In the last few weeks, stakeholders in the oil industry have raised their voices against a new regime of fees put in place by the industry regulatory body, the Nigeria Nuclear Regulatory Authority (NNRA), though the regulator said it has the blessing of the supervising ministry
There is no doubt that tempers raised by the August 29 review of fees payable by operators in the oil and gas industry, especially those dealing in radioactive materials, is yet to simmer as operators at the weekend raised the alarm that the new pricing regime would send some of them packing. The industry regulatory authorities, the Nigeria Nuclear Regulatory Authority, had in August introduced new fees which it said had the backing of the supervising ministry-Ministry of Petroleum Resources.
In the new pricing template, fees ranging from N500, 000 to N5 million were slammed on the various categories of operators. For instance, under a category named Dosimentary Service Provider, accreditation certificate will attract a fee of N1 million per biennium; registration of premises certificate- N500,000 while licence to import irradiator incorporating radioactive sources will cost N1 million. Also, accreditation certificate under land transportation of radioactive material will attract N2 million per annum while registration of vehicle to transport radioactive sources will fetch the authority N500, 000.
However, operators in the sector have raised the alarm that unless the new pricing template is jettisoned, some of them are bound to look elsewhere for means of livelihood as according to them, the prevailing economic situation does not make the new fees affordable. The rumblings over the new fees came as the Acting Director-General NNRA, Dr. Martin Ogharandukun, raised fresh concerns over the low, but existing risks associated with unapproved x-ray facilities in the country. He explained that his agency had started the registration and certification of x-ray facilities and machines in the country and asked patients to look out for a yellowish NNRA logo with the national coat of arm in it.
In a recent petition addressed to President Goodluck Jonathan, the aggrieved operators said NNRA should be prevailed upon to suspend the implementation of the new fees in the interest of peace in the nation's oil and gas sector. Among those who signed the letter were Sir Rowland Nze of Oceaneering Services Nigeria Limited, Chief Nnamdi Mbelu of Allied Inspection Services Ltd and Chief Ben Ogwu of Benok Consolidated Ltd.
Others included Mr. Andrew Emeri of Ozma Inspection Services Ltd, Mr. Aroyehun Julius of Batek Nigeria Ltd, Andrew Benjamin of SGS Inspection Services Ltd, Nick Azamosa of Blueveld Ltd, Clems Eribo of Advanced Inspection Services Ltd and Harrison Iretor of Neat Inspection Services Ltd. They explained that "Apart from the international oil companies and some international oil and gas service companies that use the high-end sources, over 90 per cent of the users of Iridium 192 sources are local Nigerian companies just emerging into the oil and gas service industry to render the service of non-destructive testing which hitherto had been the exclusive preserve of foreign expatriate companies."
According to them, "Right now an average hospital X-ray department would need at least N2 million to obtain NNRA license to import and operate its machines and most of these fees are payable every two years. Same with CT scanning machines, which NNRA licensing would cost at least N4 million to import and operate every two years."
One of the leading operators in the industry, who is also the Director, Oceaneering Services Nigeria Ltd , Sir Rowland Nze, who gave audience to THISDAY last week said the new dispensation brought by NNRA would drive some operators out of business. Explaining the genesis of the current tension in the industry, he said, "The NNRA published new fees for registration of premises, importation of radioactive substances, storage and use of radioactive substances which took retroactive effect from August 31, 2012. This was published on the pages of newspapers. The new fees are between 1000% and 4000% above current fees. NNRA also included multiple licensing fees for the same radioactive substances which are unprecedented."
Burden of New Fees
On the implication of the refusal of NNRA to reverse its decision, Nze said, "If NNRA refuses to rescind its decision, then virtually all the companies whose businesses are associated with the importation, storage and use of radioactive substances will cease to operate as they cannot afford the new fees. More so, most of them are contractually obliged to their clients and cannot afford to translate the new fees as additional cost of over 4000% to their clients even if they managed to pay the fees. Therefore, they will not have any choice than to close shop. If that happens, all employees and their dependants will be out of work. The additional effect of this type of situation will lead to shut down of some oil facilities that are dependent on the provision of services by these companies using radioactive substances, including drilling rigs."
Expressing his faith in the ability of the Federal Government to intervene in the matter, the Oceaneering boss said he believed government would still do something to douse the tension.
He said, "I believe that the President and members of the National Assembly are elected by the people to render good governance. The government we voted into office, I believe, is very responsible and could not have approved fees that will cripple any segment of the economy and bring untold hardship to the governed. The government is facing serious challenges resulting from security to flooding and displacement of people. The last thing they need is any situation which will create additional hardship and unemployment because NNRA decided to relegate their primary role as a regulatory authority and assume the function of generating revenue for the government."
According to him, assuming the Federal Government actually approved the astronomical fees, it means they had been ill-advised and government has the power to rescind the decision after weighing the facts and the consequences, which is what we expect. He said government needed to be made aware of the potential damaging consequences of such decision and its effects on the Nigerian economy, saying the NNRA is primarily a regulatory authority dealing with a potentially dangerous substance. In his opinion, the regulatory role of the authority takes priority against any other function including revenue generation for the government.
"It may interest you to know that there are many applications associated with radioactive substances. Our group are more concerned with its application in the oil and gas sector of the economy vis a viz fabrication of jackets and platforms, storage vessels of all kinds and sizes, construction of pipelines of all sizes, both onshore and offshore, including refineries and petrochemical complex as well as well-logging associated with oil drilling.
"If the companies using radioactive substances to operate are shut down, as may become the case from January 2013 if NNRA refuses to rescind the new fees, then all the operations of the companies that require their services will be affected and in some cases, lead to shut down of operations.
"The oil industry like many other industrial establishment operate as a chain linked with supply of raw materials, operations, services, manufacturing, packaging, marketing and the consumer. If any of the links cut, then other associated links will collapse. This has the potential of creating unscrupulous rogue operators who may operate below the radar, thereby threatening health and security of the people," he said.
Given the prevailing economic situation in the country, he said it would be extremely difficult for a large percentage of operators in the sector to raise the fees. According to him, "It is obvious that the companies concerned with the NNRA's astronomical and unprecedented fees will not be in a position to pay the fees. By NNRA administration, all licences related to radioactive substances expire by December 31 of the licensing year. Operators are advised to commence renewal of licences in October to enable them obtain new licences before January of the New Year.
"Therefore, as the year runs out, the licences will expire. Without the licences, the companies will cease to operate because they cannot operate without valid licence from NNRA. If the companies cease to operate, then other associated operations will obviously cease to operate which means lay barges, fabrication yards and possibly drilling rigs may be affected and would likely shut down. If this happens, the total cost can only be imagined. What NNRA are asking as fees will become insignificant.
"I believe that we have a responsible and responsive government that will not allow the insensitivity of NNRA and their quest to generate revenue to create job loss and plunge citizens into the labour market which is already saturated. Even the loss of one job is not worth it, not to talk of possible thousands of jobs," he said.