Why NEITI wants President Buhari to jettison PIB
When the Petroleum Industry Bill (PIB) was drafted about sixteen years ago it was with a lot of anticipation and promise. But four presidents, five presidential terms and five legislative tenures on, the bill is still stuttering through legislation. It is perhaps one of the most important bills ever to be contemplated in Nigeria’s history, yet the one that has taken the most time and generated the most activity without legislation.
The PIB has suffered repeated setbacks due largely to disagreements among stakeholders. These disagreements have centered mostly around the regulatory framework, including power of the minister, ownership and control of the resources, host community benefits, environmental concerns, appropriate fiscal regime, etc.
In the process every administration has produced its own PIB draft(s), but not the Law. Each PIB process has ended with each administration, to be restarted almost from scratch by the succeeding government.
It is the frustration caused by the unending debates on the bill that has made the Nigerian Extractive Industries Transparency Industry (NEITI) to call on President Muhammadu Buhari to take full charge of enacting a new law for the petroleum sector.
May be if the President enacts a new law, action would be expedited on it. To the extent that he is able to convince the members of the national assembly to act on it.
The failure of Nigeria to pass an over-arching law for the petroleum sector after repeated attempts continue to accumulate huge costs for the country, estimated at more than $200bn.
Estimates of employment impact of upstream as well as midstream and downstream have been computed in the hundreds of thousands. Granted, these numbers are largely projections. But there can be no arguments about the narrative or logic that produced them. The projected losses show the cost in missed investment opportunities. Other costs are historical, direct and equally astounding. For five years up to 2014, Nigeria imported $26.4 billion worth of refined petroleum products.
The resulting impact of this hemorrhage on the country’s balance of payments position, foreign reserves and, most recently, the value of the Naira have been colossal.
Governance deficiencies have been equally prolific. NEITI’s 2013 audit of the oil and gas sector revealed that a cumulative $10.4bn and N378.7bn was lost, under-remitted or outstanding due to inefficiencies, Theft or absence of clear fiscal regime in the sector8. All these came to N1.74 trillion at 2013 value. At the
Current exchange rate, total losses, under-remitted and under-payments for 2013 alone sum up to N3.2 trillion. Proper governance framework and clearer fiscal regime for the sector could have resolved most of the underlying causes.
The advent of a new administration on 29 May 2015, expectedly, triggered a flurry of activities and expectations around the passage of the much-anticipated Petroleum Industry Bill (PIB). These activities and expectations will reasonably pick up again as the 8th National Assembly returns to session: the Petroleum Industry Governance Bill (PIGB) introduced in April and stepped down in June by the Senate might come back on stream; at least two private members’ bills from the House of Representatives and three separate bills from the executive arm might be introduced
“Current efforts at reviving the process may have inherited all the encumbrances of the past, exhibiting a disturbingly familiar pattern. The exercise has commenced again with very vocal expressions of intention by political actors who have initiated parallel processes with divergent conceptions about the complexion of the bill. Mutual recriminations already mirror the bitter acrimony that heralded and ultimately led to failure of past efforts. Added to the usual disagreements is the new debate over whether the bill should still be taken en bloc, or this time in parts, to make the PIB easier to pass. The precious time and resources invested in the PIB process should count for much more than unending
Opportunity for actors and vested interests to engage in one-upmanship or to time out one another”, NEITI said.
A lot has been held in abeyance and a lot is being lost, at a time the country could ill afford such. While the House of Representatives and the Senate and the Ministry of Petroleum Resources are needed to be actively engaged on the process, having different bills from all of them suggests the possibility of working at cross-purpose, not in concert. This does not augur well for the much needed traction on this important legislation.
The executive needs to lead the charge here and is well positioned to facilitate greater urgency, clarity, and coordination. The PIB has suffered repeated setbacks due largely to disagreements among stakeholders. These disagreements have centered mostly around the regulatory framework, including power of the minister, ownership and control of the resources, host community benefits, environmental concerns, appropriate fiscal regime, etc.
In the sixteen years the process of reforms commenced, and in eight years since the PIB was first drafted, there was no question that the petroleum industry was in desperate need of regulatory reforms. Some of the reasons like imprecise rules, excessive regulatory discretion, and the fusion of regulatory, policy and operator roles were first-order problems which in turn created second order causes. Others like corruption, lack of transparency and accountability were consequences in a chain of ripple effects, leading ultimately to a severely underperforming economy, loss of benefits to the country, and a largely impoverished population.
Olusola Bello