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DMEA COMMENTARY DMEA

between three new entities, and one of these will NMDPRA, meanwhile, will oversee the tech-
Nigeria National Petroleum Co. Ltd (NNPC nical and commercial regulation of midstream
Ltd), the new commercial operator, it said. and downstream oil and gas operations. It will be
The newspaper went on to say that the legis- responsible for ensuring that infrastructure for
lation called for NNPC Ltd to be incorporated as midstream and downstream activities is devel-
a limited liability company within six months of oped and maintained in an efficient, safe and
the signing of the new law. Nigeria’s Ministry of sustainable manner. Additionally, it will advise
Petroleum Resources will consult with the Min- government agencies and other participants in
istry of Finance to determine the number and the sector on commercial matters related to tariff
nominal value of shares in the new company, and and pricing regimes.
all of these shares will be assigned to Nigeria’s
federal government, it said. Infrastructure investments
In turn, federal authorities will be respon- According to Vanguard, another Nigerian
sible for covering the costs associated with the newspaper, NMDPRA will not be the only
transformation of NNPC’s existing structures, it state agency involved with infrastructure. The
added. Additionally, the federal government will PIB also aims to establish an entity to promote
have the power to veto any proposals for sale of domestic gasification.
shares in the new entity, NNPC Ltd. This body, which will be known as the Mid-
On that note, Abuja does not appear to have stream Gas Infrastructure Fund (MGIF), will
any plans to privatise the company any time serve as a vehicle for investment in midstream
soon. Even so, Bloomberg reported that the PIB gas projects. More specifically, it will give the
did not rule out an equity sale. It said that the federal government a means of investing in pro-
legislation called for any future sale or transfer jects designed to expand domestic distribution
of shares to be carried out at a fair market value and consumption of gas. Since it will be able to
and via an “open, transparent and competitive buy into schemes that are led by private com-
bidding process.” panies, officials in Abuja hope it will encourage
The bill also makes other provisions for trans- private-sector investment in gas transportation
parency, the news agency added. Specifically, it and distribution infrastructure.
calls for NNPC Ltd to be subject to an annual Vanguard did not say how much MGIF might
audit by an independent firm. (This definitely be able to contribute to midstream gas projects.
represents a departure from the past, as NNPC It did report, though, that the PIB called for the
has been notorious for its questionable account- new entity to receive up to 1% of the proceeds of
ing practices and lack of transparency.) a new levy on wholesale petroleum product and
gas sales within Nigeria. Additionally, it cited the
Upstream, midstream and downstream legislation as saying that most of MGIF’s funding
Meanwhile, Punch said, the other two new would come from “funds and grants accruing
bodies – the Nigerian Upstream Regulatory from multilateral agencies, bilateral institutions
Commission (NURC) and the Nigerian Mid- and related sources.”
stream and Downstream Petroleum Regulatory This new entity will apparently have some
Authority (NMDPRA) – will be government measure of independence from Abuja. It will
agencies. not report directly to any particular state agency,
According to the legislation, NURC will be and its day-to-day operations will be over-
responsible for the technical and commercial seen by an executive director who need not be
regulation of upstream oil and gas operations. a government official. Nevertheless, its gov-
It will also be tasked with ensuring compliance erning council will be chaired by the Minister
with all relevant laws and regulations covering of Petroleum Resources and will also include
upstream activities, with optimising government high-ranking representatives of the Central
revenues from oil and gas projects and with min- Bank of Nigeria (CBN), the Ministry of Finance
imising waste. and NMDPRA.™

Week 40 08•October•2020 www. NEWSBASE .com P5