‘Why PIB may fail to address critical energy issues’
Despite decades of sluggish progress, Nigeria’s Petroleum Industry Bill (PIB) currently being debated by the National Assembly may take the country backward, especially as countries across the world prepare for zero-carbon.
Indeed, investment in fossil fuel is drastically declining as most oil and gas companies are diversifying into renewable energy, preferring to be known as energy companies.
While the failure to pass the PIB has created missed investment opportunities in the oil and gas sector, the current version of the proposed legislation if passed, could miss out in the opportunities to prepare for the zero-carbon future, Columbia Centre on Sustainable Investment, a joint Centre of Columbia Law School and the Earth Institute, Columbia University has noted.
Initiated over 20 years ago, the PIB is expected to reform Nigeria’s cloudy oil sector but the bill has been in limbo. While the country foot-drags on the bill, pressure continues to mount on fossil fuel, which accounts for about 90 per cent of Nigeria’s export.
In 2016, the Nigerian Extractive Industries Transparency Initiative (NEITI), disclosed that Nigeria has lost about $200 billion due to non-passage of the bill.
Literally, experts at the Columbia University expected a futuristic legislation that could stand the test of time as the world transits to cleaner energy, but the bill is seen as being short-sighted.
Stakeholders noted that “there is still time for the Nigerian government and parliament to heed the warning and change course.” To them, diversifying away from oil, investing in clean energy sources, and improving governance are essential steps for Nigeria to effectively break free from its oil dependence and seize the business opportunities.
They insisted Nigeria has the opportunity to build out the PIB to situate the country as a main player in accelerating the energy transition. The university, in an analysis of the proposed legislation, said the bill does not adequately address climate change, the Paris Agreement, or the energy transition, stressing that further actions are needed for Nigeria to capitalize on the transition as a business and sustainable development opportunity.
The experts noted that the PIB “fails to account for climate change, acknowledge the Paris Agreement, and address the need for diversification to adequately prepare Nigeria for the energy transition that is already underway.”
The legislation, according to them, may exacerbate Nigeria’s stranded asset risk by regulating the operation of pipelines and the building of new ones while failing to account for the stranding risk.
To them, instead of investing in projects and infrastructure that would soon be obsolete, promoting the stewardship of assets that propel energy transition could be the way to go, saying: “The new environmental requirements are articulated with no explicit connection to the climate emergency.”
They added that “the establishment of environmental remediation funds mandates for licensees or lessees to pay a certain amount into a fund may be a challenge as climate change might affect the cost of remediation when the time comes; therefore, financial contribution should be regularly updated based on a climate risk assessment.”
They listed some of the steps Nigeria could take to include, hiring experts to develop an energy transition plan that accounts for the risk of asset-stranding and analyses of the renewable energy deployment needed to meet the country’s energy needs.
They also canvassed the inclusion of climate change governance principles in the NNPC reform agenda, adding that establishing a separate strategic division within NNPC or an independent entity focused on developing clear target metrics and performance results around low-carbon energy responsibilities. This includes reducing carbon emissions, planning how to limit future oil and gas projects, and developing new business in renewable energy is critical.