Features/Spotlight

Mainstreaming RMAFC into PIA implementation

Supreme Desk
30 July 2022 9:25 PM GMT
Mainstreaming RMAFC into PIA implementation
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Nwagbara said that with the creation of the host community fund, it is expected that there will be reduced hostilities in the oil producing areas.

As the implementation of the Petroleum Industry Act (PIA), 2021 gathers momentum, some institutions of government have started to critique the law, with the view of exploring how best to implement it for the overall benefit of the nation.

One of the institutions, the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC), recently organised a retreat with the aim of engaging various stakeholders to address some issues in the PIA in order to ensure smooth implementation and optimise the flow of revenues into the Federation Account.

At the end of the retreat on the PIA implementation in Uyo, the Commission decried the obvious neglect of its critical roles in the implementation of the law.

It observed that there are some sections of the PIA that are inconsistent with the provisions of relevant sections of the constitution.

It identified the inconsistency in the provisions of Section 24 (4)-(5) of the PIA, 2021 which stipulates the remittance of operating surplus of Nigerian Upstream Petroleum Regulatory Commission (NUPRC) into Consolidated Revenue Fund, while the Commission itself is being funded from the Federation Account.

The Commission made it clear that its role as the revenue mobilising institution of the nation was not properly considered in the enactment of the Act.

This was a major point raised in the communique issued at the end of the retreat that brought together experts and stakeholders to brainstorm on the Commission's roles in the implementation of the Act.

In the communique signed by the Acting Chairman of RMAFC, Mr Umaru Abdullahi, the Commission said there was need for a second look at the Act to ensure productive implementation.

The Commission noted that its cardinal role of mobilising revenue into the Federation Account needed to be defined in the Act to ensure efficiency.

"Urgent measures should be taken to address sections of the Act that are inconsistent with the constitution.

"The measures can come in the form of judicial interpretation or legislative actions," it said.

It further stated that the operating surpluses from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) should be remitted into the Federation Account.

"Such operating surpluses should not go into the Consolidated Revenue Account as currently provided in the PIA, 2021," it said.

The Commission urged governments at all levels to collaborate towards tackling insecurity in the country to make the nation attractive to investors.

It also said that the shareholding of the NNPC Ltd should be clearly defined to reflect the three tiers of government.

It added that the existing collaboration between the FIRS and the RMAFC should be sustained to achieve the realisation of the new tax regimes in the PIA.

"There should be stringent operational policy regime to enable the nation to achieve and sustain the expected increase in revenue earnings under the PIA.''

However, the participants agreed that it is still too early to gauge the exact impact of the PIA on the federation revenue, but careful monitoring of its implementation is required so that steps can be taken in time to mitigate any adverse fall outs.

RMAFC commended the President Muhammadu Buhari-led government for enacting the Act after several years of procrastination.

Gov. Udom Emmanuel of Akwa Ibom, who spoke at the opening ceremony, renewed calls for alternative sources of revenue for the nation, stressing that diversification will save Nigeria's economy from collapse.

Represented by his deputy, Mr Moses Ekpo, the governor said that the country's overdependence on petroleum revenue had become counterproductive.

He said that investing in agriculture, small and medium scale enterprises, aviation and tourism would provide lifelines for the nation's economy.

Emmanuel said that the search for alternative energy sources was already having adverse effect on oil.

"The world is already thinking towards other sources of power. As a nation, we should begin to explore alternative sources of revenue.

"We have to urgently diversify our economy and be less dependent on oil. The industrialised nations are already looking at alternatives," he said.

The governor further stated that Nigeria should determine how the decentralisation of the oil industry would benefit the Federation Account and the host communities.

Acting Chairman of RMAFC, Abdullahi, described the oil industry as a critical part of the nation's economy.

He said that although the industry contributed less than 10 per cent to the country's GDP, it accounted for over 80 per cent of nation's foreign earnings.

"So any adverse change in the industry will have a major and long term impact on federation revenue.

"This is perhaps the reason successive governments have continued to give attention to the sector," he said.

Delivering a lecture, entitled: "Petroleum Industry Act 2021 and Its Impact on Federation Revenue," Mr Uche Nwagbara, a Director in RMAFC, said the PIA would promote efficiency in the sector.

Nwagbara who listed other benefits of the PIA to include: proper sector regulation and host community development, said that the Act was a good omen to the nation.

He noted that with the PIA, 2021, undue bureaucratic bottlenecks is removed by reducing time for approval of licences for new operators at the upstream, midstream, and downstream segments of the sector to a maximum of 90 days.

According to him, with the enactment of the Petroleum Industry Act, the sector is expected to attract more investors.

He also opined that the PIA envisages expansion of the sector to make it more profitable for the benefit of Nigerians and investors alike.

Nwagbara said that in the long term it is expected that government revenues will definitely increase.

He said that the increased revenue would be used to finance critical government projects like transportation infrastructure, expansion of electricity generation and distribution, education, healthcare among others.

Nwagbara said that with the creation of the host community fund, it is expected that there will be reduced hostilities in the oil producing areas.

He said that this will lead to improved crude oil and gas production and increase in the federation revenue.

All in all, he said that the outcomes will be based on how the Petroleum Industry Act is implemented.

Mr Abdul Muhammad, in his presentation entitled: "Legal and Constitutional Issues in PIA Implementation,'' said the PIA is challenged by implementation issues regarding fiscal federalism.

Muhammad said the PIA was enacted to reduce the bureaucratic bottleneck associated with the management of Nigeria's oil and gas sector.

According to him, the Act will create efficient and effective governing institution, with clear and separate roles for the petroleum industry.

"The Act when fully implemented will establish a framework for the creation of a commercial oriented and profit-driven national petroleum company.

"Promote transparency, good governance and accountability in the administration of the petroleum resources of Nigeria.

"The PIA, 2021 will foster a business environment conducive for petroleum operations and deepen local content practice in Nigeria oil and gas industry.

"The Host Communities Development Trust Fund is the most laudable innovation in the Act, this will bring hostilities to the barest minimum if not eliminated,'' Muhammad said.

Indeed, the driving force of the Act, is to ensure national prosperity and peace in the oil producing communities.

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