Economist Calls for NMDPRA Leadership Overhaul After PIA Failures

Kelvin Emmanuel, an economist and policy analyst, has openly criticized the leadership of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for its performance since the implementation of the Petroleum Industry Act (PIA) in March 2021. Speaking on ARISE News, Emmanuel described the agency’s actions as inefficient and failing to meet its statutory responsibilities, particularly regarding product testing and data transparency.

Emmanuel’s comments were prompted by recent reports alleging that the Dangote Refinery had imported high-sulphur petrol. He clarified that these claims were misleading, stating, “The story making headlines that Dangote imported high-sulphur petrol is not true. What actually happened was that Dangote imported a cargo of intermediate feedstock, which is a standard industry practice across countries like Malaysia, Singapore, China, India, the US, the UK, Saudi Arabia, and the UAE.”

The economist highlighted that the NMDPRA has not conducted proper testing of petroleum products as mandated by the PIA. He emphasized that the regulator should have tested products in its laboratory as required under sections 29 to 52 of the act, which stipulate verification of sulphur limits and distillation levels. Emmanuel pointed out, “Unfortunately, NMDPRA has no lab.”

He praised the Dangote Refinery for meeting international standards, noting that it recently exported petrol to the United States with a sulphur level of 36 parts per million (ppm), which is below Nigeria’s limit of 50 ppm. “That shows the refinery is producing products of even higher quality than Nigeria’s specification,” he said.

NUPRC Achievements Compared to NMDPRA

In contrast to the NMDPRA, Emmanuel commended the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for its accomplishments since the PIA’s implementation. “NUPRC has made remarkable progress,” he stated, highlighting that it has helped Nigeria recover from producing less than one million barrels per day in 2021 to recently meeting and even exceeding its OPEC quota.

According to Emmanuel, the NUPRC has expanded Nigeria’s proven and probable reserves by engaging consultants for seismic data analysis of offshore acreage, thereby reducing the number of dry wells. He also acknowledged the commission’s efforts in host community development and data transparency, specifically mentioning the Host Communities Development Trust and a hydrocarbon accounting framework that allows real-time data on production.

Despite these successes, he expressed concern over a recent policy transferring royalty collection to the Federal Inland Revenue Service (FIRS). “I disagree with the new policy that moves royalty collection to the Federal Inland Revenue Service because the NUPRC has the technical expertise to calculate royalties based on volume, depth, and price,” he explained.

Emmanuel further discussed Nigeria’s competitiveness in the oil and gas sector, pointing out that while production levels have improved, attracting investment remains a significant challenge. “In the last three months, Nigeria has reached its OPEC quota of 1.5 million barrels per day. But the challenge is increasing technical allowance rates to produce more barrels,” he noted.

He warned that Nigeria’s petroleum fiscal terms are becoming less attractive compared to other African producers. Nations like Senegal, Uganda, Cameroon, Niger, and Namibia are ramping up production, and the cost of capital in Nigeria is high. “Lenders add a country risk premium of 3–4 percent on top of standard rates, which makes it difficult for companies to achieve returns comparable to peers elsewhere,” he said.

Emmanuel attributed these challenges to macroeconomic instability rather than regulatory inefficiency at the NUPRC. “This is not the fault of NUPRC but of the Central Bank and fiscal authorities. Inflation must be reduced so that borrowing costs can fall, making the industry more competitive,” he added.

Call for Leadership Change at NMDPRA

Criticism of the NMDPRA extended to its clarity of mandate. Emmanuel remarked, “NUPRC has done far better in operationalising the PIA. But NMDPRA still lacks clarity in its mandate and efficiency.” He pointed out that the authority cannot accurately inform Nigerians about daily petrol consumption, stating, “The figure of 50 million litres per day is not based on empirical evidence but on projections.”

He emphasized that the PIA requires NMDPRA to have a standard laboratory for testing petroleum products, including sulphur limits, octane ratings, and density, yet it currently outsources these tests to third parties, raising integrity concerns. “If the regulator cannot provide empirical consumption data, how can the government or investors plan accurately? This lack of data discourages investment and shows that NMDPRA’s leadership has failed,” he said.

Emmanuel urged President Bola Tinubu to consider replacing the current leadership of NMDPRA. “I think the president should consider replacing the current leadership of NMDPRA. It has performed very poorly since the PIA was signed,” he stated.

Offering broader advice, Emmanuel suggested that the government reassess Nigeria’s relationship with OPEC. “If I were advising the president, I would tell him to reassess Nigeria’s relationship with OPEC. As Nigeria transitions from being a crude exporter to a net exporter of refined products, there is a need to delink domestic refinery supply from OPEC production quotas,” he said.

He noted that Dangote Refinery spends approximately $650 million monthly importing crude and questioned whether remaining under OPEC’s current quota system is in Nigeria’s best interests. When asked if he specifically recommended leadership changes at both regulatory agencies, Emmanuel replied, “I will keep my finger to my left hand, but I would ask the president to take NMDPRA leadership out. It has performed very poorly since the PIA was signed.”