of subsidy by respondents was not given in this research. Aversion to the subsidy could be due to a lack of or poor quality of information. It could also be due to lack of trust in government’s competence to pass on the benefits of removal back to those most affected as promised. Subsequent research by NOI Polls, expected to be undertaken on a quarterly basis for the rest of the year, will hopefully provide more insight to this. 

 

 

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