Waziri Adio, the founder and executive director (ED) of Agora Policy, an Abuja-based think tank, has commended President Bola Tinubu for starting the process of curing some of the defects of the Petroleum Industry Act (PIA).
On February 18, Tinubu signed an executive order for the direct remittance of oil and gas revenues to the federation account.
As part of the directive, Tinubu instructed that the 30 percent management fee and 30 percent frontier exploration fund (FEF) be remitted directly to the federation account.
In a column on Thisday on Sunday, Adio backed the president’s reforms, saying “there are many other things to do”.
“President Bola Tinubu deserves all the accolades he is getting for starting the process of curing some of the defects of the Petroleum Industry Act (PIA) of 2021,” he said.
Adio, who is a former executive secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), also described the omnibus petroleum law as a landmark piece of legislation and a major legacy of the former President Muhammadu Buhari administration.
However, he said the PIA has gaps which should not be unexpected for a law that took more than two decades to be passed and spans 319 sections with eight schedules.
“However, some of these gaps are too significant to be glossed over. The president has earned his stripes for having the stomach to go ahead with the corrective measures outlined in the executive order unveiled last week. He should stay the course and even go farther,” Adio said.
“It is a miracle that some of the defects of the PIA were allowed to stand for this long: they are at odds with the constitution, the highest law of the land, and they unduly favour the national oil company, NNPC Limited, at the expense of its owner, the Federation.
“Pre-PIA, the relationship between the Federation and its oil corporation was bedevilled by a pronounced principal-agent problem. The agent could easily be mistaken for the principal. For all its strengths, the PIA did little to address this agent-principal problem.”
Rather, he said the law compounded the issue by granting the agent a substantial material advantage, noting that in the post-PIA era, the agent has effectively overshadowed the principal..
‘ADDITIONAL AMENDMENTS TO THE PIA STILL REQUIRED’
Adio said several other steps must be taken, including ensuring that NNPC does not devise a smart way of re-routing the untenable management fee as part of its costs.
“It is gratifying that the president has promised a comprehensive review of the PIA as well as restricting the national oil company to its commercial mandate,” he said.
“Allowing the company to posture as Nigeria’s saviour and the go-to source for off-budget expenditures enables all sorts of malfeasance.
“Anyone who understands the political economy of oil revenue in Nigeria and the place of the national oil company in it would not but marvel that Tinubu would take this necessary but bold step a year to a general election. On this issue, he and his technical team have my commendation.”
Adio said it was also strategic for the president to begin with an executive order.
Given the sums involved, he noted that no one should be under any illusion about what might have happened if there had been a direct attempt to amend the PIA — even in the most compliant of parliaments.
Adio added that now the president has revealed his position, made his case, and opted for the safest course available, the remaining steps are likely to be less difficult.
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