Separation of functions: NMDPRA moves to incorporate midstream entities
By Patience Ikpeme
The Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has ordered the immediate incorporation of all the midstream entities under his watch.
Engr. Farouk Ahmed the Chief Executive of the NMDPRA made this disclosure in Abuja on Wednesday at the Meeting with General Counsel and Legal Advisers’ Forum of Mid and Downstream Operators.
Farouk Ahmed in his address expressed support for the proper delineation of the roles of regulatory agencies in the oil and gas industry.
To keep an eye on the activities of the midstream operations which he oversees, Farouk Ahmed disclosed that he has “directed the incorporation of midstream entities before 30th August 2023 in line with Section 302 (3).
Such separation he said “will ensure a clear and distinct midstream which is one of the cardinal expectations of the Petroleum Industry Act (PIA) and provide a clearer line of sight and focus on the deepening of the midstream which is one of our core mandates”.
The PIA he said created two regulatory bodies from the erstwhile regulators with clear, distinct functions and mandates namely the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
The NMDPRA boss cautioned that “the entire industry, especially those dealing with the defunct regulators must understand that the two agencies are not the same, complementary or substitutes for each other as their functions are clear and distinct”.
The law he said “made it clear in section 25 and 48 that regulations of upstream operations and midstream/downstream operations are exclusive to NUPRC and NMDPRA respectively. NMDPRA cannot perform the NUPRC functions and vice versa”.
Beyond the restructuring of the regulatory agencies, the law, Farouk Ahmed noted “also required the restructuring of companies and operations in the oil and gas industry, while also addressing hitherto industry established norms such as what is upstream?”
The PIA he explained has removed all ambiguities surrounding midstream and upstream operations. The PIA he said “elucidates on Licenses required for export, calculation of royalties’ definition of measurement point etc.
“All these provisions in the law were not done in isolation but with a clear target; the remodelling of the oil and gas value chain in Nigeria by creating distinct midstream business entities which have previously been subsumed in Upstream operations”.
Farouk Ahmed admitted that the implementation of the PIA has necessitated a major policy shift that may have significantly impacted the NMDPRA’s business models.
“I dare say it might take a while to fully adjust and change our modus operandi but you will agree with me that to meet the objectives of the PIA we require complete commitment from all stakeholders.
“To fast track the implementation of the PIA, all stakeholders must adhere to the provisions of the law and in a situation where ambiguities or lacunas exists, engagements such as this forum must be encouraged to seek clarity and deepen collaboration” he said.
Earlier, in his opening remarks, the NMDPRA’s Secretary and Legal Adviser Dr. Joseph Tolorunse said the purpose of the Forum was to discuss issues pertaining to-deepening industry legal practitioners’ understanding of the NMDPRA’s powers, functions, and regulations.
Others include: providing clarity on perceived regulatory overlaps between the Authority and Commission; promoting the business enabling and investment opportunities derivable from the licences, permits and authorisations issued by the Authority; and addressing legal concerns arising from the implementation of the PIA and the Authority’s regulations.