By Obas Esiedesa, Abuja
The failure by the Federal Government to implement in full the provisions of the Petroleum Industry Act 2021 is hurting the oil and gas industry and creating uncertainties among players, energy experts have said.
The confusion, they said, has hastened the divestment plans of the International Oil Companies, IOCs, as most do not trust the Nigerian environment.
Speaking at the unveiling of a policy brief by the GIFT Nigeria Project titled: “Mainstreaming Fiscal Responsibility in Nigeria’s Petroleum Sector” in Abuja, Oil and Gas Governance expert, Mr. Henry Adigun said Nigeria needs to quickly improve its business environment to boost investments into the industry.
Adigun pointed out that the failure to implement the PIA has left a huge gap both at the upstream and downstream levels.
“The sector is in a mess and this will continue until the government does the right thing.”
He pointed out that the country has failed to benefit from the high price of crude oil due to lack of policy distortions, oil theft and weak investments.
He called for support for the Fiscal Responsibility Commission, FRA, to enable the commission to monitor revenue from the petroleum sector and ensure appropriate allocation.
The brief, which was authored by the OrderPaper with support from USAID and Palladium, disclosed that certain provisions in the PIA imposed “certain ouster clauses that unfortunately impact public finance managers and entities like the FRA in providing oversight on the sector”.
It held that “Although the PIA has several good initiatives, there are drawbacks related to revenue mobilization into the central pool of government. The law has serious implications for the public finances of the federation. For instance, the reduction of collectables by the NNPC Limited will result in a considerable reduction in revenues available for service delivery by government”.
Speaking earlier, Executive Director, OrderPaper, Oke Epia explained that the brief examined the extant fiscal responsibility instruments as they relate to the petroleum sector.
“This is because the sector is not only the mainstay of the economy and major foreign exchange earner but also the pivot upon which diversification and economic growth and development should stand”, he added.
On his part, Mr. Charles Abama said the failure by the sector to remit any revenue to the Federation Account the past few months was hurting government finances.
He pointed out that if the situation persists into the near future, most state and local governments may not be able to meet their obligations to their workers.