Rethinking Nigeria’s oil industry

NIGERIA’S oil industry is bedeviled by numerous challenges which the incoming Muhammadu Buhari administration must tackle headlong if the resource is to serve Nigerians and enable the nation offset its bills and still have savings. Some of the challenges are self-imposed.

While the falling oil prices may seem a major concern at the moment, leading to a dwindling revenue base, the endemic problems of corruption in the oil sector would require strong political will and genuine desire to improve the lot of Nigerians using the country’s main revenue earner.

Afterall, oil has become something of a curse to the country in many aspects and the immediate task is to ennoble the resource, especially the judicious deployment of its proceeds. Gas flaring, crude oil theft and pipeline vandalism, divestment by international oil companies (IOCs), poor or inadequate local content and human capital deficit are some of the critical challenges.

At the same time, maintaining the level of government investment in oil and gas while striving to meet the pressing social demands of the people is another.

The incoming administration must, therefore, set its priorities right in order to achieve a balance. Among other things, however, failure so far to pass the Petroleum Industry Bill (PIB) into law, seems to be an embarrassing blight on the nation. The PIB seeks to “vest oil and gas resources in the sovereign state of Nigeria”.

The bill is crucial to the transformation of the oil industry, its non-passage signposts that there can be no real change in the fortunes of the country. The PIB seeks to ensure equitable management and allocation of oil resources in a way that is in accordance with good governance in the overall best interest of Nigerians.

Based on this fact, the document seeks to enhance the exploration and exploitation of oil for the general good of the people; establish a commercially oriented industry; create a conducive environment for business to thrive; ensure transparency and openness in the management of petroleum resources and ensure effective compliance with Health, Safety and Environment (HSE) guidelines No doubt, some stakeholders have been vehemently opposed to it.

This explains why the bill, which was first presented at the National Assembly (NASS), eight years ago, is still pending. Two legislative assemblies have sat over the bill without passing it.

There is hope that the Buhari administration would provide the necessary impetus for the legislature, now controlled by the All Progressives Congress (APC), to pass the bill should the current lawmakers fail to do so before May 29. For instance, it is common knowledge that local opposition to the bill, manifesting in a north-south dichotomy, is one factor that has contributed to its non-passage.

Indications are that lawmakers from the north are not too comfortable with a law that seeks to give a better deal to the oil-producing communities in the Niger Delta.

As a matter of fact, many want the status quo to remain, while on the other hand, equity and justice considerations fuel the position that the bill must pass, a dichotomy that is as intense as the sheer resolve to dig in by both sides.

Only when deep thoughts are given to the continued progress of Nigeria as against selfish considerations would a common ground be found and the bill would be passed into law. Besides, Nigeria’s joint-venture partners, comprising the oil majors, don’t support the bill whole-heartedly.

But Nigeria, by the PIB, is merely trying to do what Brazil did in 1953 when it first discovered oil and ruled that the resource belonged to the people, must be owned and operated by Brazilians and proceeded to run the industry as such. That put Brazilians in charge of their fortunes and has been the root of that nation’s success till date.

Rather than entrust the oil into the hands of Nigerians, the country, from the beginning of oil exploration in 1958, allowed foreign oil companies to take full control. Having been fully entrenched in the industry with billions of dollars in investments, it is not too difficult to appreciate the oil majors’ opposition and why seeking to upturn the existing structure is such a difficult task.

Nevertheless, the time for change has come. Having reached the final stage of considering the bill, the outgoing legislature should do everything within its power to get it passed, as leaving the bill for the new National Assembly could mean starting afresh.

But, should that political will that has been lacking for eight years continue till the end of this assembly’s tenure, the Buhari government and the new legislature would be signaling a new direction for Nigeria by making the passage of PIB an urgent priority.