PricewaterhouseCoopers (PwC) has identified over- regulation, insecurity and vandalism as the main problems of Nigeria’s oil and gas industry. In its latest report, “Nigeria’s Refining Revolution”, the company called on the government to tackle these and others issues in order to place the industry in the path of sustainable development.
“The Nigerian oil and gas industry is heavily regulated and comprises multiple regulators including the Ministry of Petroleum Resources (MPR), (NNPC) and Department of Petroleum Resources (DPR).
“The effectiveness of these bodies in the refining sector has remained debatable. Delays in the passage of the Petroleum Industry Bill (PIB) and full deregulation of the downstream sector are major factors which have consistently dampened investor’s confidence in the potential of the refining sector.
“According to the Nigerian Extractive Industries Transparency Initiative (NEITI), Nigeria loses an estimated $15 billion yearly in foreign investments due to regulatory uncertainty. Our Assessment Effective Regulations will be a key driver for growth within the refining sector and therefore bold & decisive reforms are necessary. Regulations are pertinent to driving confidence within the refining sector and boosting attractiveness to potential investors.
“Full deregulation of the downstream sector remains the most glaring to boost the attractiveness of the sector. Removal of price caps on PMS is the key trigger. The current institutional construct and policies need to be rationalized and reconstituted to drive efficiency of the sector.
“Setting up institutions that will be responsible for the co-ordination and regulation of all commercial activities relating to the downstream sector of the oil and gas industry and the regulation of transportation, transmission/distribution and marketing of downstream products will help drive efficiency and healthy competition within the sector.
“Policies which foster legal bunkering, access to feedstock for local refiners and export of refined products into the West African sub-region also need to be established. Increasing refining capacity remains crucial to the government’s plans for the downstream sector.’’