- Says $200bn lost to such legal uncertainty in oil industry
Chineme Okafor in Abuja
The Nigeria Extractive Industries Transparency Initiative (NEITI) has asked President Muhammadu Buhari to take the lead and infuse urgency into the process of passing the Petroleum Industry Bill (PIB) to reform Nigeria’s petroleum industry, saying the country is losing up to $15 billion worth of annual investment from the uncertainty created by such lack of reforms.
NEITI in its latest policy brief titled: ‘The Urgency of a New Petroleum Sector Law,’ stated that Nigeria has wasted too long a time to get the PIB into law, while the oil industry suffers from such delay.
“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. It therefore advised that the PIB ship should be rescued from a start-stop, unhurried and uncoordinated mode and brought swiftly ashore,” said the NEITI in the policy brief.
It stated that the PIB is one of the most important bills ever to be contemplated in Nigeria’s history, yet has remained the one that has taken the most time and generated the most activity without legislation.
NEITI said it has a legitimate interest in the country’s extractive industries as an agency set up to enthrone transparency and accountability in the extractive industries, and so wants a law to propel the activities of the petroleum industry for the benefit of the country.
It observed in a statement communicating an abridged content of the brief in Abuja that the setbacks suffered by the PIB 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.
It said in the process of all these, every administration has produced its own PIB drafts, but not the law, and therefore recommended that an inclusive task team should be urgently empanelled with Buhari in the lead and charged with building consensus among stakeholders.
“This task team should draw up a clear and well-communicated roadmap and fast-track the passage of the law in piece-meal rather than an omnibus approach. NEITI therefore calls on President Muhammadu Buhari to invest 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,” it stated.
Expressing its disappointment on the inability of successive governments to enact a law for a sector that accounts for over 80 and 90 per cent of its revenue and exports earnings respectively, NEITI pointed out that Nigeria has experienced huge losses to the tune of about $200 billion due to failure to pass an enabling law for the petroleum industry.
Some of these loses, it said are projected investments due to regulatory uncertainty which experts have put at $120 billion ($15 billion yearly).
“Governance deficiencies have been equally prolific,” said NEITI which added that its 2013 audit of the oil and gas sector revealed that $10.4 billion and N378.7 billion (N3.2 trillion at the current exchange rate) were lost as a result of under-remittance, underpayments, inefficiencies, theft or absence of clear fiscal regime in Nigeria’s oil and gas sector.
While stating that the losses in economic terms have equally been huge, NEITI traced the journey towards the enactment of a petroleum law to the past 16 years when the process of reforms for the sector started. It noted that Nigeria’s oil and gas sector has continued to deteriorate due to the fact that the laws governing the industry are not sufficient for effective regulation and in some instances too outdated to be relevant in today’s global energy environment.
It said even though Ghana does not operate a complex petroleum industry, its ability to pass a petroleum law just after two years of after commencing the process should be a lesson for Nigeria. It added that the plurality of action on the petroleum sector law indicate that Nigeria has not learnt from its past experiences to guarantee that the present journey will be any different.
It cautioned that the current efforts at reviving the process of enacting the law are already exhibiting disturbingly familiar patterns and have added a new dimension on whether the bill should be taken en bloc or passed piece-meal.
NEITI posited that to rely on rules and methods put in place four decades ago for a dynamic and volatile industry like the oil and gas sector has been a wrong and very costly choice, adding that government should not lose sight of the reasons for reforms in the sector which were for lack of transparency, accountability and efficiency.
It said the passage of the bill should be prioritised as one of the planks of economic recovery for Nigeria.
