It is a significant step in the right direction

In a small but significant step geared towards repositioning the oil and gas sector in the country, the Senate last Thursday completed the passage of the governance component of the Petroleum Industry Bill. With a new structure that takes the oil industry assets and control from the Nigerian National Petroleum Corporation (NNPC), the passed bill, if and when it eventually becomes law, will achieve the strategic objective of freeing the oil industry from the stranglehold of a perennially corrupt machinery of government.

However, against the background that the Seventh Assembly of the House of Representatives also passed a variant of the PIB that lapsed because there was no concurrence by the Senate, it may be too early to crow about the passed bill. Besides, the Petroleum Industry Governance Bill (PGIB) is just one of the five bills proposed by the National Assembly after 17 years of tinkering with several drafts, which means that there is still a long way to go before there are laws governing every aspect of the oil and gas industry in Nigeria.

The PGIB passed by the Senate scrapped the NNPC, the Department of Petroleum Resources (DPR), the Petroleum Products Pricing and Regulatory Agency (PPPRA) as well as several government agencies in the oil sector while creating new entities to oversee activities in the sector. These new entities are the National Petroleum Company (NPC), the National Petroleum Assets Management Commission (NPAMC) and the National Petroleum Regulatory Commission (NPRC). Under the new governance structure, the NPC would operate as a profit-driven commercial entity while the NPAMC would be a single petroleum regulatory commission, with a clear mandate to oversee the sector.

The passed bill also saddles the commission with the responsibility for health and safety regulations in the industry and would collaborate with the Ministry of Environment on environmental issues. The commission is expected to be funded through the retention of 10 per cent of the revenue it generates though the expenditure is subject to appropriation by the National Assembly. Meanwhile, the NPRC will replace and take over the functions of the PPPRA and DPR when the PIGB finally becomes law.

There is no doubt that the PIGB will help strengthen the institutional and governance structure of the petroleum industry with the promotion of transparency and accountability. But there are still pertinent questions that need to be addressed: Will the PGIB, as passed by the Senate, help to address fundamental questions that will lead to the creation and expansion of national wealth or is it another elite tinkering with formula for sharing extractive resources? Has it taken care of all the problems that inhibit growth in the sector? Will it be acceptable to the other tiers of government i.e. states and local governments that also have stakes in the sector? Have all the governance issues in the oil and gas sector been addressed?
Again, there are other issues.

While dismantling the NNPC may excite many Nigerians, given what the company has represented over the years, experience has also shown that the entrenched government reflex of creating new agencies to deal with systemic challenges has only led to the relocation of the various seats of abuse, rather than its elimination.

While we must commend the Senate for the passage of the PGIB, even as we hope that the House of Representatives will speed up their own process so that there can be a harmonious version to assent, it is important that the lawmakers see this as the beginning of their work. As they work on the enabling legislation, they must engage the oil and gas sector with a good sense of history, the highest level of patriotism and in accordance with the interest of the Nigerian people.

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