By Obas Esiedesa
Senior Partner, Energy & Commercial Contracts, Primera Africa Legal, Mr. Israel Aye has explained that Nigeria’s failure to pass the Petroleum Industry Bill (PIB) has cost the country over $150 billion in lost opportunities in the past 10 years.
Mr. Aye disclosed this at a one-day online workshop on “Urgent Case for Reforms in the Petroleum Industry”, organized by the Media Initiative on Transparency in Extractive Industries (MITEI) in partnership with Facility for Oil Sector Transformation (FOSTER II).
He said immediately the country disclosed its interest to change the existing petroleum laws, the environment became uncertain as investors wondered at the direction the sector was headed and held on to their investment plans.
He pointed out that a reform of the sector is urgently needed to transform Nigeria from being an extractive industry to a petroleum industry that creates wealth and value for Nigerians.
He noted that the current polices and legislative frameworks for the petroleum industry were put in place long ago “specifically to support the activities of the International Oil Companies (IOCs)”.
He said the basic petroleum laws were put in place to facilitate the upstream sector with hardly anything in the midstream, and with downstream focusing on conservation and price control.
According to him, “Regrettably in the last 60 years we have been net producers of hydro carbon and not net consumers. And that is really sad. Energy consumption is what create wealth not energy production alone.
“You are blessed if you have the means to produce the energy you consume but perhaps you are foolish if you produce energy to sell whereas you basically living in the Stone Age and not modernizing or importing parts of the produce”.
He expressed worry that the “housing of policy and regulatory framework” in the person of the Minister of Petroleum Resource has led to the under-development of the industry.
“At the moment, what is known as the Department of Petroleum Resource does not have any legal backing for its existence because what was created originally as an inspectorate to look after regulations was created by Section (10) of the NNPC Act”, he added.
Aye explained that over time it has become difficult to define what exactly the DPR is.
“Is it a department in the Ministry of Petroleum Resources? Is it an outcrop of the NNPC? Is it the Minister’s back office? It is confusing”, he added.
He advocated for the creation of a back office for the Minister of Petroleum Resources which will be peopled by highly professionalise staff that will be there “minister in, minister out” and would provide continuity in policy formulation.
“Then we need to create by statute a super regulator that will be an independent institution that will oversee regulations in upstream, midstream and downstream”, he stated.
At the end of the meeting, participants agreed that the Federal Government should ensure details of the beneficial owners of prospective bidders are included among key conditions for those interested in participating in the licensing round for the marginal oil and gas assets planned for later this year.
The group held that the disclosure of beneficial ownership information would promote transparency in the process and encourage serious bidders to show interest in the bid.