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Realising that the continued delay in the passage of the Petroleum Industry Bill, a law that could rewrite extant operational anomalies in Nigeria’s oil and gas sector was hurting the industry and the nation, the Nigerian National Petroleum Corporation asked the National Assembly to expedite action in making it a law, writes Chineme Okafor

Last week, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, said the long delay in the passage of the PIB had led to uncertainty in Nigeria’s oil and gas industry.

Baru, in a statement from the Group General Manager, Public Affairs, Ndu Ughamadu, explained that Nigeria was losing a lot of business opportunities from the non-passage of the bill by the National Assembly.

He also noted that in addition to the uncertainties created by the absence of such refined industry governance law, the recent move by the National Assembly to amend the Nigeria Liquefied Natural Gas (NLNG) Act had dampened investor’s optimism in the oil industry.

According to him, passing the PIB had become an urgent task the legislators must embrace to save the country’s oil industry from going under with investment isolation.

Baru also explained that the industry was focused on ensuring stability and security of its investment, personnel and investors, as well as addressing all community related issues that usually impact its productivity.

“The review of the NLNG Act by the National Assembly is causing a challenge for the Federal Government and IOCs and it is sending wrong signals to the international community about how business is done in the country,” Baru had stated while pointing out that the global LNG market was growing at a tremendous rate that ought to be taken advantage of with the passage of PIB.

He, however, explained that the government would work out modalities to see that key LNG projects such as the Bonny NLNG Train 7 and Brass LNG take off in the months ahead after which the Olokola LNG would come on board if the fundamentals were strong.

The GMD stated that the NNPC was refocusing on the Brass LNG and rebuilding the confidence of investors on the project after the exit of ConocoPhillips a few years ago because Nigerians would benefit from it in terms of taxes, royalties and profits.

“We are refocusing on Brass LNG and rebuilding the confidence of the IOCs in the project. It has a lot to do for Nigerians as it will create employment opportunities and create more revenue opportunities for the Federal Government. We will continue to put the right enablers in place for the project to go on,” Baru said.

 

Why the Urgency to Pass PIB?

While it had been obvious for years, the urgency to pass the bill was however, underlined again in the last quarter 2016 policy brief of the Nigerian Extractive Industries Transparency Initiative (NEITI), which stated that Nigeria has so far lost $200 billion from its failure to pass an enabling law for the petroleum industry.

Titled: ‘The Urgency of a New Petroleum Sector Law,’ NEITI declared in the policy brief that some of the losses were from projected investments put at $120 billion ($15 billion yearly), which had been deferred due to regulatory uncertainty.

NEITI explained that clear, unambiguous rules, predictable policy-making and efficient regulations have been lacking in the industry since the process of enacting a law for it commenced.

It equally said that the industry had continued to deteriorate because the laws governing its operations are not sufficient for effective regulation and in some instances too outdated to be relevant in today’s global energy environment.

“Though eight years in the National Assembly, the motion around the PIB has been on for all of sixteen years. Sadly, there is little about what is going on at the moment to suggest real movement or adequate learning from the past,” said NEITI in the brief.

It further stated: “The PIB ship should be rescued from a start-stop, unhurried and uncoordinated mode and brought swiftly ashore.”

Insisting on an executive push for the bill, NEITI said: “There is need for President Muhammadu Buhari to take the lead by investing his presidential capital on this all-important legislation, putting in place a mechanism for rallying the stakeholders to a consensus, and using this law as one of the pillars of the bridge to a much needed economic recovery.”

NEITI linked the non-passage of PIB to other economic challenges of Nigeria, stating that the country’s foreign reserves and currency value were being constantly battered by continuous importation of refined petroleum products that should otherwise have been produced in-country if the refineries were active.

“The process of enacting a new law for Nigeria’s petroleum sector has gone on for far too long, and at enormous costs to the country. More urgency and better coordination are needed on the passage of this very important bill.

“The PIB is one of the most important bills ever to be contemplated in Nigeria’s history, yet the one that has taken the most time and generated the most activity without legislation,” NEITI said, adding that the setbacks suffered by the bill were not due to poor understanding of the problems or the deficiency in expert inputs, but largely due to disagreements among stakeholders on the regulatory frameworks, including power of the minister, ownership and control of the resources, host community benefits, environmental concerns, appropriate fiscal regime, among others.

 

Commitment to Pass Bill

But while NNPC and other stakeholders have insisted on passing the PIB immediately, the Senate in February indicated it would pass a governance aspect of the bill entitled: Petroleum Industry Governance Bill (PIGB), which was separated from the contentious fiscal aspect of the whole bill latest by April.

Its latest position on the bill was made known by its Committee Chairman on Petroleum Upstream, Senator Donald Alasoadura, who spoke in a plenary comprising the Group Chief Executive of Oando Plc, Wale Tinubu and Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, at the just-concluded Nigeria Oil and Gas Conference and Exhibition in Abuja, where they discussed how new legislations and policies could transform Nigeria’s oil and gas sector.

Alasoadura explained that the Senate had advanced its works on the PIGB currently before it and would pass it into law latest by April 2017. He said the bill, which seeks to address all governance-related issues in the industry, would by the end of March go through its third reading, adding that without any unforeseen delays, it would become a law afterwards.

He also stated that Senate would subsequently pass two additional laws to complement the PIGB, although, he did not disclose the two other bills to be passed.

“Once a bill gets to its third reading, it is as good as being passed. We are expecting the bill to be passed in March or latest by April.

“The Local Content Law will also be properly taken care of. We have asked for areas of amendment from the Executive Secretary and we will be glad to do it,” he said.

The senator further stated: “We know we need laws that are in line with international standards. We need an NNPC that will be smooth, commercially oriented, that can run smoothly and make money.”

According to him, the legislators have decided to have only one regulatory body in the sector to ease the process of doing business and attract more investments.

“That it takes time like a year to set up a business in the industry is an aberration. We are thinking of when we have a timeline for all businesses to be completed within six months,” Alasoadura added.

Source: This Day

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