Hope rises as PIB gets final push
THERE are indications that the Peoples Democratic Party (PDP)-led National Assembly is in talks with the leadership of the Assembly to ensure that the Petroleum Industry Bill (PIB) is passed before June 4, 2015 when a new legislative body will be inaugurated.
This comes as the latest audit report of the Nigeria Extractive Industries Transparency Initiative (NEITI) said Nigeria lost a whopping N1.960,108 trillion to crude oil theft and sabotage in 2012. The Guardian gathered in Abuja yesterday that still smarting from the loss of the presidential election, the ruling party may have launched a last-minute effort at ensuring the passage of the bill as a parting gift to Nigerians.
The party also sees the possibility of the All Progressives Congress (APC), which will assume the majority party in the National Assembly from June 4, passing the bill in record time. Since the PIB is seen as a major revolution of the oil and gas sector, the PDP has reportedly told its members in the Senate to ensure its passage.
While The Guardian could not ascertain the level of the involvement of President Goodluck Jonathan in the renewed efforts, it is gathered that those politicians as well as industry players from the South South are harbouring the fear that the bill may not be passed in its present form which seems to favour host communities.
The thinking is that there may be pressure on the in-coming President Muhammadu Buhari to rejig the bill, which may not be in their interest. Speaking to The Guardian, an industry source said: “You know the bill has been in the making for so long, the thinking was that the National Assembly would be prevailed upon to pass it before this session closes but there was no urgency in that before the election.
With the loss of the election by the PDP which will see President Jonathan make way on May 29, APC not making inroads in the South-South and with a Northerner coming in as President, the feeling within the people from the zone is that it is now time to push for the passage of the PIB before the present administration comes to an end.
Second, the passage of the PIB by the National Assembly that is presently dominated by the PDP will lay a very good groundwork for its coming back to power in 2019. If the PDP allows the APC led government to pass the bill, it will take the glory for all the works the PDP has been doing on the bill in the last 10 years.
This is why the PDP is desperate to have the bill passed within the next few days.” Also, stakeholders in the oil and gas sector have called for the passage of the PIB in the interest of the nation’s economic growth.
In a chat with The Guardian yesterday, some experts in the oil industry said the incoming legislators would need to garner enough political-will towards resolving the controversial aspects of the bill which is the main driver of the reforms, and ensure that the country is rescued from imminent cash crunch. The stakeholders have come up with different figures Nigeria is losing due to the non-passage of the PIB.
For instance, the Nigerian National Petroleum Corporation (NNPC) had disclosed that Nigeria loses over $287 million from the Production Sharing Contracts (PSCs) monthly following the non-passage of the PIB.
However, the International Oil Companies (IOCs) under the aegis of Oil Producers Trade Section said Nigeria risks losing $185 billion within 10 years, as higher taxes proposed by a new law will deter investment in the country. The Managing Director, Danvic Concept, Afe Mayowa believes that since about 25 per cent of the lawmakers are returning to the National Assembly, the new legislators should tap from their wealth of experience to expedite action of the oil sector reforms.
“They should focus more on the contentious areas that have generated concerns, because we really need to move forward with the PIB. There must be a framework for people to put their investment in this country and that is something that must be done quickly by the incoming government, if these incumbent legislators fail to do it.
“There are issues raised by the IOCs and I think what they should do is to listen to them. The NEITI report, which was exclusively obtained by The Guardian in Abuja entitled ‘Financial, Physical and Process Audit: An Independent Report Assessing and Reconciling Financial, Physical and Process Flows within Nigeria’s Oil and Gas Industry – 2012’ found that Nigeria lost 2,842,116 barrels per day valued at N1, 960,607,108 to export crude theft and sabotage. Within the same period, Nigeria also lost around N31,771,108,795 to the nefarious activities of pipeline thieves and vandals.
The report frowned at the NNPC, which acts as agent to and sells crude oil on behalf of the Federation. NNPC is also customer for Nigeria crude oil and sells crude oil for domestic refining to itself through one of its subsidiaries – Petroleum Products Marketing Company (PPMC.) It noted that whereas there are executed Sales and Purchase Agreement (SPAs) between NNPC and other crude oil customers, there is no contract in place for the crude oil sales to NNPC-PPMC for domestic use.
The report also found that the Department of Petroleum Resources (DPR) could not provide any data on gas production or gas stock data due to some inherent difficulties associated with gas production and storage, coupled with the lack of proper equipment to handle such problems, that maintenance of accurate gas production and stock figures may only be attainable in the future.
NEITI audit 2012 also discovered that there were no bid rounds in the period covering 2012 under review, saying the examination of the Central Bank of Nigeria (CBN) statements and DPR records did not reveal any payment of Signature Bonus during the period under review. It added that domestic crude oil losses reported by PPMC in its populated templates were 3,045,625 barrels per day with an estimated value of USD$304,562,474.00 in 2012.
The losses are very significant. A few of the companies given approval (out of the 46 marketers) to import PMS in 2012 performed below average while four of them did not import any petroleum products.
The four marketers should be appropriately penalised and blacklisted from future participation in the import process if confirmed to have received foreign exchange for product importation without supplying the products.
PPPRA should further also review the future participation of the companies that performed poorly. While calling on the NNPC to discontinue the Crude Oil – Product SWAP arrangements and concentrate on direct importation of refined products, the report discovered that just as similar to the last audit report, the SWAP transactions also resulted in a net loss/ under-delivery of $500,075,239.29 or N78,761,850,188.18.
“The alternative arrangements with the balance of 78.49 per cent domestic crude allocation are not beneficial to Nigeria as shown in the analysis of Alternative Product Importation Arrangements and also corroborated in the Review of Federation Equity Crude Section of this report. The alternative arrangements should therefore be abolished forthwith while government should export the percentage of crude oil that is unrefined locally and purchase refined products,” it added.
It revealed that the quantity of domestic crude oil allocation processed by the refineries remains low (21.51 per cent) as was recorded in the previous audit cycle where an average of 20 per cent processing was achieved by the refineries over a period of three years (2009-2011). In 2012 out of a total allocation of 162.343 million barrels, only 34.927 million barrels was processed in the country.
It observed that the crude allocation to the NNPC for the refineries should be limited to their current capacity utilisation.
It called on the Federal Government through the appropriate agency to set the agenda for the privatisation of the refineries especially with the poor performance of the old and moribund Port Harcourt Refinery.
Reacting to the findings of the audit report, a collation of more than 100 civil society groups under the auspices of Publish What You Pay Nigeria (PWYP) has called for the urgent passage of the PIB to reposition Nigeria’s oil and gas sector for future challenges.
Its National Coordinator, Faith Nwadishi, said in Abuja that the coalition still believes that the PIB can still be passed before the end of the current National Assembly as a comprehensive framework to remove executive discretion and restoring sanity to the management of the sector especially in view of fast declining oil revenues.