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Pitfalls in the PIB

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Petroleum Industry Bill


The Petroleum Industry Bill (PIB) has wandered its way through the National Assembly for two decades, like an ancient Sufi mystic in search of the Truth. It has faced several disappointments and metamorphoses on its way to becoming a law. Initially a single bill, it was broken down into different Bills with one of the Bills- The Petroleum Industry Governance Bill (PIGB) passed by lawmakers in 2017 only to fail to get the much-needed presidential assent. Now it is back to the National Assembly as one single Bill. The Bill has long been presented as a credible solution to the myriad of problems facing the petroleum industry and the country, but its current version before the National Assembly is far from being a perfect Bill. If passed and signed into law as it is, it could represent a major missed opportunity for the country. 
 
The drafters of previous versions of PIB understood the need for harmonising the different regulatory structures that exist in the petroleum industry and that’s why they proposed the establishment of one regulator to replace the different regulators that currently superintendent over the industry like a confused orchestra led by several conductors. The PIGB proposed the creation of the Nigerian Petroleum Regulatory Commission (NPRC) to take over the work of the Department of Petroleum Resources (DPR), the Petroleum Inspectorate and the Petroleum Products Pricing Regulatory Agency (PPPRA). By also commercialising the Nigerian National Petroleum Corporation (NNPC) thereby stripping it of its regulatory functions, there was only one undisputed regulator of the industry left and that was the NPRC. Unfortunately, the current Bill is walking back some of the gains of this consolidation and clarity by creating two different regulators for the industry, namely the Nigeria Midstream & Downstream Petroleum Regulation Authority and the Nigeria Upstream Regulatory Commission.
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It is only in Nigeria that we successfully diagnose a problem, find the cure but then refuse to administer the said cure. The arguments against a splintered regulatory system in one industry are already well-known and acknowledged. The March 11th announcement of increase in petrol price by the PPPRA and the immediate contradiction of this by the NNPC is a reminder of what happens when too many hands are involved in driving a car. Time and time again, we’ve seen how lack of regulatory unity breeds confusion, wastes scarce resources and breeds unhealthy rivalry. At a time when the government is spending most of its revenue on recurrent expenditures, do we really want to spend billions of naira to fund two different management structures for these two regulators? This is money that could be better spent on more beneficial projects instead of spending it on remuneration, running cost and even physical structures required to run these regulatory institutions. The downstream, midstream and upstream sectors are part and parcel of just one industry. Many players in the industry operate in more than one sector and having them constantly liaising with two different regulators is unnecessary and lacks any visible benefit. The provisions for two regulators should be expunged for the sake of the country.
 
The Bill’s provision for a Midstream Gas Infrastructure Fund (MGIF) is another provision that needs to go. This Fund is proposed to come from a 1% levy on petroleum products and natural gas. If there is anything Nigeria enjoys more than creating new government agencies, it is creating new levies and taxes that further burden an already-overburdened people and industries. With deregulation, the prices of petroleum products are expected to rise sharply and instead of thinking of ameliorating the impact, we want to add another 1% levy on these crucial products. The objective of the fund and its administration is also neither clear nor convincing and there is a danger that this would become another tax on the masses to fund the unsustainable lifestyle of the political class. In any case, the petroleum industry already bears the burden of funding several initiatives including the Petroleum Technology Development Fund (PTDF), the Nigerian Content Development and Monitoring Board and the Petroleum Equalization Fund. Why do we want to add another one?

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There are a few other issues in the Bill that deserve serious scrutiny, including the proposed commercialisation of the NNPC. While the commercialisation of the perennially loss-making corporation is desirable and overdue, the process must be done in a way that does not transfer all juicy assets to a private company and leave the government with legacy liabilities of the NNPC.  The current provisions on this must be vetted to forestall this.  The PIB is an important bill that could be used to do great things for the country, but we must resist the urge to use it to retain old problems or create new ones. We have an opportunity to ensure the proposed law is designed to work for the Nigerian people and not for a select few who profit from proliferation of agencies and government interventions.

I will end this piece by encouraging more Nigerians from all walks of life to take a more active role in lawmaking, especially when it concerns crucial Bills like this. It is our collective duty, not just the job of our paid lawmakers, to make sure our interests are protected always. We -the citizens- have in the past made a mistake of not scrutinising a bill properly until it has been passed into law, and by then it is almost always too late. We can’t afford that mistake with the PIB.
Alabi tweets at @OneSodiqAlabi.
 

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