By Sebastine Obasi and Mike Eboh
MORE than 17 years of its introduction and having gone through eight National Assemblies without much to show for it, the question on the lips of concerned Nigerians continues to reverberate: Is the petroleum industry bill, PIB, jinxed?
This is coming at a time Global extractive industry watchdog, Publish What You Pay, PWYP, stated that Nigeria is losing N3 trillion annually for failing to put in place a proper legislation for the oil and gas industry. The concerns of Nigerians and stakeholders alike stem from the fact that past legislatures have promised to pass the PIB, only to renege at the end of their respective tenures.
Similar scenario appears to be playing out as the 8th National Assembly has barely 10 months to wind out, thus eliciting mixed reactions from oil and gas industry players. Speaking with Sweetcrude, Dr.Godswill Ihetu, Chairman Energy Equity Resources, EER, an integrated oil and gas company, said that bureaucracy and politics have been a major setback for the PIB.
He said, “No, the PIB is not jinxed. It is just the fact that governments since the year 2,000 have not focused sufficiently on getting it passed. In a nutshell, bureaucracy has been hampering the passage of the PIB. It is not jinxed. It’s just from one regime to another and politics in between.
“One of the biggest problems of the bill was the fact that it was bulky. It was a big package, about three hundred and something pages. It was difficult to actually get into the meat of it and discuss the entire bill. What the 8th Assembly did was to break it into four parts. Though, I heard that there will be a 5th part of it. The
Assembly hired consultants to look at it. As at today, the PIGB has been passed.
Speaking on the effect of further delay of passing the bill, Ihetu explained that the government no doubt is losing substantial revenue as investments have been held back due to lack of clarity of the fiscal regime.
“Government is losing revenue because we are still using the petroleum laws that we have tried to adjust since the year 2,000. The whole idea of addressing the PIB is to make sure the oil industry is competitive, particularly the upstream sector, which requires a lot of investments and anybody bringing investment wants to know what the law says, what the fiscal regime is.
“They do not want tomorrow the law is changed and they are stranded or committed to unfriendly fiscal regime. People have held back their investments due to lack of clarity of the fiscal regime and then some other structural problems in the public sector of the petroleum industry. For example, what is the fate of the Nigerian National Petroleum Corporation, NNPC? How do we restructure the NNPC? That has waited for almost six years. If NNPC has been restructured, by now we would have been getting the benefits,” he said.
Restating the resolve of the 8th Assembly on the PIB, the Chairman, Senate Committee on Petroleum (Upstream), Mr. Tayo Alasoadura said that the PIB would be signed into law before the end of the year. He noted that the Petroleum Industry Governance Bill (PIGB) which was recently passed was one out of the four bills expected to be signed into law by December. The senator explained that the bill has gone through five sessions of the National Assembly, beginning from the 4th Assembly which was inaugurated in 1999 under President Olusegun Obasanjo, adding that the bill is not only for Nigerians, but also for investors. According to him, when the PIB is fully passed into law, it will not only help to create more jobs for Nigerians, but will also foster a conducive business environment for petroleum operations. Speaking on the benefits of the bill, he said.
“Government’s revenue from oil industry will increase. This means more funds in the hands of government to engage in developmental activities. The downstream sector will become fully deregulated.
In other words, subsidy will be totally removed.” He also said that the law will also bring about a fully deregulated and liberalized downstream petroleum sector, create efficient and effective regulatory agencies and promote the development of Nigerian local content in the oil industry. Besides, he explained that the emphasis on local content will not only be in the area of skills, but would also be applicable to materials sourcing.
“This means more jobs for Nigerian local contractors, especially those from the oil producing regions. The PIB vests ownership and management of all petroleum resources, offshore or onshore, in the Federal Government of Nigeria, which is to manage them on behalf of all Nigerians.
“This means that irrespective of where the oil is found, it belongs to the government of Nigeria. Of course, equity calls for special consideration for localities where the resources are mined. This is taken care of by the revenue sharing laws and other provisions of this bill like the Host Community Fund.”
For Diran Fawibe, Chief Executive Officer, CEO, International Energy Services Limited, a multi-disciplinary oil services company, Nigeria has lost huge investments to other countries due to non-passage of the PIB.
According to him, “There is no short cut to increasing the nation’s oil reserves. The nation needs to create attractive environment, capable of attracting and retaining serious investors that have much resources to invest. This is important because if the environment is not right, they will go to other nations.
“In fact, we have already lost huge investments to other nations. Like I mentioned earlier, the much delayed PIB will play a big role in attracting investors to invest in Nigeria, thus assisting to explore and grow our reserves currently estimated at about 37 billion barrels. The Petroleum Act of 1969 was good and enduring for many years. It shows that those who prepared it did a good job for Nigeria. But a lot have changed since then, thus justifying the need for a new legislation.”
Also speaking, the Group Managing Director, Nigerian National Petroleum Corporation, NNPC, Dr. Maikanti Baru, said that there should be simplified fiscal terms for oil and gas. He also advocated for incentivising oil and gas operations to attract international investment into the country. According to Baru, Nigeria needs to leave out all regulatory issues in the bill to ensure progress and empower the regulatory commission to effectively regulate the industry. “NNPC appreciates the opportunity to review these bills and we have employed our deep expertise and experiences in the industry to assess their provisions and will gladly make contributions that will not only enforce the desires of the National Assembly but will ensure that the reform bills when passed into law meet the expectations of Nigerians and investors alike,” Baru stated.
Global extractive industry watchdog, Publish What You Pay, PWYP, had stated that Nigeria is losing N3 trillion annually for failing to put in place a proper legislation for
the oil and gas industry. The amount lost to the non-passage of the petroleum laws represents 32.97 per cent of the country’s 2018 budget figure of N9.1 trillion and is 40.32 per cent of the N7.44 trillion 2017 budget. Speaking on the lingering passage of the PIB, the National Coordinator, PWYP, Mr. Peter Egbule, called for the speedy assent of the Petroleum Industry Governance Bill, PIGB, and the passage of the remaining oil and gas bills before the National assembly.
According to him, the passage and signing of the Bills into law is in the collective interest of all Nigerians, as this will create a more functional administrative structure, significantly reduce financial leakages, encourage foreign and domestic investments, provide succour for host communities, among others. He said, “Although we hope and expect that the President will assent to the PIGB and the other bills whenever they are transmitted to him, but we also recognize that it is his right to refuse assent.
“If the latter happens, it will be disappointing to well-meaning Nigerians, resulting in another round of legislative reconsiderations, political intrigues, delays, and public frustration.
“This will be a major setback in our collective interest in establishing a more responsive and socio-economically impactful Nigeria petroleum industry, as well as send the wrong signal to Nigerians and the global community at large.”
He appealed to the National Assembly to immediately refocus on the passage of the Bills, and intentionally dedicate substantial time for the legislative processes required for the passage of the bills, especially before they become engrossed in the obviously heightening political activities towards the 2019 general elections. Egbule also implored both the National Assembly and the Presidency to carry out their respective actions without further delays in the interest of the dwindling economy and the lives being affected by the continuous delay in the passage of the Bills.
“We implore the National Assembly to take the path of national reverence in passing the bills.”
This is our expectation on the National assembly, and we are confident that when the time comes, they will do so with visible swiftness, in the interest of all Nigerians,” Egbule noted. He further urged President Muhammadu Buhari to on receipt of the Bills, act in line with his proclaimed stance on corruption and expedite action on his assent to the bills, adding that the present administration has a one-in-a-lifetime opportunity of writing its name in the annals of achievements by passing and signing these bills into laws.