Professor Ibibia Worika was former Legal Counsel, Commonwealth Secretariat, London. He told KELVIN EBIRI that he does not consider it expedient for the President to act as the de facto minister of petroleum.
Isn’t it abnormal for the President to double as the de facto minister of petroleum?
HE is the President of the country and could decide to appoint ministers, and having done so, he may decide not to appoint a minister for a particular ministry. I understand the controversy this has generated.
Can the President of Nigeria, in the same breath, be the petroleum minister? Opinions are divided, even among experts, depending on where you stand. You can justify it or say it is not right. What I honestly understand is that, nothing from a legal point of view truly stops the president, if he truly wishes not to appoint a minister of petroleum. He could oversee that ministry. But we must distinguish between legality and desirability, I mean what is expedient. That something is legal does not make it desirable. That something is desirable does not make it expedient. If you ask me, it is not expedient that the president should double as petroleum minister, because he is the head. A minister is supposed to come to him and report on daily basis. If he does not appoint a minister, he will be reporting to himself. Obasanjo had done it, but he never declared himself petroleum minister, but we knew to all intent and purposes, he was the de facto minister. Though he appointed a minister of state, Edmund Dakoru, and had petroleum adviser, Rilwan Lukman.
How can this administration harness the immense benefit of the petroleum sector?
I think one of the most important things hanging is the Petroleum Industry Bill (PIB). The bill, for some reasons, got stranded in the National Assembly. This administration will have to decide what it wishes to do with the PIB, because it is central to some of the restructuring we will want to see in the oil industry. Some of us still feel that the bill is a bit bulky, extremely complex and that there was really no need to consolidate everything about the industry in one piece of legislation. I still have my doubt if that is the most effective way to go about it. I sincerely and honestly think till now that that bill should be fragmented. There are stand-alone sections of that bill. For example, all the reforms concerning the NNPC as an institution. There is no need to put that in that bill. Another example is the downstream regulation of the gas industry. The original bill could have stood alone until it was consolidated. And because everything was consolidated in one bill, the reform that could have taken place in the oil industry is now stuck. The delay is costing us investment opportunities. It is showing the investors and the entire world that we are so indecisive, we are slow and that nothing is happening in the sector. I am not sure now, but as at last year, I was meant to understand that there was no one single new exploration well that was taken. We cannot do that. We are in competition with Angola, Ghana and a couple of countries and we are behaving as if the world is waiting for us. Unfortunately, because of this delay and downward international price of oil, some of the provisions of the bill, it might be necessary to take a second look at them, because the industry then and now, are not the same thing. We need to take a look at the fiscal regime and that is where the international oil companies (IOCs) are interested in. If you recall the international majors said they need to rethink the fiscal regime, because they felt that there was a disproportionate emphasis in terms of government take and they have to give so much away. If you look at it from that perspective, the price of oil is very low, in that regard, you have to adjust the fiscal regime in such a way that at least there is balance.
Why is the fragmentation of the PIB imperative?
I do know that fragmenting the bill is so important. Let me just give you an example. When I went into the Commonwealth secretariat, I was asked to head the reform of the Namibian energy regulatory regime and our instruction were to essentially have one multidimensional integrated legislation that should establish the former electricity control board as the new energy regulator. In the same law, we should be providing for the governance of the electricity sector, the oil and gas sector, renewable energy sector and the rest of them. And I knew deep down in my heart that this would not fly. But again that was what the government wanted. We went back to London and looked at it and said this cannot work. So, we went back to Namibia, did a presentation and said look if you can unbundle this such that let us have one Act that establishes the energy regulatory agency and then a sectorial law that establishes electricity Act, the gas pipeline Act, including the renewable energy Act and then let this energy regulator be vested with the power to oversee all these with some sub regulatory agencies, somehow they understood it, the took the suggestion and the work became easier. One of the problem is that if you have left it the way the government had wanted it, then it would have remained in the parliament, there is no doubt about that, because, for one provision alone, say in the renewable energy Act, you will hold down electricity, you will equally hold down oil and gas, you will also hold down regulatory institution and God knows for how many years this would have gone on. This is the same problem we are facing now in Nigeria. So, fragmenting it is the most reasonable, in fact, this is one area where legality seems to co-join with desirability and expediency.
Will the non-passage of the PIB be blamed for lack of investment in the oil sector recently?
Sincerely speaking, if you are an investor what will you do? You are operating under a very uncertain environment; you don’t know what laws are going to apply to you. There are several versions of this bill. You just need to go to the Internet to check. I don’t even know the most current version. And then apart from that you want to put down substantial capital? You cannot take that kind of risk. We have an environment that is most uncertain and certainty is the lifeblood of investment and transactions. No one wants to make investment decision for 10, 15, 20 years on account of an environmental condition that is just most uncertain. It cannot work. So, I have no doubt in my mind that that is one of the reasons for not having sufficient investment in Nigeria. And it’s unfortunate, because if we had passed this bill earlier, the current low oil prices would still have been with us. The international oil companies are not satisfied with the fiscal regime and if you ask me, if you are on their side you will not want to do anything different from what they want. They want a fair deal. But the one that is problematic is the other issue, which boils down to host communities and how should be recognised. You know the problem here is that our northern brothers think based on the constitution that the oil and gas belongs to the Federal Government of Nigeria. They don’t want to recognise anything about community issues, and if they do, the communities should given then a very small bit as recognition not 10 per cent equity as the PIB suggested. But if you go to the communities, they will argue that we deserve a fair deal because we are the ones that suffer the environmental hazard, especially, when it is onshore and even if it is offshore, we still suffer because we are littoral communities and the impact is still felt.
These are the two basis problems. But because of these two issues, which we can separate from the entire bill, we are holding down downstream gas regulation and all the gas master plan and everything that we have to ensure the viable use of our gas reserve. We are holding down institutional reform of the NNPC, fiscal issues. We have held the entire PIB to ransom on just two issues for which politics and nothing else has set in. That it is wrong. We can fragment this bill and create legislation that deals specifically with community issues and create another that deals the NNPC, downstream regulations, institutional reforms of the NNPC and all that. It is the only way forward.
Corruption is pervasive in NNPC, will unbundling it help to eradicate this?
It depends on what we mean by unbundling. My sense is that before now, the fact that we had several subsidiaries in the NNPC clearly meant that the NNPC is not just one integrated vertical organisation where everything is done in the corporate head office. So, there were subsidiaries, depending on how you see it, they were structurally unbundled in some way, but it is just that the NNPC is the group holding company and then you have several subsidiaries.
Unbundling come in again in terms of administrative control, but the truth of the matter is that we cannot have totally elastic unbundling where each of the department or division just stand specifically on its own. What has helped to sustain corruption is the Nigerian factor.
Don’t forget that the NNPC and those who are in NNPC are Nigerians. It is the same society and the same people. Whether it is the police or the customs, it is the same people essentially. So, the tools we use to fight corruption in the larger society, we should see how we can use those useful tools and fight corruption in the NNPC. But if we place less emphasis on politicisation, less on Federal character principles, more on merit, and then there should be some level of auditing of the operations of the corporation on regular basis.
