By UDEME CLEMENT

The oil and gas sector of Nigeria’s economy is poised for greater economic activities this fiscal year as the petroleum minister, Mrs. Diezani Allison-Madueke, disclosed, last week, that the revised version of the Petroleum Industry Bill (PIB) would be sent to the National Assembly for consideration within 14 days.

The Bill, which has been in parliament since 2008 recently received fresh attention, as the PIB Technical Committee set up to re-examine the legislation reviewed the bill to remove the certain clauses, with a view to ensuring a level playing ground for international oil companies and local firms operating in the industry.

Speaking while leading a delegation of the Special Task Force on the Review of the PIB and the PIB Technical Committee to submit the reviewed Bill to President Goodluck Jonathan, the minister said, “The Bill will ensure that going forward, the Ministry of Petroleum Resources is professionally run, and that it engages professionals in the oil and gas sector to work within it, which is not the case at present.

The review of the Bill, which lasted about six months, was painstaking and has been infused with such details as fiscal regime, domestic gas, reconfiguration of the NNPC and administrative roles within the oil sector to fast track development”.

Allison-Madueke explained that the reconfiguration of the NNPC is to ensure that going forward, it becomes the commercial entity that it is ought to be, such that Nigeria can grow a first-rate national oil company that will grow over the years to compete with other national oil companies like Petronas, Petrobras, among others.

“The President has directed that the Ministry of Petroleum joins relevant government stakeholders to embark on the final overview, and prepare it for presentation to the Federal Executive Council. This is not a small Bill but a critical Bill for Nigeria ’s economy and for our oil and gas sector.  At this point, government will do the final review and put it in front of the FEC for approval. Part of that process is that it will go through the attorney-general’s office.”

Major objectives

The PIB was designed to streamline operations in the oil and gas industry, to further enhance more revenue generation geared towards economic growth and development and to make the NNPC  function as a commercial venture by raising money from the capital market for its operations and to bear the costs of its transactions.

The initiative was to curtail corruption in the corporation in order make the sector viable for greater productivity. Surprisingly, the previous administration formally came to an end by May 29, 2011, but the Bill that had passed through the first and second reading, and was thoroughly scrutinised by the National Assembly was not signed into law.

Endorsement

Notwithstanding the criticism and reservations expressed by the IOCs about the possibility of the Bill to create monopoly for government, considering the mono-cultural system of Nigeria ’s economy, the PIB received wide acceptance as it was  endorsed by the IMF.

The IMF expressed satisfaction that the legislation was designed to ensure a level playing ground for IOCs and local firms operating in the industry. Also, local investors said that the Bill would enhance influx of foreign direct investments (FDI) into the country, sanitise the industry for serious investors to come in and create jobs to tackle the prevalent problem of unemployment in the country.

Before the review, some investors complained that non-passage of the PIB contributed to the decline in FDI by over 29 per cent, though there are other factors like the security challenge and lack of adequate infrastructure development.

PIB and deregulation

Some stakeholders who spoke with Sunday Business explained that government needs to fully deregulate the downstream sector of the oil industry and encourage people to invest in refineries for the Bill to achieve the set objectives in the long-run.

They believe that once the sector is deregulated, challenges associated with scarcity of petroleum products would disappear. Though initial difficulty may arise, it would only have a very short life span and within two to three years, the challenges would be over.

A local investor said, “Deregulation is the solution to the problems in the sector. In the downstream sector, we started about 103 years ago, while the upstream, that is , the exploration, commenced five decades ago, yet we are not moving forward like other countries”.

The PIB needs immediate passage to prevent the downstream sector from sudden collapse, as Nigeria ’s economy reportedly loses over $287million  monthly for non-passage of the Bill into law.

PIB and privatisation of refineries

As investors expect the passage of the Bill, many stakeholders are calling on government to privatise the refineries to enable them function optimally.

In a chat with Sunday Business, the executive secretary, Major Oil Marketers Association of Nigeria (MOMAN), Mr. Femi Olawore, said, “Government should privatise the refineries and speed up the project of building new refineries in the country, otherwise government will continue to spend money and nothing tangible will come out of it. Government should also encourage private investors to build refineries.”

Thus, the Nigerian government just has signed a Memorandum of Understanding with US-based Vulcan Petroleum Resources Limited and a local firm to build six oil refineries in the country. The project with estimated monetary value of  N697.5 billion ($4.5billion), aims to have a refining capacity of 180,000 barrels per day, even as Nigeria produces about 2 million barrels of crude a day, making the country the world’s eighth largest producer of crude oil.