OrderPaperToday – After breaking a 17 years old jinx by passing the Petroleum Industry Governance Bill (PIGB), what was thought to be watershed moment for the oil sector was however short-lived when President Muhammadu Buhari denied assent. This was despite huge expectations from Nigerians and the international community.
The Senate on the 25th of May, 2017 gave a glimmer of hope for the reforms of the oil sector by passing the Petroleum Industry Governance Bill (PIGB), one of the cluster bills from the Petroleum Industry Bill (PIB) that had stalled in the legislature for almost a decade. The others are the Petroleum Industry Fiscal Bill, the Petroleum Industry Administration Bill and the Petroleum Host and Impacted Communities Development Bill.
After several months, the House of Representatives followed suit by approving the PIGB. Both chambers then approved an harmonized version of the bill on the 31st of March 2018 but due to some fundamental issues identified by the legal department of the National Assembly, the bill experienced a mild set back before it was eventually transmitted to the President on the 25th of April, 2018.
Highlihhts of the bill
The PIGB seeks to create efficient and effective governing institutions with a clear and separate role for the petroleum industry, establish a framework for the creation of economically oriented and profit driven petroleum entities that ensure value addition and internationalization of the petroleum industry.
The bill equally seeks to target transparency and accountability in the administration of petroleum resources in Nigeria, promoting conducive business environment as well as become an answer to the prayers of unemployed youths across the country.
Importantly, the bill unbundled the Nigerian National Petroleum Corporation (NNPC) while introducing three commercial entities,- the Nigeria Petroleum Liability Management Company (NPLMC), the Nigerian Petroleum Assets Management Company Limited (NPAMC) and the National Petroleum Company (NPC).
In the proposed arrangement, the Department of Petroleum Resources (DPR), Petroleum Inspectorate and Petroleum Products Price Regulatory Agency (PPRA) would also give way for a new regulatory called the Nigerian Petroleum Regulatory Commission (NPRC). It also created the Petroleum Equalization Fund (PEF) to ensure economic balance in products prices across the country.
An investigative unit would also be created to keep surveillance on oil and gas installations for illegal activities and will have power to work with the police to make arrests.
These proposed moves were hailed by industry players as the NNPC have been identified to be a haven for corruption practices with national assembly investigating several issues in the commission. One of such is the $25billion allegations against the Group Managing Director, Maikanti Baru by the Minister of State for Petroleum Resources, Ibe Kachikwu over alleged shady contracts, an investigation that did not make the light of the day.
Buhari’s missed opportunities?
President Buhari’s assent would have gone a long way to avert enormous economic losses, unlock billions of dollars’ worth of oil sector investment but unfortunately the widespread advocacy by civil society groups and well-meaning Nigerians went down the drain with the withholding of assent.
It is believed that President Buhari who doubles as the Minister of Petroleum, denied assent because the bill aims at whittling down his power like restraining him from making policies on empowering the petroleum agencies or key authorization like discretionary award of oil and gas licenses and permits.
But Senior Special Assistant to the President on National Assembly Matters (Senate), Ita Enang on the 29th of August dismissed such claims and stressed that the President duly consulted with key ministers such as the Minister of Justice and Attorney General of the Federation, Abubakar Malami, before taking a decision.
According to Enang, other reasons cited for the rejections are “that the provision of the bill permitting the Petroleum Regulatory Commission to retain as much as 10% of the revenue generated unduly increases the funds accruing to the Petroleum Regulatory Commission to the detriment of the revenue available to the Federal, States, Federal capital Territory and Local government in the country.
“Expanding the scope of Petroleum equalization fund and some provisions in divergence from this administration’s policy and indeed conflicting provisions on independent petroleum equalization fund.
“Some legislative drafting concerns which, if assented too in the form presented will create ambiguity and conflict in interpretation.”
Missed investment opportunities
For the President Nigeria Association for Energy Economics (NAEE), Professor Wumi Iledare, believed that the signing the bill could serve as a bargaining chip because “all Presidents before him never get to see any PIB to even sign. He has the opportunity.”
Yet, President Buhari failed to sign the bill instead he cited constitutional and legal reasons.
In 2013, the Country head of Shell Companies in Nigeria, Mutiu Sunmonu stalled an investment opportunity for the county worth $30 billion till the petroleum law was signed into law.
In 2015, Chairman of the Petroleum Technology Association of Nigeria (PETAN), Bank Anthony Okoroafor, lamented that the country lost N1.7 trillion fresh investment due to the non-passage of the PIB. The Nigeria Extractive Industries Transparency Initiative (NEITI) alerted that there is an annual loss of $200 billion and another $15 billion due to regulatory uncertainties.
The 2019 scenario
Now that the 2019 elections draw near, several presidential aspirants have come out with ocean filled promises for Nigerians should in case they emerge, but what specifically would be their plans for the coming year in the oil sector?