By Gbenga Adedayo
Lack of transparency in the policies of the Nigerian National Petroleum Corporation (NNPC) is one of the major obstacles responsible for the stunted foreign investments, and which is also responsible for the slow growth in the oil and gas industry in the country.
NNPC Act empowers the corporation to engage in all commercial activities relating to the petroleum sector and to enforce all regulatory measures, including management of the upstream and downstream sub-sectors of the oil and gas industry.
Willing foreign investors are ready to invest and compete in the industry, but are discouraged by the policies and practices of the NNPC which are entangled by lack of transparency. This is more evident in its hold on regulated price of petroleum products at the downstream, which has led to unjustifiable subsidy claims that could have been invested in infrastructure.
These views were expressed recently by Brent Omdahl, Commercial Counselor at the U.S. Department of Commerce in an interview he granted to World Oil magazine.
According to him, Nigeria could attract more U.S. investment if the oil and gas sector becomes less opaque and a fuel-price peg is removed, saying, “Our investors are willing to compete on fair terms for new investments if there’s a transparent process to try to win new oil opportunities. What is difficult or a disincentive to investors is when deals are done and then the contracts are not honored.”
Omdahl said the regulated petroleum price benefits a few people while the mass of the people do not benefit, prompting him to add, “Why not open it up and let everybody benefit from it. That is money that can be used in making investments in refineries and all of a sudden you are paying less for imported fuel and your price goes down.”
Unlike the Department of Petroleum Resources (DPR) which has the statutory responsibility of ensuring compliance to petroleum laws, regulations and guidelines in the Oil and Gas Industry, the NNPC manages the affairs of the oil and gas industry.