Managing Director of Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe on Thursday warned the 10th House of Representatives to jettison the bill seeking to establish national commission for decommissioning of oil and gas installations under the Presidency.

Komolafe gave the charge in Abuja during the public hearing on the bill which empowers the proposed Commission to coordinate decommissioning efforts as part of Nigeria’s environmental diplomacy strategy, ensure autonomy in decision making management and protect national interests through sustainable resource management, environmental restoration and international collaboration’, organised by House Committee on Petroleum Resources (Upstream), chaired by Hon. Alhassan Ado-Doguwa.

While noting that the initiative was Komolafe who was represented by Emmanuel Macjaja argued that the approach adopted in the Petroleum Industry Act, 2021 was to “ensure technical coherence, economic efficiency, and alignment with both the PlA 2021 and global standards, thereby safeguarding Nigeria’s interests in the oil and gas sector and promoting the Federal Government’s ease of doing business initiatives.”

He, however, warned that creating a standalone agency will lead to duplication of existing functions, increase regulatory fragmentation, and impose unnecessary financial and institutional burdens on the Federal Government.

“In Nigeria, where coordination challenges already exist across MDAs, the introduction of another commission would only further complicate effective governance,” he warned.

Speaking further, Komolafe informed the Committee that Section 233 of the PIA which provides that fund should be set aside for decommissioning and abandonment of oil facilities, “neither belong to the operating companies nor to the government.

 

“There is dire need for public sensitisation and enlightenment in this regard. With regards to the proposed bill the following are relevant and help to highlight why this provision needs to be properly understood.

“Government’s silent majority share: Because NNPC Ltd participates in virtually every joint-venture (JV) and all production sharing contracts (PSCs), the Federal Government ultimately shoulders at least 60% of the national D&A bill, and 100% in pure PSCs. Thus, every amount an operator lodges in the Fund implies a larger contingent liability for government, via NNPC Ltd.

“Escrow-style domiciliation: Section 233 of the PIA 2021 requires every licensee/lessee to place its annual D&A contribution in an escrow account with a financial institution. The money is ring-fenced: it is not company revenue, but it is also not government revenue as it is dedicated for only the execution of approved decommissioning
programmes.

“Public-finance implications: Up-front cash-flow strain: Government must match or exceed industry contributions by meeting its own pro-rata share through equity contributions via NNPC Ltd to keep the fund solvent.

 

“The D&A Fund is already a significant contingent liability for the Federal Government. Creating a standalone Decommissioning Commission would compound, not solve, that liability by adding recurring administrative costs and diffusing accountability.”

While delivering the keynote address, Speaker Abbas Tajudeen represented by the Majority Leader, Hon. Julius Ihonvbere expressed optimism that the proposed bill seeks to: “protect our vulnerable communities that have been devastated in several ways, not just in the Niger Delta in the Middle Belt in the Northeast, where environmental degradation and abandonment of waste products and other outdated technologies to litter the entire environment.

“Is there any organization or agency in Nigeria, as we speak today that holistically and comprehensively addresses the functions that this agency will provide. I would want to begin by appealing that we’re at a level in this country now where we must abandon self interest, where we must abandon narrow and selfish interests.”

In his address, Chairman, House Committee on Petroleum Resources (Upstream), Hon. Alhassan Ado-Doguwa described the bill as a “significant legislative proposal because it addresses matters that directly affect the welfare of our people, the protection of our environment, and the livelihood of host communities within oil-producing regions.

“It reflects Parliament’s commitment to ensuring that the growth of the oil and gas sector aligns with environmental responsibility and sustainable community development.”

While noting that Nigeria’s petroleum industry has continued to face challenges in the decommissioning and abandonment of oil and gas facilities, over the years, he lamented that “these challenges have had environmental, economic, and social impacts, particularly on host communities.

“This therefore calls for a closer look at whether the existing regulatory frameworks are sufficient or need to be strengthened, and whether establishing a dedicated body, such as the proposed Commission, would better serve national interests.

“It is, however, important to note that the Petroleum Industry Act already provides for decommissioning and abandonment under Sections 232 and 233, assigning specific responsibilities to the NUPRC and MDPRA, and also establishing a fund to ensure these activities are properly planned and financed in line with regulations.

 

“It is for this reason that we have invited key stakeholders – including the Ministry of Petroleum Resources, the Federal Ministry of Environment, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the National Oil Spill Detection and Response Agency (NOSDRA), the National Environmental Standards and Regulations Enforcement Agency (NESREA), as well as industry operators, civil society groups, and academia, to share their informed perspectives.

“We encourage all participants to engage constructively and present evidence-based submissions that can help us shape a balanced, effective, and sustainable framework for managing decommissioning activities in the oil and gas sector.”

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