One of the greatest fears for the Petroleum Industry Bill, PIB, which the executive presented to the National Assembly before it went on recess, is the fact it may not survive this new round of legislation like its predecessor.
The fear is based on the fact that there are already multiple versions of the bill, even as the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has explained that the authentic bill is the one she personally signed with her hands.
Apart from that, the Senate has also said it will introduce its own bill, which also introduced another twist to the matter. Although the Senate said it only threatened to do so in view of the continued delay by the executive to present the bill, and that it needed to do so in view of the impart of the non-passage of the bill on the nation's economy in terms of attracting new investments.
Playing safe
As it is, it appears there is some kind of embargo on speaking about the PIB, as hardly any operator- indigenous or multinational wishes to speak on the matter. Even agency officials say it's "a no-go area". A few that did, played safe in terms of their critique of the bill.
However, Alison-Madueke had given the assurance that the new bill is fair to all operators and prospective investors in the industry, adding that most of the contentious issues in the previous bill, particularly with regard to fiscal terms had been resolved.
For about 12 years the Federal Government had tried to introduce sweeping reforms in the oil and gas industry, with a view to making the sector less opaque, less corruption prone and more transparent and accountable, whilst strengthening the institutional organs.
The reforms are to be encapsulated in the PIB, a process that has lasted more than a decade, and undergoing a second legislative session at the National Assembly. The former PIB failed to scale through the 6th legislative session after eight years of politicking. The lawmakers in the session, which ended in July 2011 claimed they got confused by the multiple versions of the bill in circulation at the Assembly.
Variations in draft proposals
History, may again be repeated as some of the provisions in the draft bill submitted by the Senator Udo Udoma's PIB Technical Committee set up by the Petroleum Minister are at variance with the copy signed by the minister.
For instance, the new PIB reintroduced discretionary oil block allocation, which was not only, not part of the committee's draft, but also negates the principles of the Extractive Industries Transparency Initiative, EITI, for which Nigeria is a signatory.
Section 191 titled, "Powers of the President to grant licences and leases in special circumstances," the new draft bill stated that "Notwithstanding the provisions of subsection (3) of section 190 or any other provision of this Act, the President shall have the power to grant a licence or lease under this Act."
Section 190:3 had specifically stated that "There shall be no grant of discretionary awards, except as provided under section 191 of this Act.
In addition, whereas the Committee's draft proposal expunged the existence of agencies such as the Petroleum Products Pricing Regulatory Agency, PPPRA; and the Petroleum Equalisation, PEF, against the backdrop of the deregulation of the downstream sector, the new executive bill reinstated these institutions. The development raises questions about government's commitment to fully deregulate the sector, which in the recent time has proven to be the easiest avenue for corruption.
There is also the issue of too much power vested in the office of the minister, which industry players fear can be open to abuse.
Besides, the General Manager, Health Safety and Environment, HSE, Seplat Petroleum Development Company Ltd., Mr Oghor Oghenevo, criticised that the new PIB falls short of expectations in HSE issues. According to him, "In my own view, there was inadequate attention to HSE in the PIB."
Oghenevo, speaking at a conference organised by energy journalists in Lagos last week, noted, "The mention of reform to the industry and the relief the much anticipated PIB might bring despite its protracted prenatal crisis. This emotion is regardless of the version of the document under circulation
Some members of the PIB Technical committee who expressed surprise at some the provisions of the new bill, told Sweetcrude that "there was no need for setting up the various committees on the PIB when the executive had already decided on what it wanted to do by setting up a secret committee."
According to one of them who did not want to be identified, "We still do not understand why the executive tinkered with the bill. So now, we expect the National Assembly to be the saving grace by protecting our natural wealth for our common good."
Nigeria is losing money
Many of those who called for support for the new PIB, are doing so in view of the divestment in the petroleum sector and its impact on the Nigerian economy, which is almost solely dependent on petro-dollars.
The Chief Executive Officer, International Energy Services, IES, Dr. Diran Fawibe, argued that in the last couple of years, Nigeria has been spending more money than it is generating due to lack of new investments.
Rather than playing politics with the bill, Fawibe called for more support for the passage of the bill in the interest of the nation, which depends heavily on oil revenues for its survival.
"If we are not politicising the Bill, it should be able to go through the legislative protocols in the National Assembly. But of course, we know that traditionally, oil is politics, so we don't expect that the Bill will scale through without the element of politicking. People should have the overriding interest of the country at heart and allow the Bill to be passed because if we don't, it would have meant that we wasted about eight years investment in the industry
"A lot of investments are going to other countries and Nigeria is not in the position of the 1970s when we were the only major producer in Africa. Now Angola appears to be overtaking Nigeria, not in terms of level of production but in terms of inflow of investments. And there are some other countries now in Africa that are discovering oil. See the way people are running after Ghana; a country with proven reserves of about one or two billion barrels of crude and leave the one with 35 to 37 billion barrels of oil. So we still need to put our acts together because this bill is very important to the growth of Nigerian industry."
Agreeing, the Director, Department of Petroleum Resources, DPR, Mr. Osten Olorunsola, noted that due to the non-passage of the bill only one major final investment decision, FID, has been taken the industry in over five years, as no new investments are being made.
The industry regulator argued that it will take Nigeria the same length of time, if not more for the country to recover from the losses because dividends from the industry are in the long term.
"We need to ensure that investment flows continue in order to create more jobs and reduce unemployment, boost economic production and accelerate economic growth," he said recently.
While the country is estimated to have lost tens of billions of dollars in the upstream through lack of investments, in the downstream sub-sect it is losing trillions of Naira.
The Director, Corporate Services, NNPC, Dr. Timothy Okon, speaking on, "Energy Industry Deregulation: The Prospects and Challenges," said in Lagos last week that deregulation is the only way out if the sector must be efficient.
Okon, who described the current subsidy regime in the sector as "unsustainable", said the system not only distorts efficiency of the market structure, but also creates huge deficit burden on Nigeria's budgeting process.
He said, "Current deficit in budget provisions for subsidy will be amplified from N130billion to N1.3trillion for 2011, "adding that "this is a major drain on broad national economic development," and not only disproportionate to capital budget, but also a huge disincentive to private sector investment.
Policy Objectives
The main objectives of the new PIB, which is an amalgam of 16 existing industry laws include:
*Create a conducive business environment for petroleum operations;
*Enhance exploration and exploitation of petroleum resources in Nigeria for the benefit of the Nigerian people;
*Optimize 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;
*Establish commercially oriented and profit driven oil and gas entities;
*Deregulate and liberalise the downstream petroleum sector;
*Create efficient and effective regulatory agencies;
*Promote transparency and openness in the administration of the petroleum resources of Nigeria;
*Promote the development of Nigerian content in the petroleum industry;
*Protect health, safety and the environment in the course of petroleum operations; and
*Attain such other objectives to promote a viable and sustainable petroleum industry in Nigeria.
Consequently, weighing these objectives against individual interest will determine whether national good will override selfish political interests to see the bill passed into law.
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