Criticism Mounts Against NMDPRA Leadership Over Poor Performance

Economist and policy analyst Kelvin Emmanuel has called for the dismissal of the leadership at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). His criticism stems from what he describes as a significant failure in performance and efficiency since the enactment of the Petroleum Industry Act (PIA) in 2021. Emmanuel made these remarks during an interview on ARISE News on Sunday, underscoring the regulator’s inability to fulfill its statutory obligations, particularly regarding product testing and data transparency.

Emmanuel specifically highlighted the recent allegations against Dangote Refinery concerning the importation of high-sulphur petrol. He clarified that these claims were unfounded, explaining that the refinery had actually imported a cargo of intermediate feedstock, a standard procedure in countries such as Malaysia, Singapore, China, India, the United States, the United Kingdom, Saudi Arabia, and the United Arab Emirates. “To be honest with you, I don’t think NMDPRA has done well,” he stated.

He further pointed out that the NMDPRA has not conducted adequate testing of petroleum products as required by the PIA. “The regulator should have tested the product in its lab as mandated under sections 29 to 52 of the PIA, which requires it to verify sulphur limits and distillation levels. Unfortunately, NMDPRA has no lab,” Emmanuel stated.

In contrast, Emmanuel praised the performance of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), noting its achievements since the PIA’s implementation. “NUPRC has made remarkable progress, helping Nigeria recover from producing less than one million barrels per day in 2021 to meeting and even exceeding OPEC quotas recently,” he explained. He commended the NUPRC for expanding Nigeria’s proven and probable reserves and for its commitment to host community development and data transparency.

Nevertheless, Emmanuel expressed concern over a recent policy change that transfers royalty collection to the Federal Inland Revenue Service (FIRS). He argued that the NUPRC possesses the necessary technical expertise to accurately calculate royalties based on various metrics, including volume and depth.

Addressing Nigeria’s competitiveness in the oil and gas sector, Emmanuel acknowledged that while production levels have improved, attracting investment continues to be 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 appealing compared to other African producers. “Countries like Senegal, Uganda, Cameroon, Niger, and Namibia are expanding production. The cost of capital in Nigeria is also too high, with lenders applying a country risk premium of 3–4 percent on top of standard rates,” he explained. Emmanuel attributed these challenges to macroeconomic instability, stating, “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.”

Emmanuel criticized the NMDPRA for its lack of clarity in its mandate. “NUPRC has operationalized the PIA effectively, but NMDPRA still lacks clarity and efficiency,” he said. He pointed out that the authority cannot accurately report Nigeria’s daily petrol consumption, suggesting that the widely cited figure of 50 million litres per day is not based on empirical evidence but rather projections.

“The PIA requires NMDPRA to have a standard lab to test petroleum products for sulphur limits, octane ratings, and density, but it doesn’t. It outsources tests to third parties, raising integrity concerns,” Emmanuel said. He warned that these shortcomings undermine investor confidence and hinder effective planning. “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 noted.

Emmanuel believes that the leadership of NMDPRA should be replaced. “I think the president should consider replacing the current leadership of NMDPRA,” he stated, emphasizing the need for improvement.

In his broader recommendations to the government, Emmanuel urged President Bola Tinubu 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 advised. He cited that Dangote Refinery spends approximately $650 million monthly on importing crude, questioning whether adherence to OPEC’s current quota system serves Nigeria’s interests.

When asked if he specifically recommended leadership changes at both regulatory agencies, Emmanuel was cautious. “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,” he concluded.