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THE ROLE OF DOMESTIC SUPPLY OBLIGATION AND PUBLIC SERVICE OBLIGATION IN PROMOTING ENERGY SECURITY.   
An article by Olivia Chinonso Ihemeson Esq.

Content                                                                                                                     Page
                                                                                                                                               

Obligation (PSO) In Promoting Energy Security                                     15

Bibliography                                                                                                             26

INTRODUCTION
1.1  Background to the Study
In the world today, the prevalent energy sources are petroleum, coal, natural gas, biomass, and nuclear fuels, accounting for more than 80% of global primary energy consumption. Nigeria is the most populous nation in Africa, estimated at 211,968,966 and the seventh most populous nation in the world.  Nigeria, as a political entity, operates a federal system of government with 36 states and a federal capital territory situated in Abuja. The Nigerian energy industry is central to the country’s economic growth and development; energy is crucial to all sectors of the economy. The energy industry is the cornerstone of economic growth and development in Nigeria. Nigeria is fortunate to have huge energy resources and this gives the country sufficient opportunity to thoroughly revamp its economy and transform the lives of its citizens. Energy plays an essential role in the nation’s economy and serves as a commodity traded to earn national income. It also serves as a diplomatic and political instrument serving the nation’s manufacturing, transportation, health, education, and agricultural sectors. Nigeria has an enormous supply of natural energy resources in both fossil and renewable energy sources. The country’s economy is largely dependent on the oil and gas sector which now accounts for 95% of Nigeria’s foreign exchange earnings, 80% of government revenue, 50% of national gross domestic product, and oil remains the principal source of foreign direct investment inflows in Nigeria. The oil and natural gas industries are primarily located in the Niger Delta region. Nigeria is Africa’s energy giant. It ranks as the continent’s largest oil producer and the 8th largest exporter of oil in the world. Nigeria’s proven oil reserve stood at 35 billion barrels with 2.5 million barrels per day production capacity, while natural gas reserves stood at 183 trillion cubic feet (placing Nigeria among the first ten countries with the largest gas reserves) at the end of March 2014. Nigeria is endowed with other primary energy resources which include: tar sands (31 billion barrels oil equivalent); coal and lignite (estimated to be 2.7 billion tonnes). Nigeria is also blessed with abundant renewable potential energy resources such as solar, wind, hydroelectric, biomass, and tidal. These renewable resources, however, are largely left unexploited and their viability unrealized For example, the country has exploited only 20-28% of its entire hydropower capacity, the total 5.5KW-hr/m2 /day of solar radiation is not utilized, and wind energy resources remain unexploited. Despite the enormous domestic endowments of renewable and non-renewable energy resources, the country experiences persistent and insufficient quantity, low access to energy and poor quality. Nigeria has been plagued with an inability to provide affordable, adequate and reliable energy despite it being endowed with ample energy resources. The Nigerian domestic energy market is still largely underdeveloped with demand being constrained by inadequate energy supply infrastructure.

1.2    Research Methodology
The Research Methodology adopted in this paper is the Doctrinal Research Methodology. Doctrinal method of research means the type of research conducted with the aid of books, statutes and cases and thereafter makes findings and recommendations. The research will be conducted from both primary and secondary sources of law. Primary source, such as statute with particular reference to the Petroleum Industry Act, 2021. Secondary sources such as books on the study, articles, journals and online materials.

2.0  CONCEPTUAL FRAMEWORK     
2.1    Definition of Terms
In order to have a clear picture of the topic under discourse, it is imperative to dissect some key phrases for purposes of ease of comprehension. Hence, phrases such as “Domestic Supply Obligation’, ‘Public Service Obligation’ and ‘Energy Security’ as used in the topic shall be placed under a thoughtful binocular and given conceptual meaning and analysis.

Generically, Domestic Supply Obligation could be referred to a resource availability mechanism of the host State or government, giving an order imposing obligation on the oil and gas companies to provide the resources to the local consumers. It is said to be an Obligation imposed by the government or authority on the suppliers and distributors of energy sources in order to protect consumer’s interest or welfare by supplying adequate quantity to the domestic market. It is important to note that phrases such as ‘The Role of Domestic Supply Obligation’, ‘Public Service Obligation’, and Energy Security are combination of words conjoint in the phrases. Hence, it is more beneficial to separate them for purposes of definition and conceptual cognition.

Role
A role could be said to mean a set of connected obligations, rights, norms, beliefs, and behaviours as people conceptualized in social circumstances. Role is pivotal to the functionalist and interactionist understanding of society. According to Biddle, the role theory is a sociological study of role evolution with regards to the forces behind peoples’ behavior. Biddle posits 5 model role theory. They are: Functional Role Theory, which examines role development shared social norm for a given social position; Symbolic Interactionist Role theory, which examines the development of roles with regards to outcome of  individual reactions and responses to behaviour; Structural Role Theory, which bothers on societal influence rather than individual; Organizational Role Theory, which examines the development of role in organizations; and Cognitive Role Theory, which was summarized by Flynn and Lemay as the relationship between expectations and behaviours. Drawing the function of the cognitive role theory, which is the relationship between expectations and behaviours, the provision of the DSO and PSO in the PIA, if enforced, is expected to impose energy security behavioural change in the oil and gas industry. Under the foregoing context, ‘role’ refers to the function, importance, significance influence or impact of the PIA to Domestic Supply Obligation, and Public Service Obligation towards the realization of energy security in Nigeria.

Domestic
Our laws did not define domestic, the meaning of the term will be sought from dictionaries. ‘Domestic’, is defined by the Black’s Law Dictionary ‘as or relating to one’s own country or jurisdiction’. It is also defined by the New International Webster’s Comprehensive Dictionary of English Language as ‘belonging to the house or house hold; concerning or relating to the home or family’. This means that ‘domestic’ in the context of the paper, refers to the nation state of Nigeria.

Another key word in the phrase is ‘supply’. In Economics, supply is the quantity of resources that financial assets providers, firms, producers, labourers and other economic agents are willing to bring to the market place. Supply is said to mean the giving or furnishing of something needful or desirable. It could also mean the amount of goods produced or available at a given price. It appears therefore that, domestic supply means “the supply of particular resource into the same locality where it was found. It follows therefore that, the distribution of electricity, gas, fuel, water and so on, domiciled in a State or country within the same State or country is referred to as ‘domestic supply’. Worth noting is the fact that the word supplier, instead of supply, was given meaning under the interpretation section of the PIA to mean, the holder of a wholesale gas supply licence, wholesale petroleum liquids supply licence or, retail gas supply licence. Hence this paper draws the meaning of the term in the context as used under the Act to mean the distribution of a resource.

Obligation
Obligation refers to a course of action required of a person, organization, or the general public to follow. There are different kinds of obligations. They include written obligation, which binds two parties to a contract; political obligation, which requires citizens to obey the laws of that political society; and Social Obligation, which individuals obey because it is collectively accepted. Obligation, whether legal or moral, are constraints. Obligation is a legal or moral duty to do or not to do something. This means any statutory provision or customary precepts stating what and what not to do, places obligation on the people within the jurisdiction or sphere of operation of the law or custom. In the context of this paper, the party (s) under obligation to equitably distribute resources as stipulated by the Petroleum Industry Act appears to be the oil and gas companies and refinery operators. It is pertinent to note that, while the oil and gas companies and the refinery operators are under obligation to distribute energy resources for the public consumption, the public is equally under obligation to pay for services rendered.

Public
For the students of public relations and communication sciences, publics means, group of individual people, while public, is the totality of the groupings. This concept is at variant from the sociological concept of (Offentlichkeit) which denote public sphere. The concept of public, in public relations and communication science, is regarded as the most ambiguous concept in the field. The concept of public, in public relations and communication science has suffered more blurry attributes due to its conflation of idea of a public with the notions of audience, market segment, community, constituency and so on. The word public pertains to, or affecting the people at large or the community.’ It equally means the people of a nation or community as a whole. The term ‘public’ is said to have originated from the Latin word ‘Publicus’, also spelt ‘poplicus’, which denotes mass population. Note however, that, the word public was neither separately and specifically defined nor given a statutory meaning. Therefore, its meaning will be deciphered as used in the phrase in the context of this paper, which is referred to the Nigerian public.

Service
Service has been given different meanings, thus, means different things to different people and situations.
Service is seen as an intangible transaction where no material chattel passes from the seller to the buyer. The interest though, is laced in the buyer’s readiness to make the exchange. Public services on the other hand are referred to as the services the nation state, union, or region pays for service rendered. This means that services denote the payment of money to the service provider for the service rendered. The Black’s law Dictionary, defines service as the formal delivery of writ, summons or other legal process. The Webster’s Dictionary defines service as the rendering of assistance to someone in need. Under interpretation section of the PIA, ‘Service’ means the ‘Federal Inland Revenue Service’. But because the meaning of the word “service” alone as given under the interpretation section may not portray what is needed in the context, the meaning of ‘service’ will be drawn from the meaning given to Public Service Obligation under the interpretation section. Under the interpretation section, Public Service Obligation means specific obligation imposed by the Authority on Licensees in relation to security of supply, social service, economic development, environmental protection or the use of indigenous materials. It appears that that the word “service” as used under the interpretation section denotes Licensees’ rendering of supply services to the public as may be directed by the Authority. This also mean that the public must pay for the services rendered.
           
Energy
Energy is said to be the engine that propels the wheel of modern developments. The energy sector is the sum totality of energy generation industries. It comprised of the fossil fuel industry, the electrical industry, and the nuclear power industry. The fossil fuel industry includes companies involved in the exploration and development of oil and gas reserves, oil and gas drilling, and oil and gas refining, and oil and gas distribution. It also includes the integrated power utility companies such as coal and renewable energy. From the explanation above radiated, it appears that non-renewable energy includes but not limited to fossil fuel, gas kerosene and coal. Another section of the energy sector is the electrical power industry. This includes electricity generation, electric power distribution, and sales. There is also the nuclear power industry. One other and most trending energy industry is the renewable energy. It is comprised of alternative energy and sustainable energy companies such as the hydroelectric power energy, wind power energy, solar power energy. Lastly is the traditional power energy based on the collection and distribution of firewood. Looking at the importance and role of the energy industry to development, it appears that, the energy industry is the major source of environmental pollution. Oil is said to have been used for more than 5000 years. Oil energy is mostly used in cars and other different automobiles. In the context of this paper, ‘energy’ refers to oil and gas in Nigeria.
           
Security
Security is freedom from, or resilience against potential harm or other unwanted coercive change propelled by others. It is most especially referred to hostile forces. Therefore, the absence of harm, such as freedom from want, secure foundations, secrecy of telephone lines, secure room or cell, and the state of mind which is emotional security amongst others are what is referred to as security. However, the word ‘security’ in the context of this paper which is ‘energy security’, refers to the presence or condition of availability, affordability, reliability, and sustainability of energy resources at any point in time, for the customers or consumers.

Having separately explained the meaning of Domestic, Supply, Obligation, Security, Public, Energy, and Service, it is imperative to understand the conjunctive meaning of the phrases forming the topic of discourse. These are: Domestic Supply Obligation (DSO), Public Supply Obligation (PSO), and Energy Security (ES), in the context of the Petroleum Industry Act.

Domestic Crude Oil Supply Obligation is provided for under the PIA . Also, Power is vested on the Commission to make regulation for domestic gas delivery obligation. Under the Petroleum Industry Act, ‘Domestic Supply Obligation’ means ‘the obligations of an upstream crude oil producer to dedicate a specific volume of crude oil towards the domestic refineries.

2.1.1   Domestic Supply Obligation (DSO)
Generally speaking, Domestic Supply Obligation is an energy security mechanism of the host nation’s government, placing a compelling order on the operators to provide a certain percentage of the resources to the local end-users at an acceptable or affordable price. According to Taverne, provision of Domestic Supply Obligation in a nation’s legislation, vests power on the national authority to demand for the contractor to sell a percentage of the production share for purposes of settling domestic need upon emergency circumstances. For the UK Department of Energy and Climate Change, a design of Domestic Supply Obligation mechanism creates atmosphere which allows energy suppliers to have multiple delivery routes, with wide range partnerships response to the policy. The contribution of Goldberg to the discourse is that, DSO is an imposed obligation by the resource host government upon the suppliers and distributor to relinquish a certain percentage of the product for the domestic consumption to protect their welfare and interest.
2.1.2   Public Service Obligation (PSO)
In the context of the European Union, Public service obligation is a concept formulated to impose an obligation upon an organization by legislation or contract for the provision of service that will serve general interest within the European Union. The importance of public service obligation to serve the interest of the public led to the formulation of the German Public Service Obligation Regulation, 2005 to regulate air flights. This is pursuant to Council Regulation (EEC) No. 2408/92 for the Schedule air services within Germany. In view of this, the German government imposed obligation on the air flight providers to increase their flight routes within Germany. The Irish Commission for Energy Regulation is not left out of providing a DSO mechanism for Ireland. The aim is to impose an obligation on energy suppliers in order to ensure security of supply. The Irish PSO comes with obligation targeted on the public to pay levies. For public service obligation is the obligation placed on the public to pay for services rendered. It is germane to note that the Nigerian Petroleum Industry Act 2021 provides for public service obligation.

2.1.3  Energy Security (ES)
Energy security is the association between national security and the availability of resources for energy consumption. Overland, further contributed that, the nature of international energy relations has played a pivotal role in energy security and vulnerability simultaneously. This is factual evidence because, energy rich nations do cut energy supply from the dependent states causing energy disruption. It appears therefore that, the rapid development of renewable energy is the only thing that will bring energy security and sustainability. This is because, the energy source in not controlled by another nation that is vulnerable to disruption, once it is fixed. Mitchel is of the view that energy security entails reliability, affordability, avoidance of foreign policy constraints, and environmental friendliness. According to Goldberg, energy security may mean different things to different people at different situation due to its connectivity with economic, social, political, environmental, foreign policy and military. For the EU, energy security includes the availability of energy during emergency, a free and sustainable market system, diversification of source of energy supply and efficient distribution strategy. Elkind, on the issue of energy security, is with the opinion that, availability means amongst others, resource endowment, capital investment, a robust legal and regulatory framework and consumers’ ease of access to the product in the market. Elkind propounds four criteria referred to as the ‘Elkind criteria’ which stipulates that a sustainable energy security propagates availability, reliability, affordability and environmental protection sustainability. For Dike, the importance of environmental sustainability as being part of energy security cannot be over emphasized. He buttressed further that, petroleum is the main pillar with regards to energy security policy, as well as meeting global energy demand, especially the transportation sector. He however pointed out that, petroleum industry is a major contributor to environmental degradation impacting on climate change. Dike again stated that, deficient of a robust legal regime that provides for domestic consumption in an affordable, reliable, and sustainable manner equally amounts to energy security threat. For Yergin, the availability, sustainability access to resource, and timely distribution for domestic use is the basis of energy security. On issues bothering the environment, section 102 provides for the operator to within 1 year or 6 months upon approval of lease or licence for the up and the midstream sector, submit to the Authority or the Commission, the environmental safety plan for approval. There is no specific set up standard under the Act as a guide for the operators.

3. 0   LEGAL AND INSTITUTIONAL FRAMEWORK
3.1 Legal Framework
3.1.1Petroleum Industry Act, 2021 (PIA)
The petroleum industry Act, 2021 provides legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry and development of host communities. It contains 5 chapters, 319 and 8 schedules dealing with rights of preemption; incorporated joint ventures. Domestic base price and pricing framework, pricing formula for gas, price for the gas-based industries; capital allowances; production allowances and cost price ration limit; petroleum fees, rents and Royalties; and creation of the ministry of petroleum incorporated.
Amongst many provisions contained in the PIA are provisions for the domestic supply obligation contained also is the provision for public service obligation.
These are policies formulated to enhance domestic supply for the improvement of energy supply for Nigeria.
3.1.2  Federal High Court Act
The Federal High Court Act confers jurisdiction on the Federal High Court to exercise both civil and criminal jurisdiction and powers in respect of matters listed under section 251 (1) (n) Constitution of Federal Republic of Nigeria, 1999: mines and minerals (including oil fields, oil mining, geological surveys and natural gas)

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