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‘Nigeria losing competitive edge over PIB delay’

Participants at a recent roundtable on the Petroleum Industry Bill (PIB) organised by the Nigeria Natural Resource Charter (NNRC) in Abuja were worried that Nigeria…

Participants at a recent roundtable on the Petroleum Industry Bill (PIB) organised by the Nigeria Natural Resource Charter (NNRC) in Abuja were worried that Nigeria was losing fresh oil industry investments to rival destinations in Africa due to PIB delay.

The participants noted that the development had cost Nigeria’s oil and gas industry billions of dollars investment and returns to the economy.

They blamed the loss on uncertainties in the operational environment, particularly on legal terms of contracts and acreage allocations.

A communique at the end of the meeting read in part: “Nigeria’s competitive advantage is consistently being eroded by increasing discoveries of crude oil in more stable economies operating within Africa such as Tanzania, Ghana and Mozambique.”

These concerns summarise the myriad of comments that have greeted the continued delay in the passage of PIB.

Although the Minister of State for Petroleum Resources, Timipre Sylva, said the much awaited PIB would be passed into law by the National Assembly by mid-2020, the lawmakers are yet to receive a revised version of the bill for legislative processing and passage.

With the COVID-19 pandemic disrupting government earnings and investment decisions, there is no better time to revisit the bill and open up the oil and gas sector for investments.

Recall that a presidential committee set up in 2007 to look into the oil and gas sector came up with the idea of the bill, which aims to increase transparency at the Nigerian National Petroleum Corporation (NNPC) and to increase Nigeria’s share of oil revenue.

Drafts of the bill, however, became very contentious due to objections from International Oil Companies (IOCs) and the NNPC. Consequently, the bill was never passed into law.

Recently, the Senate Committee on Petroleum (Upstream and Downstream) said very little would be achieved without the bill.

The committee noted that it was the desire of the National Assembly to pass the PIB before the end of 2020, but expressed worry that with the continued delay by the presidency, the plan could be endangered.

The Senate President, Ahmad Lawan, had earlier in 2020 pledged that the senate would ensure the transmission of the approved version of the PIB to President Muhammadu Buhari for assent before the end of 2020.

Lawan said, “Our petroleum industry is almost stagnant, and for long needing profound reform. Our oil and gas-related committees are, therefore, expected to work hard to take the lead in our determination to reform this vital sector. It is the desire, indeed the design of this senate; that the Petroleum Industry Bill is passed before the end of 2020.”

The PIB was first introduced in the National Assembly (NASS) in 2000, thereby making it easily the bill that has spent the longest time there (NASS).

Having suffered setbacks during the Seventh NASS, it was decided that a new approach would be adopted to facilitate its passage and signing into law. The bill was subsequently unbundled into several segments by the Eight NASS, which was aimed at making it easier for the less-controversial aspects to have easy passage while the more controversial aspects were dwelt upon more.

The PIB was split into four: Petroleum Industry Governance Bill (PIGB), Petroleum Industry Administrative Bill (PIAB), Petroleum Host and Impacted Community Bill (PHIB) and Petroleum Industry Fiscal Bill (PIFB).

In January, 2018, the PIGB was passed by the House of Representatives. The senate had passed the PIGB in May, 2017, marking a significant milestone in the journey of replacing the obsolete Petroleum Act (1969). Some of the underlying principles included effective and capable institution, clear roles and accountabilities and transparency and ease of doing business.

Post-COVID-19 oil economy

With oil prices hitting an all-time low due to price wars between Saudi Arabia and Russia, as well as reduced demand occasioned by the pandemic, it is apparent that oil dominance as an energy source of choice in the post-COVID-19 economy will be challenged.

Experts argue that the time is ripe to streamline the number of MDAs involved in the governance structure in the Nigerian oil and gas industry which conforms to the overall target of the government in reducing cost of governance based on current realities and scarce resources.

The Director General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, in lending his voice to the cause, urged the government to pass the PIB into law.

Yusuf said, “Today, that revenue is facing a serious risk of shortfall from illegal bunkering, declining demand from buyers, stalled investments in the oil and gas sector and emerging technology in renewable energy.”

Lawmakers and the executive must begin to consider completing the PIB process to strengthen the oil and gas industry so that Nigeria can reap from that. This is because in a few years, the fossil fuel economy may face a huge threat from greener and cleaner fuel that could make oil dependence irrelevant.

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