PIB: WHY NIGERIA MUST ACT FAST If the history of bill processing in Nigerian parliament is analysed, the Petroleum Industry Bill PIB must rank among the unenviable topmost in the bills that have suffered longest delays, lengthiest argument and perhaps most distracting political connotations. This is in spite of the bulk fortunes and potentials which the bill holds in stock for Africa’s most populous country and World’s sixth oil-rich nation. Paradoxically, this is a bill many expected to enjoy utmost priority and harmonious support for quick passage into law in view of the strategic importance of oil and gas sector to Nigeria’s economy and overall development. Consequently, the question in most lips is: Where lies the patriotism of Nigerian lawmakers? In fact, it is a common knowledge that many states and local governments usually turn broke any time there is a shortfall in petroleum revenues, affects monthly disbursement in the federation account. Hence, like the classical economist used to assert “no Nile no Egypt” in attempt to highlight the importance of River Nile to the economy of Egypt, it will not be wrong to say “no Petroleum no Nigeria” in contemporary econometrics sense. The PIB seeks to establish a legal, fiscal and regulatory framework for the petroleum industry in Nigeria in order to rejuvenate the sector which experts believed has been stagnant for many decades in a dynamic hydrocarbon international marketplace that has built economies of UAE, Saudi Arabia and Malaysia. Among the benefits which the Nigerian Minister of Petroleum, Mrs. Deziani Alison-Madueke has been using every available opportunity to drum support for, are to create a conducive business environment for the petroleum operations; enhance exploration and exploitation of petroleum resources in Nigeria for the benefits of Nigerian people; optimise domestic gas supplies, particularly for power generation and industrial development; establish a progressive fiscal framework that encourages further investment in the petroleum industry while optimising revenues accruing to the government; and establish commercially oriented and profit-driven oil and gas entities. Other benefits of the bill includes: to deregulate and liberalise the downstream sector; create efficient and effective regulatory agencies; promote transparency and openness in the administration of petroleum resources in Nigeria. Additional benefits include to promote the development of Nigeria Content in the petroleum industry; protect health safety and environment in the course of petroleum operations; and to attain such other objectives to promote a viable and sustainable petroleum industry in Nigeria. Commenting on the win-win nature of the bill in a press interview while attending a recent Nigerian Senate public hearing on PIB, the Minister called for quick passage of the bill, saying, “we believe that it is essential to have this kind of open stakeholders forum here and there. You are fully aware that some of the fiscal regimes have been a cause of concern to the multinational oil companies in particular and some of our independent companies as well.” Continuing, she said “if we continue under the purview of National Assembly and of course whose committees have taken full control of the bill and we have taken this course with them in an effort to what we consider as a win-win situation for all. It is hoped that at the end of all these public hearings along with the committees, this would have actually happened. It is unlikely that there will all be a time when there will be full agreement obviously. “A country has to make revenue and return on investment out of its core mono-economy products, which in our case is oil and gas so to speak. So we must up the intake of revenue because the product sharing contract PSC of 1993 was very adverse for this country,” she concluded. With all the good intentions embodied in the bill, industry stakeholders are united in voicing that the country is losing tremendously as a result of perpetual delay of the bill. For instance, available economic indicators show that petroleum contribution to the national GDP have been on a downwards trend since 2009 a year after the first version of PIB was introduced to the National Assembly from the initial 18.89 per cent in the first quarter of 2009 to about 13.42 per cent for the third quarter of 2012. This is essentially as a result of decline in investment in the sector especially the onshore front as investors are said to be afraid and uncertain of the PIB outcome coupled with sustained losses to theft and vandalism. There is therefore need to avoid further delay to transforming the bill into an Act. For one, Nigeria economy is peculiar in the sense that since the advent of oil and gas exploration and production in the country, other key sectors like agriculture, manufacturing, trade and services suffered neglect leading to a mono-cultural condition where petroleum became the mainstay of the economy. Nigerian Government hence mainly depends on oil and gas proceeds for finance and trade balances. The country therefore more than anything else requires a regulatory framework that will guarantee the fortune of this lifeline. A home-grown approach encompassing the interest of the Nigerians, as the PIB is the key. More so, knowing that the hydrocarbon industry is a global market, it is imperative to take meaningful steps to protect Nigeria from perceived vagaries of market dynamics. Economic diversification effort of government planned to utilise capital from the more viable sector, which in this case is petroleum, for divestment, is a lofty idea that has been going on. This needs to be vigorously pursued by clearing all obstacles to the PIB so that the industry can stabilize once more to provide the needed fund, before the energy independence policies of petroleum importing nations begin to show impact. The global economic melt-down having dealt heavy blow to the economy of most developed nations has prompted high energy consuming nations like the U.S to begin to look into policies of energy independence as well as painstakingly engage in exploring new ways of cutting down oil imports. This therefore extremely necessitates putting all machineries in place to open up the industry through the quick passage of the bill so that Nigeria can start the robust phase of oil industry that the new bill holds in promise. It is a known fact that modern technology has tremendously improved and is still improving the speed and accuracy of doing business. Oil and gas sector is not an exception and has benefited adequately from technology revolutions. Hence concerted effort in hydrocarbon exploration and exploitation across the globe has yielded expected result of developing the shale oil and discovering many new frontiers. In Africa for example, Ghana, Liberia, Sierra Leone, Kenya, Uganda, Tanzania, and Chad are among emerging oil producing nations. It is instructive to make hay while the sun shines, by settling every impediment on the PIB to avoid losing Nigeria trade partners to the new oil producing nations or a situation where advancement in engineering could develop economically competitive means of extracting shale oil. Responding to questions posed to him by journalists recently at the National Assembly complex on the possible impact of new oil fields to Nigeria petroleum future, the Executive Director Exploration and Production of NNPC Mr. Abiye Membere, who is also the Lead, Technical team of the PIB called on the law makers to expeditiously pass the bill but said, though we should not take for granted the impact of the emerging oil producing nations with respect to the PIB, they are however not a threat to Nigeria oil and gas fields, which he described as developed with no basis for comparison with the new fields that totally lack infrastructure. On the shale oil issue, Membere said “ you hear people talk about shale oil that we should be globally competitive, what they forget to tell you is that shale oil is developed at almost $50 -$70 per barrel while Nigerian oil is developed at $24-$30 per barrel” . So where is the competition? He queried. Furthering he stressed the determination of NNPC and Ministry of petroleum to be doing what is best for the country. In his word: “We will continue to do what is good for this country and we believe what we put together as the proposed PIB in respect to the fiscal regime is in the best interest of Nigerian people.” Above all it is no more news that the petroleum industry in Nigeria is riddled with crisis of crude oil theft, pipeline vandalism, militancy and even hostage taking all emanating from stagnant socio-cultural operational environment. These have given rise to petroleum revenue shortfall presently generating controversy in Federal Account Allocation Committee FAAC. Commenting recently on the issue, the Group Managing Director of NNPC, Mr. Andrew Yakubu, who spoke while making submission to the Senate and House of Representatives Joint Committee on the Medium Term Expenditure Framework (MTEF) for the period of 2014 to 2016, decried the persistent attacks on major pipeline arteries supplying crude oil to export terminals stressing that the menace has impacted negatively on the nation’s economy. There is therefore compelling need to change the laws and guidelines prevalent in the industry in line with emerging realities. History has shown that the most effective way of tackling an ideology is by developing superior one to coexist and subsequently engulf it. The PIB is a new ideology and the entire interest and agitation in the oil producing areas on the other hand is a new ideology. What the situation vehemently demands is the swift passage of this revised PIB that meticulously took into account all perceived stakes of the governments( federal and states), the investor, the host communities. When this happens the once peaceful and prosperous oil and gas industry can return to the country for the benefit of all. A stitch in time, they say, ‘saves nine.
Posted on: Thu, 20 Mar 2014 18:35:43 +0000
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