Reps raise the alarm over breach of PIA decommissioning rules

File Copy: House of Representatives

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The House of Representatives Ad-hoc Committee on Decommissioning and Abandonment in the oil sector has attributed the non-compliance with provisions of the Petroleum Industry Act and other extant laws by the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority as a worrisome development in the sector.

The committee stated this on Monday, following the submissions made by representatives of the two agencies at the resumed investigations held in Abuja.

The Chief Executive, NUPRC, Farouk Ahmed, was represented by the Executive Commissioner, Development and Production Engineering, Enorense Amadasu, while the Chief Executive Officer, NMDPRA, Gbenga Komolafe, was represented by the Executive Director of Health, Safety, Environment and Communities, Dr Mustafa Lamorde.

The Tajudeen Abbas-led 10th House constituted the committee to probe operators’ and regulators’ adherence to the PIA in decommissioning and abandonment.

The investigation followed growing concerns over a significant funding gap of about $20bn, as well as environmental and fiscal risks from ageing assets, scrutinising companies’ D&A plans, financial provisions like escrow accounts and regulatory enforcement by agencies like NUPRC and NMDPRA, to protect communities and the environment from liabilities of abandoned infrastructure.

In their separate submissions, the two agencies, NUPRC, informed the committee that several factors were responsible for the implementation of the regulations in the D&A in the oil sector despite the provisions in the PIA.

These, according to them, included some legal technicalities in the Ministry of Justice, issues with the responsibility of the Central Bank of Nigeria, escrow accounts, as well as other challenges.

The NUPRC boss said, “Our response is clear that the NUPRC has strongly enforced the provisions of Sections 232 and 233 of the PIA 2021, which together with the subsidiary legislation cease to serve any decommissioning and abandonment plan. Extensive engagements in the industry have been held.

“It’s also important for us to understand that the D and A we reviewed then was actually for them to tell us what will happen at the end of the life cycle of the plan, such that at the end, the environment will be restored close to its original state.”

In his remark, Chairman of the Committee, Bassey Ekpenyong, lamented the delays in implementing the PIA provisions and other extant laws.

“The regulation is a regulation that was approved in 2003. And I want to believe that as soon as you did that, you submitted it to the Minister of Justice,” he said.

The House of Representatives’ renewed focus on decommissioning and abandonment stems from long-standing gaps in how operators retire ageing oil and gas assets in Nigeria’s onshore and offshore fields.

For decades, several wells, flow stations, pipelines and related infrastructure were left idle without proper dismantling or site remediation, leading to environmental degradation, community disputes, and revenue losses.

Repeated audit reports and expert assessments drew attention to the absence of adequate financial guarantees by operators, weak enforcement by regulators, and the lack of a unified legal framework before the enactment of the Petroleum Industry Act in 2021.

The PIA sought to correct these gaps by mandating clearly funded decommissioning plans, escrow arrangements, periodic reporting, and strict oversight by NUPRC and NMDPRA.

In the years following the passage of the PIA, concerns persisted that operators were yet to fully comply with Sections 232 and 233, while the regulators responsible for approving and monitoring decommissioning frameworks had not enforced the law uniformly.

The estimated $20bn decommissioning liability accumulated over decades heightened pressure on the legislature to intervene to prevent the costs of abandoned assets from being transferred to host communities or the Federal Government.

This led the 10th House to set up the Ad-hoc Committee to review the status of decommissioning funds, the adequacy of operators’ pledged provisions, the transparency of escrow arrangements and the regulators’ capacity to enforce compliance.

The committee’s ongoing probe aims to establish whether companies have met their statutory obligations, whether regulators have exercised their powers under the PIA and how existing loopholes can be addressed to prevent environmental and financial risks associated with poorly managed decommissioning.

Dirisu, has over 12 years experience covering political parties, National Assembly, sports, transportation, etc, and currently works with The PUNCH

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