Kenna Partners, a leading law firm in Nigeria, recently hosted stakeholders in the Oil and Gas sector to an interactive executive breakfast session to discuss emerging Issues Under the Petroleum Industry Act. The meeting was organized to promote stakeholder engagement in the industry. Also, it served as a veritable platform for operators and regulators to share perspectives on the Petroleum Industry Act and chart a sustainable path for the industry.
In his opening remark, the firm’s Senior Partner, Prof. Fabian Ajogwu, OFR, SAN, commended the Federal Government for enacting the Petroleum Industry Act after decades of calls for updated legislation for the Nigerian Oil and gas industry. He spoke about the innovations of the recently enacted PIA and how important it was to have a session where stakeholders and regulators in the industry could discuss the practical issues arising from the implementation of the novel Act.
Emerging Issues Left Unaddressed by the Petroleum Industry Act
Nimma Jo-Madugu, Partner in the firm’s Energy Unit, delivered an in-depth analysis of the emerging issues that operators within the industry are facing. She discussed the problems with the dual regulatory regimes of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority. She also discussed the silence of the Petroleum Industry Act on key issues that affect the Act’s implementation. Some of the other issues Jo-Madugu discussed include the domiciliation of decommissioning and abandonment funds, the regulation of integrated operations and the implementation of the provisions on Host Communities Development Trusts.
According to Jo-Madugu: “the only way conclusive way forward is an amendment of the legislation or a judicial review. Pending either of these, directives by the President or a committee in the Senate, are arguably persuasive at best”.
On the part of the regulators, the Director at the National Oil and Gas Excellence Centre of the NUPRC, Abel Isa, elaborated on the duties and key focus areas of the Commission.
He explained that the Commission is continually working on improving the sector, evidenced by regulations released by the Commission which are already gazetted, and the draft regulations it has yet to publish but for which exposure drafts are available to the public. He also highlighted the Commission’s key focus areas which include the development of regulations, Reserves and Production Products, Deep Drilling, Host Communities Development Trust, Gas Development and Monetization, and sustainability measures such as the Environmental Remediation Fund, and the Decommissioning and Abandonment Fund, amongst others.
The operators present at the session, which largely comprised of C-suite executives, conveyed their appreciation of the Commission’s efforts as conveyed by Mr Isa. The operators voiced their concern about the increased penalties imposed by the regulators and the difficulties experienced in navigating the penalties, particularly given foreign exchange factors. They also lamented the multiple taxation they face, particularly with the Companies Income Tax, due to the existence of other sector-exclusive taxes.
The session was moderated by Eunice Alasa.
Source: Vanguard
