The recent passage of the Petroleum Industry Governance Bill by the House of Representatives will give investors the assurance that Nigeria is committed to creating a predictable operating environment for investment decisions in the oil and gas sector. Ejiofor Alike reports
After over four decades of oil and gas production in Nigeria, the administration of former President Olusegun Obasanjo had initiated steps to enact a modern legislation that would replace about 16 obsolete legislative and administrative instruments in Nigeriaâ€™s oil and gas industry
This idea gave birth to the Petroleum Industry Bill whose journey started on April 24, 2000 when Obasanjo set up the Oil and Gas Reform Implementation Committee (OGIC), headed by his then Honorary Special Adviser on Energy and Strategic Matters, the late Dr. Rilwanu Lukman, to carry out the first comprehensive reform of the oil and gas industry.
Obasanjo left office before he could implement the National Oil and Gas Policy (NOGP) report that was submitted by the Lukmanâ€™s committee.
The late President Umaru Musa Yarâ€™Adua reconstituted a new committee, also headed by Lukman, on September 7, 2007.
Lukmanâ€™s new committee, which submitted its report on August 3, 2008, was mandated to â€œtransform the broad provisions in the NOGP into functional institutional structures that are legal and practical for the effective management of the oil and gas sector in Nigeriaâ€.
The PIB, which also seek to replace about 16 obsolete legislative and administrative instruments in Nigeriaâ€™s oil and gas industry and transform them into a single law, emerged from the report of these two committees.
Unfortunately, 17 years after the bill was submitted to the National Assembly, the reform bill could not be signed into law because of the politics associated with the fiscal regime and other controversial provisions, which the successive law makers could not resolve.
However, on assumption of office, this present administration had split the Petroleum Industry Bill (PIB) into four parts â€“ Petroleum Industry Governance Bill (PIGB), Petroleum Industry Administration Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and Petroleum Host Community Bill (PHCB) to fast-track its passage into law.
The PIB was originally submitted to the National Assembly by Yarâ€™Adua, and a revised version submitted by his predecessor, former President Goodluck Jonathan, before Buhariâ€™s administration split the bill for ease of passage.
In what could be described as a historic move, the Senate on May 25, 2017 passed the PIGB, the first leg of the 17-year-old PIB.
Major highlights of PIGB
With the passage of the bill, a new regulatory agency, known as Nigeria Petroleum Regulatory Commission (NPRC), would take over the functions of Petroleum Inspectorate (PI); the Department of Petroleum Resources (DPR) and the Petroleum Products Pricing Regulatory Agency (PPPRA).
The new commission, among other things, will also administer and enforce policies, laws and regulations relating to all aspects of petroleum operations which are assigned to it under the provisions of the Act.
With the bill signed into law, two new companies – Nigeria Petroleum Assets Management Company (NPAMC) and National Petroleum Company (NPC), would be established with certain assets and liabilities of Nigerian National Petroleum Corporation, (NNPC), while the NPC, for instance, would operate as a full independent commercial entity.
The move, according to the Senate, is geared towards unbundling the NNPC and the petroleum industry.
In the PIGB, the Ministry of Petroleum Resources would be renamed Ministry of Petroleum Incorporated.
The new bill also provides that upon the recommendations of the new commission, the Minister of Petroleum Resources can grant, amend, renew, extend or revoke any licence or lease required for petroleum or production, pursuant to the provisions of the Act or any other enactment.
The bill also stipulates that when the commission is created, it shall be vested with all assets, funds, resources and other movable and immovable property, which immediately before the commencement of operation of the new commission, were held by the PI, DPR and PPPRA.
The PIGB vested more powers on the commission, as the President or the Minister of Petroleum Resources, who currently wields such powers, would be stripped of such powers.
The bill has significantly reduced the powers of the President and the Minister of Petroleum Resources in exercising control over the oil and gas sector.
The PIGB is expected to help promote transparency and accountability in the administration of petroleum resources of Nigeria as well as foster a conducive business environment for petroleum industry operations.
The Senate President, Senator Bukola Saraki had also hinted that the bill will reduce corruption in the industry.
After the passage of the PIGB by the Senate, it was sent to the House of Representatives for concurrence before being transmitted to the President for assent.
Last Wednesday, the lower chamber of the National Assembly passed the reform legislation, setting the stage for the transmission of the bill to President Muhammadu Buhari for his assent.
The Speaker of the House Hon. Yakubu Dogara had last Thursday said the new legislation would be transmitted to the president within the next few days, and called on Buhari to, as a matter of urgency, sign the bill into law.
Dogara also explained that the 8th National Assembly had to move on and pass its own version of the bill, following the failure of the executive to present a draft bill to the National Assembly.
Dogaraâ€™s Special Adviser on Media and Public Affairs, Mr. Turaki Hassan said the Speaker had described the passage of the PIGB as a historic and landmark achievement by the 8th National Assembly after it was first introduced to the parliament by late President Yarâ€™Adua in 2008.
Boosting investorsâ€™ confidence
Nigeriaâ€™s oil and gas industry has suffered dearth of investments for the past 17 years following the failure of the federal government to pass the PIB.
With the non-passage of the PIB, the countryâ€™s oil and gas sector is afflicted with a protracted reform, which created uncertainty in the operating environment, and scared investors, especially foreign investors.
The lack of clarity of terms in the operating environment forced many investors to abandon the country and sanction projects in other countries where the operating environment is predictable.
This development led to loss of investments as investors relocated from Nigeria to elsewhere.
Despite the efforts made by the successive administrations to woo investors, only pockets of projects have been sanctioned since the past 10 years while major projects have either been deferred or cancelled.
THISDAY had reported that President Muhammadu Buhari has travelled round the world to solicit for investments but his efforts have only yielded signing of MoUs as no major investments have been launched in Nigeriaâ€™s oil and gas sector.
With the uncertainty in the oil and gas sector, investors have not taken the risk to stake billions of dollars on investments in the sector.
Most investors and operators have put their major investments on hold, pending the passage of the PIB, which will define new fiscal terms for the industry.
The passage of the PIGB will no doubt give investors the confidence that the country is committed to creating a predictable environment for investors to take major investment decisions.
The federal government should expedite actions to conclude the 17-year-old reform by fast-tracking the passage of Petroleum Industry Administration Bill, Petroleum Industry Fiscal Bill and Petroleum Host Community Bill (PHCB).