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Komolafe: NUPRC Will Not Pander to Any Party, Warns Oil Producers to Meet Obligations or Lose Export License

Komolafe has said NUPRC would not favor any party, warning producers and refiners to meet obligations or lose export licenses.

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, on Tuesday said the commission will not pander to the wishes of either the oil producers or the crude refiners in the implementation of the Domestic Crude Supply Obligations (DCSO).

Komolafe stated that last night during an interview on the Arise News Prime Time, insisting that all parties to agreements must adhere to the extant directive or face sanctions.

He spoke on the heels of the arguments by oil producers and petroleum refiners around the non-compliance with the terms of the crude-for-naira policy and the DCSO enshrined in the Petroleum Industry Act (PIA) 2021, and the recent directive by the NUPRC to resolve the issues.

Komolafe stated that contrary to some assumptions, the regulator being alive to its statutory responsibilities had put in place regulations to guide the industry.

He said having put in place the regulation on domestic crude supply, it was expected that both the producers and the refiners comply with the regulation to avoid Nigeria suffering supply insecurity domestically.

However, he said the agency experienced a situation whereby the producers began to complain that the refiners were not meeting their obligation while the refiners also complained of the refusal of producers to supply them crude.

This, he explained, led to the summoning of the industry stakeholders numbering over 50 including captains of the industry, to a meeting last Saturday, where the commission’s latest directive to both producers and refiners were issued.

“So, at that meeting, we listened to both parties. Don’t forget that the regulator is quasi-judicial, listening to both parties. So, when we listened to them, the case of the producers was that the refiners often fail to meet their obligation in terms of the operational and commercial terms.

“And what are the operational terms? That is fixing the vessels when it is expected. The commercial terms, that is putting the payment instrument in place as and when required. Those elements are very important.

“Given the fact that crude is not sold on credit and there are international standards for achieving all that. Like I said, both parties have their strong points. On the part of the refiners, without feedstock, the refineries will shut down. And once the refineries shut down, what you’re going to experience is energy insecurity,” he added.

Komolafe pointed out that the federal government under President Bola Tinubu made the rule and approved that domestic crude should be made available on crude for naira basis.

He said the commission recognised that the idea behind the policy was to free the pressure on the country’s local currency, the naira, adding that the implementation of the regulation will depend on the successful implementation of the initiative.

Komolafe dispelled any form of bias or weakness on the part of NUPRC in enforcing the regulation on local crude supply obligation, saying that “is not a correct position, and so it’s important that I put things in proper perspective”.

According to him, the regulator has now listened to the complaints by both sides and has now ruled that the licensees should meet their obligations.

He explained that the regulator factors the domestic volume which is called the domestic obligation, on a monthly basis, and is made known to both the licensees and the refiners. He, however, confirmed that the failure of the licensees to meet the regulations led to the latest decision of the commission through the directives to halt the non-compliance.

Komolafe further explained: “Actually, that is what led to the decision we have just taken. Now, we have given a standard regulatory directive to the producers to meet their obligation – that is, the volumes apportioned to them for domestic use.

“And to enforce that, contrary to the assertion that maybe the regulator is unwilling to enforce that position, we have made it very clear, via a regulatory circular that we have issued to the industry, that every licensee – producing company—will meet its obligation or risk not having an export license. Without an export license, you can’t export the apportioned domestic obligation.

“So, how else do you determine the will? So, we have actually demonstrated the will. But now, with the proviso. Mind you, the job of a regulator is to uphold the rule. So, we are not trying to pander to either side.

“We are a very, very unbiased regulator. To, first of all, ensure that the producers meet their obligation, that is why we said, meet your obligation or risk not having an export license for the part that is made for domestic use.”

He said the NUPRC has also put a proviso that should there be any reason why any producer will not meet that obligation, the reason should be made known to the commission directly to the office of the chief executive.

He explained that while producers have an obligation to deliver a certain volume of crude to refineries per day, the refineries were also expected to meet their obligation of fixing the payment instrument or fixing the vessel to avoid having a distress cargo.

According to the NUPRC boss, whenever there is distress cargo, then there will be a penalty to that refinery, adding that with that, both parties recognise that the regulator is unbiased, is impartial, and is taking care of the concern of both parties.

On what the commission was doing to help meet the government’s aspiration of 2.7 million barrels per by 2027, Komolafe said the agency as a forward-looking and strategic regulator was constantly reviewing the production situation in the country.

He insisted that Nigeria’s average daily production currently stands at 1.7 million barrels per day, with an incremental 200,000 barrels per day.

He said the commission was deploying strategic approaches to increase the nation’s production, citing the agency’s routine monitoring of yhe totality of allowable, producible volume from all oil wells.

In addition to that, he recalled that during the NUPRC third anniversary in October 2024, the commission launched Project 1 million barrels additional volume.

“At that time, we were doing about 1.5 million barrels. So, today, we have gained an increment of about 200,000 barrels. Now, we are at about 1.7 million on the average million barrels.

“So, that initiative is a one-stop-shop initiative where we put all the players within the value chain to contribute, to leverage on the power of collaboration to increase the national production,” he said.

Emmanuel Addeh and Peter Uzoho

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