Wednesday, August 1, 2012

Imperative of a New Nigerian Petroleum Industry Act

On Wednesday, July 18, 2012, the Nigeria Petroleum Industry Bill began its second journey to the National Assembly when President Goodluck Jonathan forwarded the 223 page bill to the lawmakers for consideration, adoption and speedy passage. It would be recalled that the bill had earlier been introduced by late President Umaru Musa Yar’Adua to the national parliament in 2009. This piece of legislation had been enmeshed in controversies as several versions were being circulated so much so that it was difficult to ascertain the original. Some Senators were also accused of having been sponsored by an International Oil Company on a retreat to Ghana thereby engendering conflict of interest. Even while addressing the media to inform the general public that the President has sent the bill to the National Assembly, Minister of Petroleum Resources, Dieziani Allison-Madueke disowned the versions that were being circulated on the internet prior to July 18. She said the authentic one has some security features which include Coat of Arms and petroleum industry bill 2012 signature in red pen on each page.

There is no doubt that the petroleum industry bill which is an agglomeration of about 16 extant legislations governing the oil sector, some of which have been in existence for over 50 years, need complete overhaul.  The importance of the bill could be seen in the 11 objectives which it seeks to achieve. These are: “To create a conducive business environment for petroleum operations; enhance exploration and exploitation of petroleum resources in Nigeria for the benefit of Nigerian people; optimize domestic gas supplies, particularly for power generation and industrial development; establish a progressive fiscal framework that encourages further investments in the petroleum industry while optimizing the revenues accruing to the Government; establish commercially oriented and profit driven oil and gas entities; and, deregulate and liberalize the downstream petroleum sector.”

Other objectives include, “to 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.” 

One of the key features of the new bill as enunciated by the Minister of Petroleum Resources, Mrs. Deziani Allison-Maduekwe, include the unbundling of the Nigerian National Petroleum Corporation (NNPC) into several companies. According to her, the new firms that will be created with the passage of the PIB include National Oil Company, Asset Management Corporation, National Frontier Exploration Services, National Gas Company and the Petroleum Host Communities Development Fund. News report also quoted the Petroleum Minister as saying that the difference between the previous bill which was stalled by the sixth National Assembly and the new version presented to the seventh parliament  lies in the fact that “The fiscal regimes used are so much different. The manner and templates for various calculations have been looked at differently, and other fiscal areas. The issue of domestic gas and fiscal regime for domestic gas has been looked at robustly. The issue of the reconfiguration of the NNPC is to ensure that going forward, it becomes the commercial entity that it is supposed to be and we can actually grow a first rate national oil company that over the years will grow to compete with other national oil companies such as Petronas and Petrobras.”

From the forgoing, it will seem that the long awaited new Petroleum Industry Bill will serve as a panacea to the many malaise of the petroleum sector. Labour and civil society groups have been calling for the quick passage of the magic bill. I align myself with this patriotic call. Unfortunately, a day after the presentation of the bill to the National Assembly, the lawmakers decided to proceed on their annual vacation to resume on September 18, 2012. In fact, the House of Representatives lambasted the presidency for submitting the bill late and for bringing insufficient copies. The House alleged that out of the 500 copies requested from the executive, only three were brought.

Sure, the House of Representative have a valid point to criticize the executive for the late submission of the PIB for consideration, however, honourable members must not use that as an alibi for stalling the speedy passage of this all important legislation that is set to revolutionalize our oil and gas sector. While arguing for quick processing of the PIB, President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Babatunde Ogun observed that “the Nigerian oil industry has been in a state of suspended animation since 2009 with investors cautious about making investments, industry workers apprehensive about their jobs and the Nigerian people clamouring for the restructuring of the state oil company to ensure transparency and deliver more value to Nigerians”  PENGASSAN president further noted that “With new discoveries of hydrocarbons all along the west coast of Africa – Ghana, Sierra Leone, Liberia, as well as on the east coast – Tanzania, Kenya, Uganda, Mozambique not to mention our traditional rivals in the Gulf of Guinea, foreign direct investments have flowed to these new players with none coming our way in Nigeria” According to industry analysts, some $40 billion in exploration and production investments has been halted while the government debated the nature of the PIB. The labour leader therefore enjoined early passage of the bill before countries and companies cum investors start making their budget for next year.

I beseech Distinguished Senators and Honourable Members to please cut short their vacation and resume immediately after the Ramadan Eid-el-Fitr celebration to start the consideration of this pivotal bill in earnest. Considering the huge loss the country has been incurring for its years of inertia in having a comprehensive legislation to drive the oil and gas sector, it is high time this new PIB is granted accelerated review and passage.