States and local governments are on a collision course with the federal government over the shareholding structure of the newly created public oil companies.
Findings show that states and councils are not accommodated in the share structures of the oil firms formed to replace the Nigerian National Petroleum Company Limited (NNPCL), reports The Nation.
The new companies are the Nigerian Petroleum Assets Management Company Limited and the National Petroleum Company (NPC).
The ownership structures of the two companies show that the Bureau of Public Enterprises (BPE) will have 20 percent stake; Federal Ministry of Finance Incorporated (MOFI), 40 percent and Ministry of Petroleum Incorporated (MOPI), 40 percent.
MOPI, established in 2023 under the Petroleum Industry Act (PIA), plays a key role in managing federal government’s shares and overseeing oil and gas assets.
Officials knowledgeable about the development are already querying the fact that there are also no plans to allocate shares of the new companies to the states and the local governments in the near future.
One of the officials pointed out that historically, shares of federation assets are usually allocated to subnational entities in federated structures.
He gave an example of the National Sovereign Investment Authority (NSIA) in which subnational governments are represented.
The official said: “The exclusion of the subnational governments, whether deliberate or not, is not right. It must be corrected as quickly as possible to stave off a disagreement between the states and local councils on the one hand and the Federal Government. Those who packaged the new companies must understand that national assets in a federation belong to all tiers of government.
“I, therefore see no reason for all the shares in the new companies to be allocated to Federal Government-owned entities.
“I am worried that the development could threaten the PIA, a legislation hailed as a panacea for the ailing oil sector.”
A member of the Federation Account Allocation Committee (FAAC), who expressed concern over the development, said: “MOPI has no legal basis for holding onto its shares. If this issue is not addressed, it could become the norm, making it difficult to rectify in the future.
“I know state governors will challenge the inclusion of MOPI and question why their interests are not accommodated.
“It is crucial to amend the Petroleum Industry Act (PIA) and remove MOPI. According to the 1999 Constitution, federation assets should be jointly owned by the federal, state, and local governments.
“In the case of the new company, MOFI represents the federal government, leaving subnational entities without representation and raising doubts about who is protecting their interests.
“The governors should be asking, who does MOPI reports to?”
Director-General of the Nigerian Governors’ Forum (NGF), Asishana Okauru, claimed that oftentimes, state governments were kept in the dark by the federal government.
“Many times, states do not know what is happening in the centre. There is quite a lot of things happening at the federal level that state governments are not aware of,” Okauru said.
