‘Urgent, holistic legal reform needed in Nigeria’s oil, gas sector’
A Professor of Law and Director, Institute for Oil, Gas, Energy, Environment and Sustainable Development (OGEES Institute), Afe Babalola University, Ado Ekiti, Damilola Olawuyi has said most of the legal framework in the nation’s oil and gas sector require urgent and holistic reform to enable the sector to deliver maximum benefits.
Making reference to the Pipelines Act, which remained without review for over 60 years, Olawuyi told The Guardian the development exemplifies the need for the reform process to bring several of the nation’s archaic laws in the industry in line with current realities and international best practices.
The Guardian had for instance, reported that about 63 years after the Oil Pipelines Act came into force, the country charges a meagre N50 for licences to operate pipeline networks worth $4.6 million for one kilometre.
Section 31 (Sub-section One to Six) of the Act states: “The applicant for a permit to survey shall pay a fee of twenty naira upon submitting his application, and a fee of fifty naira upon the grant of such permit. The applicant for a licence shall pay a fifty-naira fee upon the submission of his application, and a fee of N200 upon the grant of such licence. The holder of a permit shall pay a fee of N50 in respect of each variation of such permit. The holder of a licence shall pay a fee of N200 in respect of each variation of such licence. An annual fee shall be paid on each licence of twenty naira per mile (1.6km) of the length of the pipeline, subject to a minimum of N200. The holder of a licence shall pay a fee of N100 upon submitting his application for a restriction order under Section 12 of this act, and a fee of such amount as the minister may determine, not exceeding N400 on such order being made.”
Olawuyi noted that “Failure to update the Act means that pipeline licenses are processed and granted at the cost of N20. This is not only unrealistic, but also quite lamentable given the quantum of revenue that is being lost from not levying the appropriate fees.”
He insisted that by appraising and updating all archaic laws, including the Pipelines Act, “we can significantly address inconsistencies and block avenues for resource waste and loss in this critically important industry.”
Speaking on existing oil projects without Final Investment Decisions, the don noted that while most of the projects are attractive from economic and business standpoints, issues of insecurity; lack of modern physical and associated infrastructure; and the generally uncertain investment climate in the country may continue to stifle FDI inflows.
“It is commendable that the government has stepped up its foreign investment drive over the last years. However, for these to yield positive and meaningful results for the oil and gas industry, the prevailing structural defects to long term FDIs will have to be meticulously addressed,” Olawuyi said.
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