It was cheering news when the Minister of State for Petroleum Resources, Ibe Kachikwu, while speaking recently on Nigeria’s Petroleum Sector Outlook for 2017, expressed confidence that the protracted Petroleum Industry Bill (PIB) would be passed this year.
The Minister said, “In 2017 we are going to be running with rocket pace. First of all, we are going to firm up our policies, gazette all our oil and gas policies and then pass the PIB.”
Also welcome is the commitment by the Senate that the bill will be passed this year. Senate President Bukola Saraki, at a three-day public hearing organised by the Senate Joint Committee on the bill last December disclosed that the upper legislative body will pass the bill in tranches as a way out of its non-passage for the past eight years.
The PIB which seeks to reposition the petroleum industry has been highly politicised and therefore suffered unnecessary delay over the years.
The hint of the PIB came in 2007 via the recommendations of a Presidential Committee set up to carry out oil and gas sector reforms in Nigeria. The reforms were expected to form the nucleus of Nigeria’s desire to become one of the most industrialised nations in the world by the year 2020. For the country to realize this dream, it was envisioned that the major source of revenue into the Federation account, the oil and gas sector, must be repositioned for greater efficiency, openness, and competition built on good corporate governance as obtained in other resource-rich nations.
The proposed legislation was therefore designed to strengthen the capacity of indigenous companies in the oil and gas sector to compete with international oil companies in the search and acquisition of hydrocarbons in Nigeria. The measure was also intended to reduce exploitation in the sector and limit, to the barest minimum, federal government’s exposure to oil and gas exploration and production through joint venture operations.
To achieve this, priority has to be placed on privatisation and commercialisation in a manner that retains government interest only as a shareholder. Besides, all the companies in the joint venture arrangement are to enjoy the freedom to source funds independently for their operations.
To make this to happen, the PIB is expected to provide for the establishment of an independent regulator, an energy council, a national petroleum directorate, an inspectorate commission and a national petroleum company that will be open and ready to embrace competition, professionalism and good business ethics in its operations.
The new law is expected to lay the foundation by producing a dynamic policy framework for massive reforms in the oil and gas industry. Under the PIB, the need to address the issue of raising indigenous capacity through a deliberate policy on research, production and broadening the spectrum for distribution are to be given priority. Each of these new agencies to be created under the PIB is expected to operate in the spirit of efficiency, complementarity and division of labour. Above all, the agencies are to function with Nigeria’s national interest as fundamental basis of operation.
Unfortunately, contents of the former petroleum industry bill became very contentious; dividing the oil and gas industry along interests groups. Even more contentious was the fiscal regime proposed by the former bill. While some major oil companies routed for a fiscal regime that guaranteed them maximum profits, agencies like the Nigeria Extractive Industries Transparency International (NEITI), the media, the civil society and majority of Nigerian’s public were concerned that the reform should lead to improved revenues for government.
It was the 7th National Assembly that discarded the various versions in circulation and elected to begin the process afresh. Experts began to canvas for greater access to valid crucial facts, data and knowledgeable resource persons with passion for the Nigerian project to provide informed inputs, constructive discussions as well as debates on the proposed legislation. The 8thNational Assembly took it from there.
As has rightly been highlighted by stakeholders, the delay in the passage of the Petroleum Industry Bill (PIB) has depressed the economy and stunted progress in the extractive sector.
Although the passage of the bill is regarded by experts as the best thing that would happen to Nigeria’s oil and gas industry and to the economy, the PIB has remained stagnated at the National Assembly (NASS) since 2007.
As the biggest economy in Africa, analysts have argued that further delay in our effort to reform our oil and gas industry is antithetical to our desire to become one of the industrialised nations by the year 2020.
Although the petroleum industry has been contributing over 90 per cent of the country’s foreign exchange earnings, its existing legal, regulatory and institutional structures are outdated.
The sector had therefore performed below expectations, a development which led to the government and investors losing significant edge in the oil and gas investment trends.
This is why we affirm strongly that the renewed zeal in passing the bill should be sustained. The executive and legislative arms at the centre must walk their talk by ensuring that the Petroleum Industry Bill becomes law this year.
Copyright 2018 Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.