Refineries Need a Competitive Regulatory Framework Market: Farouk

At the Crude Oil Refinery Owners Association of Nigeria (CORAN) summit held in Lagos, the Authority Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, emphasized the crucial role refineries play in Nigeria’s energy sector. He stressed the importance of a well-structured regulatory framework to foster a competitive refining market.

Farouk highlighted that the summit could be a significant step toward strengthening Nigeria’s refining capacity. This would align with the government’s efforts to increase local production and improve the competitiveness of Nigeria’s refinery products in global markets.

Streamlining Regulations for a Competitive Refining Market

In his address, Farouk outlined the NMDPRA’s approach to simplifying the regulatory process in order to encourage growth in refining capacity. This includes:

1. Simplifying and Licensing: The creation of a one-stop shop for permitting, allowing investors to complete all regulatory requirements through a single platform, reduces confusion and delays for new refining projects.
2. Digitizing Processes: Implementing digital platforms for licensing, reporting, and compliance monitoring to speed up processing times, reduce paperwork, and improve transparency.
3. Aligning with International Standards: NMDPRA ensures that its regulations are clear, consistent, and aligned with international standards, reducing compliance costs for refineries. To date, the authority has developed over 20 regulations, with 16 already gazetted.

Encouraging Private Investment

Farouk explained that NMDPRA’s regulatory framework is designed to attract investment by providing clarity and stability. This includes:

• Public-Private Partnerships (PPP): Partnering with private sector players to build refining capacity while leveraging government resources to reduce project risks and ensure compliance with environmental and operational standards.
• Clear Legal Frameworks: Creating accessible legal pathways to resolve disputes between the government and private investors, reducing the risk of litigation and encouraging investment.
• Corporate Social Responsibility (CSR): Private refiners are encouraged to engage in CSR initiatives through the Host Community Development Trust (HCDT), promoting job creation and local development where refineries are located.

Balancing Regulation and Investment

The NMDPRA’s regulatory approach is designed to strike a balance between enforcing regulations and encouraging private sector involvement. Farouk emphasized that the authority does not focus solely on penalties for violations of the Petroleum Industry Act (PIA) but rather adopts a collaborative and non-confrontational stance. He urged industry participants to comply with the PIA, allowing the NMDPRA to focus on monitoring rather than enforcement.

Key Goals and Outlook

The NMDPRA aims to:

• Increase refining capacity.
• Create a transparent, competitive downstream market.
• Foster a stable regulatory environment that encourages long-term planning and private investment.
• Support Nigeria’s energy security and sustainable economic growth.

Farouk concluded that Nigeria’s future as a refining hub depends on the cooperation of public and private stakeholders, with NMDPRA committed to streamlining processes and fostering an investment-friendly environment.

Source: CORAN