Chapter overview 60

As this research considers transportation and distribution of petroleum products from the perspective of downstream petroleum industry operations, it became important to analyse the entire downstream regulatory framework so as to see how the laws, regulations and institutions interact with the specifics of petroleum product transportation. Therefore, this chapter sets out to:

 Identify and analyse the laws governing the entire downstream petroleum

industry operations in Nigeria.

 Identify the stakeholders involved in transportation and distribution operations

both from operational and regulatory perspective, and identify their interests.

 Identify and discuss the problems and prospects, if any, within the regulatory

framework.

This chapter has been published under the following tittle:

Ambituuni, A., Amezaga, J. and Emeseh, E. (2014) 'Analysis of safety and environmental regulations for downstream petroleum industry operations in Nigeria: Problems and prospects', Environmental Development, 9(0), pp. 43-60

The chapter is made of five sections. As part of this introduction, the next subsections provide a brief overview, highlighting broadly the justification for the analysis and key developments in safety and environmental regulations. Section 3.2 analyses provisions in various safety, environmental and petroleum laws to evaluate their adequacy for ensuring safety and proper environmental management in the downstream sector and specific to petroleum product transportation. Section 3.3 explores the institutional arrangements and stakeholder organisations for monitoring and enforcement of the laws, identifying key enforcement challenges. Following on from this, Section 3.4 illustrates the main findings within the analysed regulatory framework. The section also

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looked beyond the regulatory framework to factors within the wider socio-political and governance framework that contributes to the effectiveness or otherwise of the regulatory framework.Section 3.5 is the chapter conclusion.

3.1.1 Introduction

As stated in chapter 1, energy generation is largely dependent on petroleum products in Nigeria (Iwayemi, 2008), although there is some contribution from hydropower, biomass and coal. According to AGUSTO (2008), petroleum consumption has been on the increase in Nigeria since the early 1980s. This upward trend is evidenced in the energy consumption data of 2006, 2007 and 2011 where petroleum products represents 53, 67.3, and 68.5 percent respectively of the total energy consumed in the country (Energy Information Administration, 2012).

This increase in consumption of petroleum products has obvious implications for the operations of the petroleum industry in the country (both upstream and downstream), including the risks posed to human safety and the natural environment. Potentially, any of the activities in either the upstream or downstream sectors pose human health, safety, and environmental risks; and the challenge for any government is balancing these concerns with national economic development and energy security goals. This is done through the establishment of an adequate regulatory framework consisting of laws and regulations setting out rights, obligations, procedures and standards, and regulatory institutions charged with responsibility for monitoring compliance (Principle 11, 1992). It is against this back-drop that this chapter analyses the safety and environmental regulatory frameworks applicable to the downstream sector of the Nigerian petroleum industry. The aim is to evaluate their adequacy in addressing the particular risks or concerns from this sector, specifically pipeline and trucking activities.

The motivation for this analysis is that, first, as seen in Chapter 1, accidents and disasters (especially in transportation activities) within the downstream petroleum sector have been identified as a major source of safety and environmental problems in Nigeria. (Dare et al., 2009; Bala-Gbogbo, 2010; Fadeyibi et al., 2011; Anifowose et al., 2012). Indeed, environmental pollution, deaths and other human disasters from the transportation and distribution sub-sectors within the downstream Nigeria petroleum industry have been highly visible. (Ogri, 2001; Emeseh, 2006; Onuoha, 2007; Zabbey, 2009; UNEP, 2011).

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There is, therefore, a need to evaluate the adequacy and comprehensiveness of regulations and also to identify the elements that can be used to ground the risk management framework in this study.

Second, with the combination of 4 refineries, 21 product depots (with a total capacity of 3.7 billion litres), approximately 5001km of pipeline network (NNPC, 2005), over 5000 truck tankers involved in daily product transportation (FRSC, 2011) and over 26,000 retail stations (PPPRA, 2006), it is important to evaluate the synergy between the various pieces of legislation and institutional framework governing downstream facilities, activities and stakeholders within them, with regard to human safety and the environment. Third, it appears that there is already some awareness of the need for a more focussed regulation of the downstream sector and health and safety in Nigeria. In the new Petroleum Industry Bill (PIB-Draft, 2012) and the National Oil Spill Detection and Response Agency (NOSDRA) Amendment Bill (2012) currently before the National Assembly on restructuring of the Nigerian petroleum industry and introduction of specific regulatory bodies to deal with safety and risks issues. It is important to evaluate whether this new framework offers any real advantage in managing safety and environmental issues by assessing in light of the issues present in the existing framework and the extent to which these are addressed in the new proposals.

3.1.2 Safety and environmental regulations in Nigeria

Although open to a variety of definitions, regulation generally involves a sustained and focused control exercised by a public agency over activities that are valued by a community (Selznick, 1985). In this context, safety and environmental regulation involves the establishment of laws and regulations governing the interaction of man with the natural environment, in order to restrict or minimize the negative impacts on safety, human health and the quality of natural environment. Prevention underlies modern safety and environmental regulation, and various mechanisms are adopted to achieve the objectives of the regulation (Testa et al., 2011).

Effective monitoring and enforcement by a regulator is crucial to the effectiveness of any regulatory regime, and this is facilitated by the laws being sufficiently robust, comprehensive and consistent; provision for a range of sanctions, including but not limited to criminal sanctions, to help compel compliance; appropriate institutional

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capacity and necessary resources to undertake enforcement action; and a conducive wider socio-political and governance environment for effective enforcement (Ogbodo, 2009). It is within this context that the safety and environmental regulation of the downstream sector is analysed. However, it is impossible to fully engage with all of the variables outlined above in this chapter. So while some mention will be made of various factors, the focus is on the adequacy of the rules and the institutional arrangements which are a necessary foundation for any enforcement action. This is, however, not to detract from the understanding that various other factors may undermine effective regulation and lead to enforcement deficits.

As with most developing countries, coherent safety and environmental regulation generally, and specifically of the petroleum industry, is a relatively new phenomenon in Nigeria. Although, there are some provisions relevant to environmental protection dating back to the colonial period, these were essentially public health related (e.g. various provisions in the Criminal Code Act of 1916 and Public Health Act 1917). Following independence in 1960, there was some ad hoc enactment of certain laws such as the Oil in Navigable Waters Act 1968 relating to the discharge of oil in navigable waters in furtherance of treaty obligations under international law (Ladan, 2009).

Focussed safety and environmental regulation of the industry followed much later. This has been associated with the increases in incidents of sabotage and awareness of environmental quality both on a global and local scale (Agha et al., 2004). Notably, the key driver for enactment of safety, health and environmental laws in Nigeria was the 1988 toxic waste dumping incident in Koko (Emeseh, 2006). The incident prompted the enactment in 1988 of the Harmful Wastes (Special Criminal Provisions) Decree; and the Federal Environmental Protection Decree, a framework environmental legislation which among other things established the Federal Environmental Protection Agency (whose functions are now largely taken over by the Federal Ministry of Environment created in 1999). These set the first coherent framework for human safety and proper environmental management in the country, although the extent to which this was achieved is debatable (Ogri, 2001).

As will be gleaned from the discussions above, it took decades to enact petroleum industry specific environmental law. Nevertheless, these two laws in 1988 had implications for the

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petroleum sector and also invigorated discourse and analysis of environmental provisions in extant sectoral laws, including those governing the entire petroleum industry.