The expected PIB act should ensure better management of our oil resources
All things being equal, there are expectations that the National Assembly may pass the Petroleum Industry Bill (PIB) into law this year after almost a decade of bickering. It is, however, our hope that when they eventually do, it will be worth the wait, given the critical nature of the industry. We are particular that the outcome would not simply amount to another elite tinkering with formulae and combinations for sharing extractive resources rather than a serious attempt on how to create or expand national wealth.
To address the gap in the legal, institutional and regulatory framework in the industry, there seems to be a broad consensus between the executive and the legislature on critical issues like oil spills, gas flaring, agitation in the host communities, funding of the Nigerian National Petroleum Corporation (NNPC), contract cycles, status and structure of the refineries and the management of the upstream sector vis-à-vis liberalisation, etc. “All studies conducted on the petroleum sector since 1999 are settled on the issue that the role of government in the sector needs to be better clarified whilst the policy, regulatory and commercial institutions need to be given a refocused mandate to ensure better sector governance, transparency of regulations”, said Minister of State, Petroleum Resources, Mr Ibe Kachikwu in the course of his presentation at the National Assembly last November. But there are other problems.
In its October 20, 2014 report on the mismanagement of the oil and gas sector in Nigeria, ‘The Economist’ wrote: “…oil is also being stolen at a record rate and traders’ figures show output at well below the government’s figures. Information about Africa’s biggest oil industry is an opaque myriad of numbers. No one knows which ones are accurate; no one knows how much oil Nigeria actually produces. If there were an authoritative figure, the truly horrifying scope of corruption would be exposed.”
To address some of these challenges, the federal government, according to Kachikwu, has come up with a draft national oil policy, a draft national gas policy and a draft fiscal policy. However, an unresolved matter is the role to be played by the minister in the sector post-reform. Under the current draft, the minister is limited to the policy function and he/she does not sit on the board of the regulator. But like all his predecessors, Kachikwu wants the minister in charge of petroleum to retain the powers to chair the board of the regulator. This, as many experts have warned, conflicts with the idea of insulating the institution from political control and abuse.
Of course there are ecological effects of oil and gas extraction that are felt beyond the individual level. That is why provisions like 13% derivation, Niger Delta Development Commission (NDDC), Niger Delta Ministry and the statutory allocations to states and local governments in affected areas are in place. There is also a large quantum of corporate social responsibility (CSR) contributions by oil companies to their host communities which we are reluctant to admit and own. Attempts must therefore be made not to expand the appetite of looters and increase the competition among squads of gangsters. Even PIB does not vest oil and gas interests of extractive host areas in individuals. It refers to host communities where chiefs and greedy elite hijack everything and leave the people mired in perpetual poverty.
The rest of the oil industry assets and control that is in government hands should be made accessible to the Nigerian and international investing public through both the Nigerian Stock Exchange and other major world stock markets. That is the only way to achieve two strategic objectives: increase Nigeria’s oil and gas wealth and free the oil industry from the deadly stranglehold of a perennially corrupt machinery of government.
Source: This Day