Operators Raise the Alarm over Policy Uncertainty in Nigeria’s Oil Industry

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By Ejiofor Alike

Oil and gas industry operators under the aegis of Petroleum Club, Lagos, have raised the alarm over the policy uncertainty associated with the protracted reform in the sector and the delay in the passage of the Petroleum Industry Bill (PIB).

The operators have also decried the protracted 18-year-old oil and gas reform, stressing that the country has lost investments to other countries where the operating environment is predictable.

The Petroleum Club brought together stakeholders in the oil and gas industry for holistic discussions on the recent passage of the Petroleum Industry Governance Bill (PIGB) in addition to examining the remaining three reform bills – Petroleum Industry Administration Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and Petroleum Host Community Bill (PHCB).

Speaking at the PIB workshop in Lagos, the Chairman of the Petroleum Club, Mr. Godswill Ihetu, argued that the aim of the reform is to ensure that the management of the country’s petroleum resources is in line with global best practices.

“Since the year 2000, the process has encountered one obstacle or the other. The continued delay of the passage of the Petroleum Industry Bill, as the policy reform document came to be known, created a climate of policy uncertainty in the management of the petroleum sector in Nigeria. This lack of policy clarity has led to a reduced level of new investments, which went elsewhere. In addition, regulations were weak and outdated and needed to be strengthened and updated. Hopefully, this new PIB, when it becomes law, will address these shortcomings,” Ihetu said.

While lauding the National Assembly for passing PIGB, Ihetu noted that one of the reasons for the delay in passing the PIB was the sheer size of the document.

“The process has encountered one obstacle or the other. The continued delays of the passage of the Petroleum Industry Bill (PIB), as the policy reform document came to be known, created a climate of policy uncertainty in the management of the petroleum sector in Nigeria. This lack of policy clarity has led to a reduced level of new investments which went elsewhere. In addition, regulations were weak and outdated and needed to be strengthened and updated. Hopefully, this new PIB, when it becomes law, will address these shortcomings,” Ihetu said.
“The passage of the PIGB was a good job. You cannot have a perfect document. But I think, by and large, what is in the PIGB is quite commendable, and we would like to support the work they have done – the fact that they have tried to move this as quickly as possible,” Ihetu added..

“However, the 8th National Assembly decided to break up the document into four sections, namely: the Petroleum Industry Governance Bill, the Petroleum Industry Administration Bill, the Petroleum Industry Fiscal Bill, and the Petroleum Host Communities Bill. No deal has been done on the other three parts of the PIB. We, as members of the Petroleum Club, have been given the opportunity to be the first to consider the draft of these three bills. Reviewing these drafts will allow us to better understand and articulate our memoranda in time for the public hearings, which are to be held by the National Assembly next month or so,” Ihetu added.

At the workshop, concerns were also raised by the operators over the inclusion of the Petroleum Equalisation Fund in the PIGB.

“The question is: Are we going to deregulate? If we are going to deregulate, then the PEF becomes a little bit redundant. The issue of deregulating the downstream is not easy; we have been dancing around it. We are now paying subsidy and we are paying subsidy because the crude oil price, which is a big element of the price, has gone up,” Ihetu added.