Nigeria may save $15 billion yearly in oil sector if PIGB sails through
Nigeria could halt a loss of investments estimated at over $15 billion yearly in the oil and gas sector as lawmakers mandated to review the Petroleum Industry Governance Bill (PIGB) readies a final report for senate consideration and approval on April 25.
“Barring any last minute changes, the Senate Joint Committee on Petroleum (Upstream, Downstream and Gas), will on 25th April lay the final report of the Petroleum Industry Governance Bill before the Senate for consideration and approval,” a spokesman for Senate President Bukola Saraki said in a statement on March 27.
After consideration and passage, the bill would be sent to the House of Representatives for passage before a final version is sent to President Muhammadu Buhari for assent.
The PIGB bill seeks to establish a framework for the creation of commercially-oriented and profit-driven petroleum entities which the Nigerian Extractive Industries Transparency Initiative (NEITI) say the absence cost Nigeria $15 billion yearly in investments.
NEITI, in its last quarter 2016 policy brief stated that some of the losses were from projected investments put at $120 billion ($15 billion yearly), which has been deferred to risks and uncertainties in the sector.
When passed into law, the PIGB seeks to promote transparency in the administration of the petroleum resources of Nigeria and create a conducive business environment for petroleum industry operators.
“We will break the PIB jinx soon. All stakeholders from communities, agencies, CSO’s have all made inputs to address their concerns,” reads a Twitter message from Bukola Saraki, Senate president.
However, the journey to this announcement has been replete with intrigues from when the first PIB bill was introduced by the late president Musa Umaru Yar’Adua to the sixth National Assembly in 2008.
Disagreements about a 10 per cent crude earnings allocation to host communities in the Niger Delta recently stalled the process culminating in the decision by the Nigerian National Petroleum Corporation (NNPC) under Ibe Kachikwu, as group managing director, splitting the bill into four for quick passage.
They are the Petroleum Industry Governance Bill, (PIGB), the Fiscal Regime Bill, the Upstream and Midstream Administration Bill and the Petroleum Revenue Bill in order.
The PIGB subjects the Petroleum minister’s discretion in awarding licenses and leases of oil blocks to the recommendation of the Nigerian Petroleum Regulatory Commission (NPRC).
“This is particularly significant because most of the members of the Commission’s (NPRC) board would be appointed by the President of the federal republic of Nigeria and not the Minister, which in our view, further dilutes the power vested in the Minister,” say legal experts at Banwo & Ighodalo in their review.
Furthermore, the PIGB subsumes the functions of the Department of Petroleum Resources (DPR), and the Petroleum Products Pricing Regulatory Agency (PPPRA), into NPRC which also acts the regulator of the upstream, midstream and downstream sub-sectors of the oil and gas industry.
Under the PIGB, two entities to be known as the Nigerian Petroleum Assets Management Company (NPAMC) and the National Petroleum Company (NPC),would emerge from the shards of the NNPC and be vested with certain liabilities and assets of the NNPC.
The NPAMC will manage NNPC’s oil and gas investment in assets where government is not obligated to provide any upfront funding (basically the production sharing contracts), whilst the NPC shall be an integrated oil and gas company operating as a fully commercial entity across the energy value chain.
Global professional services firm PriceWaterHouse Coopers (PwC) in its oil and gas review report for 2016 stated that lack of reforms in the regulatory, fiscal and licensing systems of Nigeria’s oil sector makes it unattractive for investors.
“As uncertain regulatory frameworks, taxation requirements and corruption continue to rank at the top of industry’s challenges in the country, it is high time that government made significant changes,” said Chris Bredenhann, the company’s Africa Oil and Gas Advisory Leader,
To achieve this objective, the statement said a one-day retreat is planned for April 4, in Abuja with the objective of receiving ‘further input, deliberate on their findings and recommendations, and conclude their report for submission to the senate.’
President Buhari, who came to power on the promise of reforming the oil and gas sector where corruption and abuse is rampant, will hope that when the national assembly is done with their review, the bill would be similar to what he intended.
ISAAC ANYAOGU