-By Fred Ojiegbe
There is much anxiety and cautious optimism over the passage of the much-awaited petroleum industry governance bill (PIGB) as the month of June comes to an end.
This is based on promises made by government officials that the PIGB will be passed this June. The Speaker, House of Representatives, Femi Gbajabiamila had in February during a courtesy visit by a delegation of the Experts Advisory Panel of the Nigeria Natural Resource Charter assured that the PIGB will be passed before the end of June. He said: “The legislature needs to work with you. We need to work together. Oil and gas is an integral part of our economy. It remains the mainstay of our economy, and so we have to work together to protect it. “It requires us to work with those who understand the nuances of that sector. For the oil and gas industry to develop, there has to be a symbiotic relationship. You have the knowledge and we have the capacity to make it happen. “PIGB is on the front burner. We intend to start the process soon. We’re hoping that by June, we’ll be able to see the light at the end of the tunnel.”
However, industry stakeholders have continued to express cautious optimism as they await the passage of the bill. Dr. Frank Ihekwoaba, Chief Finance Officer, Eroton Exploration and Production Company Limited, while expressing caution, stated that the PIGB will follow public sector model that rewards effort as opposed to rewarding result. “That the National Assembly is still struggling to muster up the energy to pass a PIGB is basically extreme procrastination that ensures Nigeria will remain moribund, archaic, unaccountable and noncompetitive. That’s who we have been, who we are, and who the inaction ensures Nigeria remains. In that state of anomie, a few benefit while the majority languish as usual.
Professor Wumi Iledare, Director, SPE Africa Region, is optimistic the bill will be passed. “PIGB at the end of June is plausible because all the work was completely done in the last assembly. Nigeria has much more to gain if PIGB is passed. It will enhance transparency and accountability and improve investor’s perception. It would expunge the amorphous governance of the oil sector with a distinctive commercial, regulatory and policy institutions. It will make institutions more apolitical with well defined criteria to select board members based on experience and competence for value addition. “There will be interconnectivity of the value chain in terms of effective regulatory framework with no room for price control or subsidy along the value chain. PIGB establishes institutions to enforce fiscal policy and regulations effectively, equitably and ethically, in terms of revenue collections, lease administration, corporate and community responsibility,” he added.
Corroborating Iledare’s submission, Bank-Anthony Okoroafor, immediate past Chairman, Petroleum Technology Association of Nigeria, PETAN, believes the bill will be passed as promised. “It will be passed. If the right PIB is passed, it will bring fiscal clarity to our industry. Oil is being discovered everywhere and we need to put our acts together. Investment will go to areas with better fiscals clarity. We have lost a lot of investment by this decade that the PIB has not been passed,” he stated.
For Dr. Chambers Oyibo, former Group Managing Director, Nigerian National Petroleum Corporation, NNPC and Chairman/Chief Executive Officer, Prime Energy Resources Limited, the circumstances are no longer the same. “Oil prices are very low now. If our legislators are serious about passing the PIGB, they must have done a lot of work on it. The law that regulates the most important industry in Nigeria shouldn’t take more than 18 months. Our legislators don’t seem t o know the impact of making this law as it affects the citizenry who have been waiting endlessly. Can you imagine how long it has been from the regime of former President Olusegun Obasanjo to President Muhammadu Buhari? He asked.
The concerns of the stakeholders, no doubt stem from the fact that the bill originally known as petroleum industry bill, PIB, has been in the works for close to two decades, as it was first introduced in the National Assembly in the Year 2000, thereby making it easily the bill that has spent the longest time under our bi-cameral legislative bodies. Having suffered a setback in the 7th Assembly, it was decided that a new approach would be adopted to facilitate its passage and signing into law. The bill was subsequently unbundled into several segments by the 8th National Assembly, which was aimed at making it easier for the less-controversial aspects of the bill to have easy passage while the more controversial aspects are dwelt more upon. The Petroleum Industry Bill (PIB) was therefore split into four parts, namely: Petroleum Industry Governance Bill (PIGB), Petroleum Industry Administrative Bill (PIAB), Petroleum Host and Impacted Community Bill (PHIB) and Petroleum Industry Fiscal Bill (PIFB). In January 2018, the Petroleum Industry Governance Bill was passed by the House of Representatives. This marked a significant milestone in the journey of replacing the obsolete Petroleum Act (1969), as the Senate had earlier passed the PIGB in May, 2017. Some of the underlying principles include: Effective and capable institution, clear roles and accountabilities, transparency and ease of doing business. Core objectives in the PIGB include: i. To provide a one stop shop Regulatory Authority; ii. To provide functional commercial entities; iii. Discretional powers abolished; iv. Improved technology and innovation; v. Clarity of roles and accountabilities; vi. Create efficient and effective governing institutions with clear and separate roles in the Petroleum Industry; vii. Establish a framework for the creation of commercially oriented and profit driven petroleum entities that ensures value addition and internationalization of petroleum industry; viii. Promote transparency and accountability in the administration of the petroleum resources of Nigeria; ix. Create conducive business environment for the petroleum industry operations.
Disappearing Opportunity
There has been a flight of new investment opportunities from Nigeria to our neighbour’s in Ghana, Angola and Equatorial Guinea who have more defined laws and governance structure. Experts estimate that the country loses approximately $15million annually in lost investments due to loss of investor confidence in the industry. The passage of the bill will engender investor confidence in the industry and attract more Foreign Direct Investments.
Post COVID-19 Oil Economy
With oil prices hitting an all time low as a result of price wars between Saudi Arabia and Russia as well as reduced demand occasioned by the COVID-19 pandemic, it is apparent that oil dominance as an energy source of choice in the post COVID-19 economy will be challenged. The time is therefore ripe to streamline the number of MDA’s involved in the governance structure in the Nigerian Oil and Gas Industry, which conforms to the overall target of the Government in reducing cost of governance based on current realities and scarce resources. A single regulatory body would ensure end to end project cycle approval which will greatly reduce transaction cost, eliminate regulatory competition and enhance value maximisation. It will also promote the Executive Order 001 on Ease of Doing Business in Nigeria.