The Institute of Directors (IoD) on Monday highlighted important areas to be reviewed by the authorities to engender the successful implementation of the Petroleum Industry Act (PIA).
Dr Ije Jidenma, President, IoD, gave the advice in a policy paper titled: “Making the Petroleum Industry Act work: A Position Paper,” recently in Lagos.
Jidenma said that while there was no such thing as a perfect piece of legislation, recent events pointed to implementation ‘headwinds.’
She stressed that Nigeria in its implementation of the PIA must send the right signals consistent with the outlined noble objectives.
Jidenma outlined the institute’s concern with its implementation to include stalled downstream deregulation, implementation complexities, need for gas investment incentivising, and Environmental, Social and Governance (ESG) issues.
According to her, the Federal Government’s decision to stall the Act raised further questions on section 53 (7) which requires “NNPC Ltd and any of its subsidiaries to conduct their affairs on a commercial basis in a profitable and efficient manner without recourse to government funds.”
This, she said, was highlighted in view of the sum of $341 billion (or N1.43 trillion) which was reported to had been spent in 2021 on petroleum subsidy.
Jidenma tasked government to create an enabling environment that would make implementation of deregulation easier and readily acceptable.
“Pending their full privatisation, government must fast-track the ongoing full rehabilitation of refineries to ensure that the import freight element in the price of product is minimised;
“Government should review the current fuel pricing mechanism and must as a matter of urgency, work on removing all the inefficiencies and distortions that are negatively impacting the landing costs of products,” she said.
She noted that feedback from the business community suggested that some aspects of the Act might prove difficult to implement in practice because of inherent complications.
Jidenma cited two examples that would suffice as: the hydrocarbon tax and Company Income Tax (CIT) overlap and conversion from existing Oil Prospecting License (OPLs) to the new Petroleum Prospecting License (PPLs).
She noted that while section 302 (1) states that CIT shall apply to companies engaged in petroleum operations (upstream, midstream and downstream), section 260 (1) states that Hydrocarbon Tax shall apply to companies upstream: onshore, shallow water and deep offshore.