PIB passage as ticket out of recession
The economic recession that Nigeria is undergoing presently has reopened debate over the non-passage of the Petroleum Industry Bill (PIB), which many believe could have kept Nigeria out of the woods.
This is the argument: if Nigeria is a monolithic economy that relies almost solely on crude oil, is it not commonsensical that part of the strategies to exit the economic recession should be close to the same sector that serves as energizer for the economy in the first place?
Attempts made to pass the PIB by previous governments, observers have argued, yielded no result because of lack of political will. And based on the ‘change mantra’ with which the new government of All Progressives Congress (APC) rose to power early last year, there was a renewed optimism that the much-needed political will for the passage of the PIB was on its way.
But this hope seems to be diminishing 16 months after assuming office and President Muhammadu Buhari-led government has not even made the right moves in that direction.
Indeed, speaking at a National Petroleum and Power Policy Forum organized by the Emerald Energy Institute of the University of Port Harcourt, experts cited a combination of political will on the part of President Buhari and patriotism on the part of the National Assembly as the ingredients that are urgently required to ensure the passage of the PIB.
A former Company Secretary of the Nigerian National Petroleum Corporation (NNPC), Prof Yinka Omorogbe and Vice Chairman of Emerald Energy Resources, Dr. Jude Amaefule submitted that lack of political will and legislative inertia were responsible for the non-passage of the PIB.
Specifically, Omorogbe on her part, said if President Buhari has the political will, the PIB could be passed in record time by the 8th National Assembly.
She also declared that the version passed by the 7th House of Representatives is good enough and can indeed serve as a start off point for the reform process of the oil and gas sector.
Omorogbe warned that Nigeria couldn’t afford to wait for another 10 years or more to pass the bill insisting that such posture will inflict irreparable damage on the oil sector.
Minister of State for Petroleum Resources, Dr Ibe Kachikwu’s recent submission that the PIB might likely be compartmentalised got a major support in Amaefule who also advocated a compartmentalization of the PIB into smaller sections for easy passage and subsequent implementation.
Amaefule added: “At the very worst, if these legislators cannot handle what we have, let them take the fiscal side of this bill and pass it and look at the re-organising of the NNPC as a different bill because we put a lot into that kitchen sink. Reserve replenishment is dropping and if there is no exploration you do not have reserve. You maybe wishfully thinking, I have it in the ground but you must spend the money. We have not being spending the money because of the uncertaintities surrounding the PIB. Instead of that gigantic bill, if nothing else let us compartmentalize it.”
Indeed, class struggle and protection of interests by the executive and legislative arms of government are also major stumbling blocks against the passage of PIB.
Part of the grouses that unsettle the National Assembly is the discretionary power granted the President in Section 191 of the proposed document.
The section read in part: “There shall be no grant of discretionary awards, except as provided under Section 191 (Section 190 (3)). Notwithstanding the provisions of subsection (3) of Section 190 or any other provisions of this Act, the President shall have the power to grant a license or lease under this Act (Section 191).”
Another section is that of confidentiality clause as contained in Section 174 (1), which contradicts certain provisions of the Freedom of Information Act.
“Confidentiality clauses or other clauses contained in licenses, leases, agreements or contracts for upstream petroleum operations that are for the purpose of preventing access to information and documents by third parties in respect of any payment of royalties, fees and bonuses of whatever nature, and taxes, shall be void and of no effect (Section 174 (1).”
Again, there is anxiety over Sections 149 and 160, which say the management company to be established shall not be subjected to the provisions of the Fiscal Responsibility Act 2007 and the Public Procurement Act 2007.
The provision says: “Incorporation of National Oil Company (30% private equity): ‘The National Gas Company shall not be subject to the provisions of the Fiscal Responsibility Act, 2007 and the Public Procurement Act, 2007.’ (Section 149). Incorporation of National Gas Company (40% private equity): ‘The National Gas Company shall not be subject to the provisions of the Fiscal Responsibility Act, 2007 and the Public Procurement Act, 2007’ (Section 160).”
But what has Nigeria lost or to put it succinctly, what is Nigeria losing by not moving swiftly to ensure passage of PIB?
A policy brief by the Nigeria Extractive Industries Transparency Initiative (NEITI) painted a grim picture.
It said a whopping $200 billion is lost with yet another $15 billion annually in fresh investments by the attendant regulatory uncertainties.
The policy brief in a veiled manner berated President Muhammadu Buhari, who doubles as the Minister of Petroleum Resources, for showing lack of interest in the passage of the PIB.
The policy brief entitled: ‘The urgency of a new petroleum sector law’, said the process of enacting a new law for Nigeria’s petroleum sector has gone on for far too long, and at enormous costs to the country, saying urgency and better coordination are needed on the passage of the very important bill.
It therefore advised that the PIB ship should be rescued from a start-stop, unhurried and uncoordinated mode and brought swiftly ashore.
NEITI maintained that the PIB is 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.
NEITI stated that as an agency set up to enthrone transparency and accountability in the extractive industries, it has legitimate interest in a petroleum law for the country.
NEITI therefore recommended that an inclusive task team should be urgently empanelled, with the President as the lead and charged with building consensus among stakeholders. It added that the task team should draw up a clear and well-communicated roadmap and fast track the passage of the law in piece-meal rather than an omnibus approach.
The policy brief noted that clear, unambiguous rules, predictable policy-making and efficient regulations have been lacking in Nigeria’s petroleum sector, since the process of enacting a law for the sector commenced.
The brief submitted that governance deficiencies have been equally prolific adding that the NEITI’s 2013 audit of the oil and gas sector revealed that $10.4bn and N378.7bn (N3.2 trillion at the current exchange rate) were lost as a result of under-remittance, underpayments, inefficiencies, theft or absence of clear fiscal regime in Nigeria’s oil and gas sector.
The agency further stated that the losses in economic terms have equally been huge; the hemorrhage on Nigeria’s foreign reserves and value of the Naira due to imports of over $26.4Billion worth of refined petroleum products that should otherwise have been done in – country and loss of jobs in their hundreds of thousands for the teeming unemployed Nigerians.
While NEITI acknowledges the plurality of challenges in the petroleum sector law, it said that there is no evidence that Nigeria has learnt from its past experiences to guarantee that the present journey will be any different.
It cautioned that the current efforts at reviving the process of enacting the law are already ‘exhibiting disturbingly familiar patterns’ and have added a new dimension on whether the bill should be taken en bloc or passed piece-meal.
The NEITI Policy Brief aims at drawing attention of policy makers and the populace to critical issues regarding the extractive sector, provoke informed debate and drive policy changes in the extractive industry in Nigeria.