Professor Wumi Iledare, Professor Emeritus in Energy Studies at Louisiana State University has advised the Presidency to clearly define the responsibilities and roles of the three Ministers: the Minister of State (Gas), the Minister of State (Oil), and the yet-to-be designated Minister of Petroleum Resources in a single Ministry.
Professor Iledare made this known in an exclusive chat with EnergyDay, after President Bola Tinubu’s recent decision to assign portfolio to Minister of State Gas and Minister of State (Crude Oil) expected to operate within the Ministry of Petroleum Resources.
He noted that the decision of President Tinubu to appoint a Minister of State (Gas) and Minister of State (Crude Oil) would be beneficial for policy development to enhance downstream oil and gas products, optimize aggregate value, and diversify the domestic economy from rent-seeking and sharing.
He revealed that the idea is commendable if executed properly.
Professor Iledare, therefore, urged President Tinubu to clearly define the responsibilities and roles of the three Ministers to avoid creating confusion in the governance and institution of the petroleum industry as formulated by provisions of the Petroleum Industry Act.
He warned that if the roles of the three Ministers are not clearly defined in the context of the provision of PIA, there is a tendency for confusion and tugs of war with territorial protection among the technical aids of the three Ministers and the Ministry, Department, and Agencies.
“Thus, a clear definition of responsibilities and roles of the three Ministers in a single ministry is essential to optimise the value chain for sustainable petroleum and national development, and broadly avoid confusion.
, “If a complex situation is created due to lack of clarity in roles of the three Ministers, the Key Performance Indicators(KPIs) of the industry may continue to run against the traffic as observed under PMB from 2015-23,”
Professor Iledare, Executive Director, Emmanuel Egbogah Foundation for Petroleum Policy Advocacy, said, “Having two Ministers of State and their placement within the Ministry of Petroleum Resources, while the substantive Minister of Petroleum Resources is not named yet, is workable if roles are well defined.
According to him, a clear definition of the responsibilities and roles of the three Ministers in a single ministry is essential to optimise the value chain for sustainable petroleum and national development.
He also charged the President to initiate a domestic gas commercialization agenda to be executed and implemented by the Minister of State Gas Resources.
Professor Iledare further highlighted the importance of appointing a designated Minister of Petroleum Resources responsible for primary energy definition and development processes. He emphasized that the delay in this appointment could hinder progress in fulfilling specific responsibilities. He emphasized that crude oil and natural gas resources are inseparable as primary energy sources in the context of upstream activities.
Therefore, there is a need to appoint a coordinating Minister in the Ministry of Petroleum Resources to ensure effective coordination and development in this sector.
Furthermore, Iledare encouraged President Tinubu to understand that a Minister of Petroleum Resources has the power, under Section 3(1) of the PIA, to formulate, monitor, and administer government policy in the petroleum industry, among other functions.
He also shared the view that the PIA recognizes the need for a Minister of Petroleum to be appointed to oversee the Petroleum Industry within the context of primary energy, specifically in the development of natural gas and crude oil in the upstream business framework.
He said, “Decoupling the development of natural gas and crude oil will be unsettling to the upstream business and perhaps creates suboptimal asset development as intentionally crafted in the PIA 2021
According to Iledare, from a pure petroleum economics perspective, decoupling natural gas and crude oil in the upstream business compromises the building one gets two products in terms of cost efficiency in strategic and rational thinking of an economic being.
He said, “It is also important to examine the Petroleum Industry Act (2021), the policy institutional framework, and the governance responsibilities within the context of hydrocarbon development and PIA fiscal framework.
Professor Iledare said, “I am still hopeful that the President will not follow the footsteps of the immediate past president. He must avoid keeping the PIA policy institution in the Presidency.
“In fact, he needs to restructure, rekindle, and rebrand the Ministry of Petroleum Resources as intended by the framers of the PIA (2021).
“Currently, the Ministry is the weakest link of the three PIA institutions despite being the most important.
“Things are even more complex now than then after the PIA became law. I think the President will be misled and ill-advised to think it is right to retain the Ministry of Petroleum Resources for himself.
Professor Iledare, therefore, noted that he is honestly of the view that there seems to be a lack of a good understanding of the difference between natural gas as a primary energy source and gas as a secondary energy source.
According to him, it is imperative for the government to see crude oil as a primary energy source and oil products as secondary energy sources.
He said, “The stakeholders are watching with a sound mind to analyse the events as they unfold”