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National Assembly, oil and the PIB

THE National Assembly is still talking about oil – for now, at least, because the final vote on the Petroleum Industry Bill (PIB) is yet to come.

Everyone knows oil is causing problems – but everyone also knows that oil is making Nigeria richer. It’s paying for hospitals, roads, and our efforts against violent extremists. So running the oil industry properly really matters.

The PIB has been supported strongly by the President and Minister for Petroleum Resources, and if it becomes law it’ll rewrite many of our rules about how we pump, move, and refine oil and gas.


And as you might imagine, it’s taken a lot of work for the drafters to get the Bill in shape. And it’s crucial that this Bill gets passed.

Right now, the Bill stands at 223 pages. It’s thorough-going, and it takes into account years of research about the problems in and around the industry.

Certainly, though, it’s stirred up some concerns. Most of all, these are being voiced by the oil companies. And this is quite natural: these companies played a big role writing the last rule book, and now feel that they’re getting cut out of the new one.

Of course, from our point of view, it’s important to keep the oil companies on-side: we’ve worked closely with them and have benefitted enormously from their work. But now there’s a need to recognise new realities and problems. We’re addressing them head-on.

And importantly, all Nigerians realise that these problems are urgent and real. Understanding these problems is the best way to grasp the Bill, because it responds to them very directly, and very effectively.

Transparency measures

What are the issues? The first affects many millions of ordinary Nigerians. Today, 13 per cent of oil revenue goes into Nigerian communities – but, as we know, a lot never reaches the people. The first problem is about getting a fair deal for Nigerians.

Under the PIB, we’re going to increase the amount of oil revenue we give to communities: for long enough the oil companies have made large profits in Nigeria from Nigerian resources, giving only small amounts back to the people.

Now an additional 10 per cent of the revenue – totalling 23 per cent overall – will be going to communities around the oil and gas facilities.

This will be called the Host Communities Fund, and it’s there to develop the poor communities living in the shadow of oil production. They have common problems – pot-holed roads, under-staffed schools, unsafe water and a host of others which – will be countered with better resourcing through the Fund, going directly to communities.

And the PIB is also clearer about who gets what: its transparency measures – publishing the Government’s contracts with oil companies, making data about production available – will ensure that these and the above changes are made responsibly. The PIB opens up Government’s action for the best kind of oversight: public approval, or public outrage.

Changing rules

But we’re not trying to strangle the industry by sharing out revenue more fairly. Just the opposite, in fact, because today the Nigerian oil industry isn’t growing – and this is the second big problem. We’re pumping less oil, and finding fewer wells each year. We really need this growth, and the PIB has an action plan.

In the first place, the Bill chops up the large blocks of land given out to the oil companies, making smaller blocks – with these, we can make sure that every little area is being used, and that we’re pumping oil at top capacity.

Secondly, we’re also making space for smaller, Nigerian companies by making sure that all firms can get hold of the numbers and information about oil deposits they need – the kind of information that many big companies can buy, but that small ones can’t afford.

So there’ll be better competition. And we’re also setting up a team of explorers, the Frontier Exploration Service, to find more oil and gas and to map the deposits we already have – in the South and in the North, too.

And the third problem is the environment. The extent of the destruction has been terrible, and the most important of all is its effect upon the residents of the Niger delta and surrounding region. Many fishermen have found their fish poisoned.

Water is often thickened or slicked by oil, whilst gas flaring leaves locals’ health seriously threatened by asthma or other illnesses. This Bill gives answers to those people.

There’ll be no more gas flaring, and we’re going to crack down on oil-spills. Today the World Bank says there might be up to 4,000 spills – small and large – per year. This disgraceful state of affairs is intolerable, and it’s a stain on Nigeria’s conscience and worldwide image.

The Bill brings in new bodies with clear responsibilities – the regulators – to make sure all damage done is answered for. Bringing oil out from the ground needn’t be dirty. It isn’t elsewhere, and the PIB aims to modernise Nigeria’s industry to bring us into line.

We’ve lived amongst these oilmen for around 60 years, now. A lot’s changed in that time: we’ve pumped oil for longer than we’ve been an independent country. And the rules we use to run the industry are old, too. Sure, some rules stand the test of time, and the challenge for any Government is to work out which rules need to change, and which should be respected.

In the case of oil, the answer is clear: nobody, not even the PIB’s biggest opponents, likes how things work today. The oil-slicks, the plummeting oil production, and the poverty of the oil states all show that the rules must be rewritten.

The Government’s rewrite – the PIB – hits back at all the biggest problems. It’s a serious piece of legislation, one of the most ground-breaking seen by the Senate in recent years.

Now this Bill needs public, and political support. The President and Ministers are taking care of the political work: for the sake of the Nigerians near the wells, and for the sake of the Nigerian society as a whole, let’s see that it gets all the public support it deserves.


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