Undoubtedly, the nation’s oil sector requires regulatory, governance and fiscal legislation that would guide the exploration and exploitation of the nation’s hydrocarbon deposits in a profitable manner. Nume Ekeghe reports that to achieve this, the Minister of State for Petroleum, Timipre Sylva and others, especially host communities, have intensified the clamour for the Petroleum Industry Bill given the benefit it portends for Nigeria
The Petroleum Industry Bill (PIB), which is meant to regulate the entire sphere of the industry has struggled to see the light of day despite its introduction to the National Assembly over 16 years ago.
The clamour for this has persisted due to a number of factors including the agitations by the Niger Delta people for a fair deal in the mining of their mineral endowment often referred to as the Black Gold.
The host communities have also come out strongly to advocate for a better deal. While some of them have called for 10 per cent equity shareholding in the three companies that would emerge from the commercialisation of the Nigerian National Petroleum Corporation, others seek the scrapping of the Niger Delta Development Commission, contribution of 10 per cent operating expenses of oil companies to the proposed Host Communities Development Trust Fund and the direct payment of lawful benefits to host communities and families.
Critical Challenges
It was in response to this and other issues that the Minister of state for Petroleum Timipre Sylva and the Group Managing Director of the NNPC, Melee Kyari, said the country needed the PIB like yesterday.
Sylva noted that apart from the COVID-19 pandemic and its induced economic recession, the oil industry is faced with other critical challenges.
According to him, “several nations have announced their intent to comply with the Paris Agreement 2016 and adopted climate change policies by 2050 or 2060. This means that the usefulness of fossil fuel (crude oil) will diminish significantly. Indeed UK, South Korea, China, Brazil and some other nations fall within this category.
“Global financing of fossil fuel projects have also been affected with many investor nations and other major players within the financial ecosystem have reiterated their intention to stop funding projects fitting this description in 2025.
“This will inevitably impact the ability of industry players to access the needed funds with which we will bring assets into production and by extension reduce government’s revenue ordinarily.”
Kyari on his part lamented that the oil industry has not seen significant investments and developments since year 2000 till date. “When we started the journey to PIB in 2000 through the Oil and Gas Reform Committee, that was the beginning of uncertainty in the industry. Since 2000 till this moment, I can also confirm that the industry has not seen significant investments and developments.
“The reason is very clear. We have stagnated and that stagnation we need to exit it like yesterday. Twenty years ago, the topmost companies were oil and gas companies but today the topmost company is a supermarket.
“In more than 30 years to come, we will still be resource dependent in the sense that it is a developing country and we have 70 per cent of our population below 30 years of age. The PIB will bring us back into reckoning to take advantage of the resources that we have today so this country can make progress.”
Public Hearing
Already, public hearings in the Senate and House of Representatives have been concluded. Organised by the National Assembly Joint Committees on Petroleum – Upstream, Downstream and Gas – the Senate sessions ended on a peaceful note after stakeholders made their point, while that of the House of Representatives witnessed a free-for-all by opposing factions of host community associations.
At the upper chamber, Senate President Ahmad Lawan sent a strong message to those who may be out to play the spoilers’ game in the determination of the National Assembly to pass the PIB. To him, the PIB is a task that must be done. He said that the passage of the Bill was long overdue. He said that the 9th National Assembly is eager to pass the PIB and ensure maximum befit for the country in particular and industry players in general, before crude oil loses its savour to new technology in renewable energy.
Arguably, according to him, Nigeria’s oil and gas industry has experienced several shocks and challenges over a long period as a result of outdated laws. He said that the challenges include those dictated by global practices, the persistent calls for the deregulation of the downstream sector, the agitation of the oil producing communities and the unbundling of the NNPC, which necessitate urgent legislative reform.
“It is estimated that with the evolving of new technologies, fossil fuel may be less attractive if not of no value in the next 20 years. It is therefore time for us to make maximum benefit of our fossil fuel reserves through this reform before it fades away.”
To him, the haste by the National Assembly to get the Bill passed is not far-fetched. “As legislators, we will strive to deliver a Bill that will enhance the growth of our oil and gas industry, modernise our fiscal system and enhance competitiveness, while creating harmony for all stakeholders.
“This is a promise we have made and that we shall achieve. Nigeria must have an Oil and Gas Industry that benefits its people. Equally, our Oil and Gas Industry must be competitive. We must create a sustainable investment climate, where business in the sector will flourish,” he added.
Reservations
In spite of the hopes that the existence of a robust and dynamic legislation like the PIB is required to shore up the revenue if the country and cater to the positive interests of investors and Niger Delta stakeholders, IOCs have expressed reservations to the passage of the the bill “in its current form.”
The IOCs, represented by the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and industry (LCCI), at the session acknowledged the commendable efforts of the Federal Government to enact the all encompassing legislation, but warned that the law may reduce Nigeria’s global competitiveness.
“We fear that if the PIB is passed in its current form, it will not meet the government’s objectives of making Nigeria the leading destination for oil and gas investment and the recent scarcity of investment – only $3bn out of $70bn (representing 4 per cent) in Africa – will continue,” chairman of the OPTS, Mike Sangster declared.
The OPTS boss insisted that the lack of competitiveness was caused in part by the high cost of doing business in Nigeria, with overall project costs and operations costs being 69 per cent and 42 per cent higher than the global average respectively.
“Nigeria’s Government Take also remains high and uncompetitive, exceeding that of most comparable prolific basins, Sangster lamented, while advocating that that “a PIB, which safeguards existing projects and introduces competitive terms, is required to fully utilise the country’s resources for the benefit of all Nigerians”.
Demand by Host Communities
On their part, the Host Communities of Nigeria Producing Oil and Gas, insisted on 10 per cent equity share holding in the three companies to emerge from the commercialisation of the NNPC.
The National President of HostCom National, Dr. Benjamin Tamaranebi, said: “After 60 years of marginalisation and bearing the brunt of the negative impacts of exploration and exploitation.
Today some states have started discovering and enjoying their natural resources but the oil producing states and HostCom are not envious of them therefore our position is sacrosanct.
“It will be very absurd and economically very illogical to deprive HostCom the right to equity share holding in both the establishment of the NNPC Limited, the Commission, the Authority and the Boards. Rather than attempt to sell performing equity as stated in the 2020 PIB, no equity/asset is performing more than our Oil and Gas reserves. This quest to take over complete control of all our National assets by a very unpatriotic few has to stop.”
Tamaranebi later told reporters that the provision that oil companies should contribute 2.5 per cent of their operating expenditure to the Host Community Development Trust Fund should also be increased to 10 per cent.
For the President, Women in Energy Network (WIEN), Funmi Ogbue, the provision that oil companies should contribute 2.5 per cent of their operating cost to the host community development trust fund is exorbitant in view of other taxes they are already saddled with. “WIEN believes that 2.5 per cent is too expensive. WIEN posits that a total of not more that one per cent consistent with other statutory provisions like the Nigerian Local Content Act 2010 should replace the current figure captured in the PIB.”
Objectivity
However, for Civil Society Legislative Advocacy Centre (CISLAC) led by its Executive Director, Auwal Musa Rafsanjani, objectivity is key. According to Rafsanjani, every player in the sector has the right to seek protection for their interest but “the most important thing is to put their requests on the table, objectively look at them critically and figure out if it is borne out of selfish sentiments or an act of progressive advice to help the government sustain the business profitably”.
He noted that while the PIB is over 20 years old, passing the Bill is one thing while the content of the bill is another, adding that “If the content of the bill is based on principles that enshrine fairness, transparency and accountability in the sector, then, there is nothing to worry about.
“If the bill is based on the national interest which includes the survival of the business community, then they can ignore selfish sentiments and go ahead and pass the bill. You can never please everyone at the same time”.
However, he insisted that the only challenge is to ensure that the people to administer the provisions of the PIB when passed into law would not usurp it for selfish interest rather than the collective interest.
He said: “There are models all over the world on how people/countries are managing the sector in their country, it is not rocket science to learn that and implement, Saudi Arabia, UAE, Norway to mention but a few.
“There is need to get the sector out of the political office holders’ influence else the sector will continually be managed to serve one purpose which is a drain pipe for the political class to fund frivolities in governance.”
