NNPC Fuel Price Fixing: A regulatory capacity gap in Nigeria’s petroleum industry

Abubakar A. Nuhu-Koko, a researcher in petroleum policy and economics, is founder and pioneer executive director, The Shehu Shagari World Institute for Leadership and Good Governance, Sokoto, Nigeria. He can be reached on +234 706 330 6887 or aanuhukoko4000@gmail.com

For instance, there was once upon a time when both the operational segment of the industry as represented by the then Nigerian National Petroleum Corporation (NNPC), which has now assumed a new corporate name, Nigerian National Petroleum Company Limited, and the regulatory arm of the industry, the Department of Petroleum Resources (DPR), were embedded in the NNPC, with the NNPC being the  dominant power and financier of the DPR.

Even when the two were later unbundled in the 1988 reform of the NNPC, the reform was reduced to just a mere symbolic action as the then NNPC still controlled and dominated  whatever happens in the industry.

Furthermore, it seems that even with the latest development and the coming into effect of the Petroleum Industry Act (PIA, 2021) which further unbundled the NNPC and established two independent regulatory authorities for the industry, the NNPC Ltd is still asserting its traditional dominance in the NPI and not yielding to the new industry desired corporate organisational, regulatory, governance and institutional framework.

For instance, Mele Kyari, the chief executive officer of NNPC Ltd, is still more powerful than the combined powers of the two chief executive officers of the two independent regulatory entities established for the industry by the Petroleum Industry Act (PIA 2021). The PIA (2021) seeks to  provide a legal, governance, regulatory and fiscal framework for the Nigerian Petroleum Industry (NPI).

During the immediate past government of former President Muhammadu Buhari (PMB) which saw to the PIA Act (2021) coming into being, the CEO of NNPC Limited, even though President Buhari doubled as the minister of petroleum resources and assisted by a minister of state, still took on and played the combined roles of the minister of petroleum resources, the regulators and as well as the leading operator within the NPI, to the extent that the industry suffered its worst operational performance since it came into being in 1956.

It seems the same scenario is being repeated or emerging with the coming on board of President Bola Ahmed Tinubu’s (PBAT) administration as recently as May 29th, 2023. PBAT’s fuel subsidy policy change pronouncement during his inaugural speech on May 29th, 2023 triggered immediate response and reaction simultaneously by the petroleum marketers and the NNPC Limited, respectively, barely 24 hours after the policy pronouncement was made.

The petroleum products marketers either shutdown their petrol filling stations to create artificial scarcity in order to make supernormal profits (profiteering) later on, or opened and operated their filling stations but with hiked prices ranging from N400/litre to well over N450/litre.

As if this was not provocative enough by the marketers, NNPC Limited released a new pricing template with an outrageous 300 percent increment in the prices of products. This new price template is to be applied in all its retail filling stations across the major towns and cities across the country.

All these flurry of activities were as a result of the policy pronouncement made by PBAT on the issue of ending the fuel subsidy regime by his administration.

The problem with the action of the management of the NNPC Limited by the immediate release of a new fuel price template is that it defied or violated the 2023 Appropriation Act that set the effective termination of fuel subsidy regime as June 30th, 2023.

The action is illegal; more especially as the nation has been constantly reminded by Mele Kyari, the chief executive officer of NNPC Limited, that the same NNPC Limited is a fully privatised limited liability entity.

I believe that the PBAT administration needs to put its foot down on this flagrant usurpation of power and distortion of the regulatory framework and processes by NNPC Limited. And Mele Kyari, CEO of the now limited liability company, NNPCL, should also be reminded that under the 1999 Nigerian Constitution (as amended) and the extant laws enacted by the National Assembly, no private limited liability company has the power and right to assume and or usurp the duties and responsibilities vested upon the federal government of Nigeria.

Therefore, one can question why should the Presidency, the Ministry of Petroleum Resources and the Downstream regulator (i.e. Midstream and Downstream Petroleum Regulatory Agency –  MDPRA) with the statutory responsibility for oversight of the Nigerian Downstream Petroleum Industry, abdicate their respective duties and responsibilities to a private limited liability company – NNPC Limited?

This question also raises other pertinent questions such as: Who speaks for and on behalf of the government regarding change in petroleum products pricing or fuel subsidies removal? Is it the Presidency, the Ministry of Petroleum Resources, the petroleum industry regulators? Or is it the privatised limited liability company – the NNPC Limited?

Furthermore, why is it that it is Mele Kyari, the group chief executive officer/group managing director (GMD) of the NNPC Limited, that is at the forefront leading the NPI team to the ongoing negotiations with the Presidency and the trade unions headed by the Nigerian Labour Congress (NLC) and the Trade Union Congress TUC) and not the the MDPRA (ie the downstream industry regulator)? That is to say, why is MDPRA being made to play second fiddle in the whole affairs that it ought to be leading? This is a clear indication  of regulatory gap or simply ineptitude at play.

Moreover, with whose authority did the management of the NNPC Limited authorise the release of the new pricing template and enforced its use across the nation? That is to say, was Mr. President consulted before such a major policy change was illegally implemented? Again, this would indicate the lack of executive oversight on the part of the Presidency.

Finally, who should be the guardian angel of the NIP? Should it be the NNPC Ltd, the Ministry of Petroleum Resources or the two regulatory entities of the industry? Unless these pertinent questions are addressed by both the Presidency and the National Assembly, the role NNPC Limited (a privatised limited liability company) is playing in the NIP and the larger economic policy making arena is akin to making the company the national authority; which means, invariably, state capture by NNPC Limited, the domination of public policy making arena by a privatised entity!

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