NNPC Ltd fuel price fixing: Regulatory capacity gab in the Nigerian petroleum industry

For quite some time, the Nigerian Petroleum Industry (NPI) had been beset with policy and regulatory confusion and muddling through; especially in its downstream subsector or segment.

For instance, there was once upon a time when both the operational segment of the industry as represented by the then Nigerian National Petroleum Corporation (NNPC) which now assumed a new corporate name, Nigerian National Petroleum Company Limited and the regulatory arm of the industry, the Department of Petroleum Resources (DPR) were all embedded in the NNPC, with the NNPC as the dominant power and financier of the DPR.

Even when the two were later unbundled in the 1988 reform of the NNPC, the reform was reduced to just a mere symbolic action as the then NNPC still controlled and dominated whatever happens in the industry.

Furthermore, it seems even the latest development with the coming into effect of the Petroleum Industry Act (PIA, 2021) which further unbundled the NNPC and established two independent regulatory authorities for the industry, the NNPC Ltd is still asserting its traditional dominance in the NPI and not yielding to the new industry desired corporate organisatiknal, regulatory, governance and institutional framework.

For instance, the Chief Executive Officer of the NNPC Ltd, Mele Kyari is still more powerful than the combined powers of the two Chief Executive Officers of the two independent regulatory entities established for the industry by the Petroleum Industry Act (PIA 2021).

The PIA (2021) seeks to provide legal, governance, regulatory and fiscal framework for the Nigerian Petroleum Industry (NPI).

During the immediate past government of former President Muhammadu Buhari (PMB) during which the PIA Act (2021) came into being, the Chief Executive Officer of the NNPC Ltd even though the President doubled as the Minister of Petroleum Resources and assisted by a Minister of State, he still played the combined roles of the Minister of Petroleum Resources, the Regulators and as well as the leading Operator within the NPI to the extent that the industry suffered its worst operational performance since it came into being in 1956.

Abubakar Atiku Nuhu-Koko

It seems the same scenario is being repeated or emerging with the coming on board of President Bola Ahmed Tinubu’s (PBAT) administration as recently as May 29th, 2023.

PBAT’s fuel subsidy policy change pronouncement during his inaugural speech on May 29th, 2023 triggered immediate response and reaction simultaneously by the Petroleum marketers and the NNPC Ltd respectively barely 24 hours after the policy pronouncement was made.

While the Petroleum products marketers either shutdown their Petroleum filling stations to create artificial scarcity in order to later on make super normal profits (profiteering) or opened and operated their filling stations but with hiked prices ranging from N400/litre to well over N450/litre.

As if this was not provocative enough by the marketers, the NNPC Ltd released a new pricing template with outrageous 300% increment of prices for products. The new price template is to be applied in all its retail filling stations across the major towns and cities across the country.

All these flurry of activities were as a result of the policy pronouncement made by PBAT on the issue of ending fuel subsidy regime by his administration.

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The problem with the action of the management of the NNPC Ltd by the immediate release of a new fuel prices template is that it defied or violated the 2023 Appropriation Act that set the effective termination of fuel subsidy regime as June 30th, 2023.

The action is illegal; more especially as the nation has been constantly reminded by the Chief Executive Officer of the NNPC Ltd, Mele Kyari that NNPC Ltd is a fully privatised limited liability entity.

I believe that Mr. Mele Kyari should also be reminded that under the 1999 Nigerian Constitution (as amended) and the extant laws enacted by the National Assembly, no private limited liability company has the power and right to assume and or usurp the duties and responsibilities vested upon the federal government of Nigeria.

Therefore, one can question why should the the Presidency, the Ministry of Petroleum Resources and the Downstream regulator (ie Midstream and Downstream Petroleum Regulatory Agency – MDPRA) – with the statutory responsibility for oversight of the Nigerian Downstream Petroleum Industry abdicates their respective duties and responsibilities to a private limited liability company – the NNPC Ltd?

This question also raises other pertinent questions such as: Who speaks for and on behalf of the government regarding change in petroleum products pricing/fuel subsidies removal? Is it the Presidency, the Ministry of Petroleum Resources? The Petroleum Industry Regulators? or the privatised limited liability company – the NNPC Ltd?

Furthermore, why is it that it is the Group Managing Director (GMD) of the NNPC Ltd, Mele Kyari that is at the forefront leading the NPI team to the ongoing negotiations with the Presidency and the trade unions headed by the Nigerian Labour Congress (NLC) and the Trade Union Congress TUC) and not the the MDPRA (ie the downstream industry regulator)?

That is to say, why is MDPRA playing a second fiddle in the whole affairs? This is an indication of regulatory gap or ineptitude at play.

Moreover, with whose authority did the management of the NNPC Ltd authorised the release of the new pricing template and enforced its use across nation? That is to say that was Mr. President consulted before such a major policy change was illegally implemented? This indicates the lack of executive oversight on the part of the Presidency.

Finally, who should be the guardian angel of the NIP? Should it be the NNPC Ltd, the Ministry of Petroleum Resources or the two regulatory entities of the industry?

Unless these pertinent questions are addressed by both the Presidency and the National Assembly, role the NNPC Ltd (a privatised limited liability company) is playing in the NIP and the larger economic policymaking arena is akin to making the company as the national authority; which means invariably, state capture by the NNPC Ltd which means the domination of public policymaking arena by the NNPC Ltd!!!

*Abubakar Atiku Nuhu-Koko*
Thursday, June 1st, 2023.

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