The implementation of the Petroleum Industry Act (PIA) 2021 has a significant implication for the revenue mobilization and fiscal roles of the Nigerian government, including a cut in revenue by the Nigerian National Petroleum Company Ltd (NNPCL).
This was contained in a Policy Brief on Mainstreaming Fiscal Responsibility in Nigeria’s Petroleum Sector, unveiled in Abuja on Monday by OrderPaper, an agency that seeks to improve revenue remittance and transparency in the oil and gas sector.
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The report read thus: “Although the PIA has several good initiatives, there are drawbacks related to revenue mobilization into the central pool of government.
“The law has serious implications for the public finances of the federation. For instance, the reduction in remittance of collectables by the NNPC Ltd will result in a considerable reduction in revenues available for service delivery by the government.”
Speaking, the Executive Director OrderPaper, Oke Epia, said the report was realized through the United States Agency for International Development (USAID) supported Growth Initiatives for Fiscal Transparency (GIFT) Nigeria Project.
Epia said the PIA was supposed to reform administration and revenue remittance but that has not happened, noting that, “These are the issues that led GIFT Nigeria to commission the study.”
He also gave instances in the PIA where the Fiscal Responsibility Commission (FRC) or other monitoring agencies cannot checkmate NNPCL, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
In his review of the policy brief, an oil and gas governance consultant, Henry Adigun, called on NNPCL to improve transparency, saying “NNPCL has improved disclosure but has not improved transparency.
“We can commend the NNPCL for moving from being opaque but they have to move to become clearer.”
He said the PIA was solely drafted by NNPCL and that the immediate amendment was not right, causing foreign investors to divest their assets.
“When you amend a law immediately after you sign it, you send a wrong signal to investors,” Adigun noted as he queried the huge employee burden of NNPCl with over 3,200 staff doing nothing in the moribund refineries.