Time to be decisive on PIB
Following the recommendations of a presidential committee set up by the Olusegun Obasanjo administration to carry out oil and gas sector reforms in Nigeria, the idea of the Petroleum Industry Bill (PIB) was conceived in 2007. The bill was first introduced to the National Assembly in 2009. Since then, it has suffered a number of setbacks.
PIB proposes to completely overhaul Nigeria’s petroleum industry and form the nucleus of Nigeria’s aspiration to become one of the most industrialised nations in the world by the year 2020.
The current draft of the bill, sent to the National Assembly in 2013, seeks to, amongst other things, restructure the regulatory and commercial institutions in the petroleum industry, change the fiscal dynamics and reform the operational mechanisms of the upstream, downstream and natural gas industries.
The PIB was also designed to provide for the establishment of an independent regulator, an energy council, a national petroleum directorate, an inspectorate commission and a national petroleum company that will be open and ready to embrace competition, professionalism and good business ethics in its operations which will help solve the perennial problem of poor funding of joint venture operations. Unfortunately, while many had expected the bill to enjoy utmost priority and support for quick passage into law in view of the strategic importance of the oil and gas sector to Nigeria’s economy and overall development, the reverse has been the case as the PIB has been overwhelmed by controversies, leading to the long delay on the floor of the National Assembly. The delay has been on account of diverse interests in different provisions of the bill. Amongst these are the interests of legislators from the north pitted against their southern counterparts, leading to years of disputes between the lawmakers, oil ministry/presidency, oil majors, host communities and other stakeholders.
Expectedly, the uncertainty surrounding the bill has not done Nigeria’s economic fortunes any good. Data released by Wood Mackenzie indicates that Nigeria has lost about $37 billion in private sector investments in the oil and gas industry in the last five years due to the non-passage of the PIB. In 2012, there was also a gap of $7 billion between planned investments in the oil and gas industry and the actual investments, according to the Wood Mackenzie report. It further noted that the country also experienced fiscal crisis, which was, however, masked by high prices of crude oil, but with the current low crude oil prices, the impact is being felt by the economy.
It is obvious that the outgoing 7th National Assembly will not pass the PIB. We therefore urge the incoming Buhari administration to be decisive on the PIB in order to move the oil and gas industry forward.
Some experts have recommended that the bill be broken down in bits and passed separately. Some analysts who spoke to BusinessDay, however, said there is a need to de-emphasise PIB and move the industry forward, arguing that before the PIB, there were existing laws driving the industry and Nigeria was making progress, whereas the uncertainty surrounding the PIB has put the country’s oil industry at a standstill.
We align with the analysts and recommend that the PIB be scrapped. This action, in our view, will remove all the uncertainties brought about by the bill and restore the needed confidence for the industry to thrive. Otherwise the PIB, with all the controversies surrounding it, will continue to be a distraction to operators and other stakeholders in the industry and the Nigerian economy will be worse for it.