When early last year, the two chambers of the National Assembly passed the harmonised version of the Petroleum Industry Governance Bill (PIGB), many (including operators and stakeholders) were relieved that finally a part of the 16-year-old Petroleum Industry Bill (PIB) would become law. The subsequent refusal by President Muhammadu Buhari to assent to the bill disappointed the country, and threw spanner into the effort by advocates to have a law that would kick-start the reform of the petroleum industry which has been governed by a law enacted in 1969, writes OBAS ESIEDESA.
For 16 years, the country has tried and failed to enact a new law for the sector that would bring in the much needed reform to ensure that Nigeria and its people get maximum benefits from the sector that contributes almost 90 percent of the its foreign exchange earnings and 95 percent of government revenue.
The journey started in 2002 when the then President, Olusegun Obasanjo established the Oil and Gas Reform Implementation Committee. The committee recommended separate commercial institutions in the sector from the regulatory and policy-making institutions.
The work of OGIC finally led to the first Petroleum Industry Bill by the Executive Arm of government in 2008. This did not sail through the National Assembly. But the Senate in 2011 brought its own version, another version was also drafted by the Executive through the then Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke. These also failed.
In 2015 however, the Senate broke the PIB into four separate bills namely, the Petroleum Industry Governance Bill (PIGB); the Petroleum Industry Administration Bill (PIAB); the Petroleum Industry Fiscal Bill (PIFB) and the Petroleum Host and Impacted Community Bill (PHCB).
The first part, PIGB, was what the National Assembly passed and the President rejected. The is now again with the National assembly whose term would end in just over two months’ time.
The need for reform in the sector
Two significant global policies in the past few years have called to question the future role crude oil will play in the world energy mix. Most countries are moving into electricity powered vehicles, with many setting year 2040 as date to phase out petrol and diesel powered engines.
Also, most African countries have now found oil in commercial quantities which has reduced the attraction of the Nigerian petroleum industry. These factors mean Nigeria cannot continue in its present path as it will only lead to disaster.
With proven reserve dwindling as many companies stay away from finding new fields or investing in new acreages, the new laws are expected to modernize the sector, making it more open and accountable to the people.
According to industry experts, the PIGB and the other bills would eliminate uncertainties in the sector and create the needed environment to attract fresh investments.
The laws will increase oil and gas production for domestic markets and exports. Higher levels of production will mean more employment and business opportunities in Nigeria and more revenues for government.
Speaking on the need to urgently pass the bills, the National Coordinator of Publish What You Pay Nigeria, Mr. Peter Egbule urged the National Assembly to urgently convene a session with the Executive Arm where issues raised in the President’s decline of assent will be discussed and resolved.
Egbule noted that the country is losing billions of dollars in the non-enactment of the PIBs, adding that the country does not have the luxury of time given the dynamics in the oil and gas sector globally.
According to him, “The passage of the PIB is urgent, it is critical and it is long overdue. I don’t think there is any clime where you can talk about reform of the oil and gas sub-sector without having a very good regulation, policy and framework. We don’t have it. The importance of passing not just the PIGB but all other bills that make the PIB are as important as the need to get the economy running on a very good footing. It is absolutely critical, it is urgent, it is needful. And if we are sincere with ourselves, it has made us lose a lot of money that would have been gotten through direct foreign investment.
Continuing he said: “The National Assembly has the responsibility of having a joint session with the Executive arm and if there are sections the President feels need to be reviewed, then let the joint session review it. The National Assembly should do that.
“Secondly, they should be able to call the Executive Arm to order and make them understand the urgency of the situation. The way these things are being handled it is like we have the luxury of time. We don’t. Gone are those days when we were the only bride in oil and gas industry as far as Africa is concerned. Today, almost all our neigbours are beginning to discover oil in commercial quantity. Investors and buyers are gravitating towards them”.
With barely two months to the end of the 8th Assembly, he urged the lawmakers to increase the pace of work on the bill and ensure its passage.
“This National Assembly has a better understanding of the situation than the rest. So they should urgently call that meeting and let the Executive arm understand they situation we are in. The power dynamics in oil sector is changing globally and at some point we may have to consume our oil. Recently, I saw a publication that said some of our vessels were floating on the high seas loaded but nobody is buying. That is a very strong pointer that we have to act and act quickly.
“Immediate implication of not having the reform law is that some buyers will withdraw from doing business with us. Some big players in the oil and gas especially the IOCs will reduce their investment. They will not put extra money in this economy. Rather they would want to reduce their risk because it shows that Nigeria is a very risky clime to operate in the oil and gas sector”.
He said IOCs will go to places with stable modern laws which will lead to job losses because if investment is reduced it means operations will also slow down and the hands that are needed will be reduced.