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Editorial News of Sunday, 31 January 2021


PIB’s long walk to fruition

Ahmad Lawan Ahmad Lawan

Fourteen years ago, an attempt was made by the David Mark-led National Assembly to pass the Petroleum Industry Bill (PIB). Like a pack of cards, it crashed. As expected, accusations were passed and in the end, nothing happened.

Throughout the eight years that Mark held sway as President of the Senate and chairman of the National Assembly, the bill couldn’t be passed.

Many Nigerians had also expected that it was going to be passed when President Goodluck Jonathan held sway. As the first president from the Niger Delta, many had hoped that the PIB was to be finally passed. The disappointment became rife when Jonathan’s minister of Petroleum Resources, Allison Madueke, who also hailed from the Niger Delta and held sway for four years, couldn’t lobby the National Assembly to pass it into law.

However, between 2015-2019, a partial breakthrough was recorded, when Bukola Saraki-led National Assembly passed a component of the bill tagged Petroleum Industry Governance Bill. In the bill, the National Assembly unbundled the Nigerian National Petroleum Cooperation (NNPC) and created a regulatory agency. NNPC would have been fully commercialised and operated as a business venture.
President Muhammadu Buhari, citing some inadequacies, vetoed the bill.

In the end, it wasn’t signed into law. Ironically, throughout the first term of President Buhari, no bill on the oil and gas sector was sent to the National Assembly for consideration. Instead, an initiative of the National Assembly, despite its many imperfections, was thrown into the waste bin.

With the fresh submission of the bill to the two chambers of the National Assembly by Buhari, there is a glimpse of hope that it may be passed before the end of the second quarter of 2021. However, strong oppositions to some aspects of the bill by host communities and International Oil Companies (IOCs), may derail the process.

Key stakeholders have rejected its key provisions on host communities’ equity share holding and investment prospects. The percentage to be allocated to host communities has been largely responsible for the delay in the passage of PIB since 2007.

Late President Umar Musa Yar’Adua proposed 10 per cent, but was rejected by lawmakers predominantly from the North in the 7th National Assembly. Goodluck Jonathan retained the same 10 per cent, but was again rejected by the National Assembly. In the 8th Senate led by Saraki, it was brought down to 5 per cent, but couldn’t be passed into law.

Turning down the 2.5 per cent provided in the current PIB, the Host Communities of Nigeria Producing Oil and Gas (HOSTCOM) at a public hearing at the Senate on the reviewed PIB, made it clear that nothing short of 10 per cent would be acceptable to them.

In a presentation by its national president, Benjamin Style Tams, the HOSTCOM declared: “As it concerns the Host Communities of Nigeria Producing Oil and Gas in Chapter 3, the Host Communities stand on 10 per cent equity share Holding
after 60years 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 producing states and HostCom are not envious of them, therefore our position is sacrosanct.”

The host communities argued that it would 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.
The host communities made it clear that: “This quest to take over complete control of all our National assets by a very unpatriotic few has to stop.

“In the case of the Gas flare penalty funds, the Host Communities who are the direct recipients of the negative effects are the ones to receive the Gas flare penalty. Regarding the environmental management and sustainable development of the Host Communities, it’s imperative that all laws and polices precedent to the commencement of any action must be conformed with the existing international standards inherent in our submission,” HostCom added.

In their own presentation, the Oil Producers Trade Section (OPTS) led by Mike Sanger, made a strong case against the bill for not making serious provisions for investment in the oil and gas sector.

OPTS disclosed that “if the PIB is passed in its current form, it would not meet the government’s objectives of making Nigeria the leading destination for oil and gas investment and the recent scarcity of investment-only $3b out of $70b in Africa-will continue.”

It lamented that, “Nigeria faces ever increasing competition for investment and, despite having the largest reserves, only $3 billion out of the $70 billion committed in Africa for projects sanctioned between 2015-2019 were attributed to Nigeria, representing a meagre 4%.”

According to OPTS, “This lack of competitiveness is caused in part by the high cost of doing business in Nigeria, with overall project costs and operations costs being 69% and 42% higher than the global average respectively.
“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,” It submitted.

Similarly, Women In Energy Network (WIEN), raised concerns over the proposal in the PIB which stated that “each settlor, where applicable through the operator should contribute an amount equal to 2.5 % of actual operating expenditure in respect of all petroleum operation.”

Speaking at the public hearing, the President of WIEN and Managing Director of Zigma Limited, Mrs. Funmi Ogbue, said the 2.5% is too expensive. “WIEN posits that a total of not more than 1 % (one percent) consistent with other Statutory provisions like the Nigerian Local Content Act 2010, replace the current figure captured in the PIB.

“This will improve investors’ perception about the industry being already over taxed which will attract even more Foreign Direct Investment to the sector and country at large. WIEN would like to see the deliberate inclusion of policies that will ensure that at least 35% of each Governing Board is constituted by women.”

Meanwhile, President of Senate, Ahmad Lawan, said the National Assembly in its consideration of the piece of legislation, would ensure that the bill whoen passed into law, guarantees improved revenue earnings for the country.

Lawan said: “Let me say this, we (National Assembly) will pass this bill not without ensuring that it is a bill that satisfies certain conditions. Nigeria is blessed with these resources, we want Nigeria to benefit optimally from them. In fact, we are in a hurry because we have lost so many years of benefits that we could have had.”

The Senate President, however, noted that the non-passage of the PIB had been a major drag on the industry over the years, significantly limiting its ability to attract both local and foreign capital at a time when many other countries are scrambling to exploit their oil and gas resources.

“The mere knowledge that the nation’s oil industry is still being governed by laws enacted more than 50 years ago is ludicrous and extremely disappointing. As legislators, we will strive to deliver a bill that will enhance the growth of our oil and gas industry, modernize 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 said.

He added that the determination by the legislature to pass the Bill “is driven by the need to overhaul a system that has refused to operate optimally in line with global standards, resulting into loss of continental competiveness, transparency, accountability, good governance and economy loss for the petroleum industry and the country.”

The Senate President noted that the challenges surrounding the future usefulness of petroleum resources and the increased level of uncertainty on oil demand calls for great concern.

“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,” Lawan stressed.

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