PIB: NIGERIA VS WORLD OIL GIANTS

Almost five years since it was drafted, the Nigeria Petroleum Industry Bill (PIB) is yet to become a law. The bill which was the brainchild of the Oil and Gas Sector Implementation Committee (OGIC) set up by former President Olusegun Obasanjo in 2002, was first drafted by the same committee later reconstituted in 2007 by late President Umaru Musa Yar’adua to review the OGIC report and come up with a workable document. It was this effort that later translated into the formulation of the  Petroleum Industry Bill (PIB), which was expediently endorsed by the Federal Executive Council and subsequently sent to the National Assembly in August 2007 for their consideration and enactment into law.

Enactment of a new legal framework in the nation’s oil and gas sector was informed by government’s realisation of the huge losses accrued to the nation as a result of the loopholes in the existing legal framework governing the sector, which favours the oil companies more than the nation; the need to transform the Nigerian National Petroleum Corporation (NNPC) from a huge shapeless cost centre with conflicting roles in policy, regulation, and commercial operations into a full-fledged international, integrated commercial oil and gas corporation driven by revenue generation and profit objectives; as well as the need for a holistic review of the governing structure of the entire sector to make it truly serve the interest of the people. Moreover, in contrast to existing global trend in the oil sector, Nigeria’s fiscal terms are currently lenient compared to its peers, particularly countries like Libya which has 93% government take and UAE which is on an average of 94%, while Nigerian government share is much lower. Even under the proposed PIB, the government will only be raking an average of 73% to 82%, which is still lower than what is obtained in other countries of similar geological features.

As crucial as the bill is to the nation, which is envisaged to restructure the sector that provides more than 75% of the nation’s revenue, five years after it was drafted, the bill is still before the National Assembly and probably awaiting its third reading when the Senate resumes from its recess in September. The snail-pace and seeming reluctance in passing the bill may not be unconnected with the nefarious interests of the world oil giants operating in Nigeria, who realised that the new bill if passed would not favour them, and therefore prefer to maintain the status quo that has been in operation since the 1970s, and which gives them an upper hand in the industry.

Contrary to the existing fiscal system governing the nation’s oil sector, the proposed Petroleum Industry Bill introduces a number of changes, which includes the creation of the Nigerian Hydrocarbon Tax (NHT) that provides for a higher government take for offshore fields and a marginal higher take for onshore and shallow waters. The PIB also introduces a new land management system with stringent handover guidelines that would provide a platform for new local and foreign investors, to enlist and contribute to the growth of the industry. This simply means that companies currently operating in the country would be required to give back certain fields from existing oil prospecting licenses and oil mining leases, where production activities are yet to commence or which the companies are keeping to be developed in the near future to new investors in order to boost productivity.

Ultimately, the bill seeks to address the flagrant corruption in the oil and gas sector and ensure that Nigeria derives maximum benefit across oil and gas value chain by providing a level playing field for wider participation of stakeholders and entrenching transparency. In a nutshell, the new bill aims at reforming the country’s oil and gas sector by ensuring higher and more equitable gain for the country from its abundant oil resources, break the monopoly of a few multinational oil giants and provide opportunity for new investors as well as check the alarming level of corruption in the sector.

Naturally, the multinational oil barons, long accustomed with the lucrative ways of doing business in Nigeria would not be comfortable with the new law. Thus, the firm resistance by those oil companies to scuttle the successful passage of the bill. There have been media reports about the oil companies’ attempts to compromise Nigerian lawmakers and other opinion leaders among other high-level diplomatic manoeuvres, so that they can continue to reap the highest benefit. In this regard, there were even some reports recently, about alleged threats by some oil companies to sue the federal government over some provisions of the bill that reduce their profit and make the regulatory environment tighter. Basically the oil companies are determined to frustrate the successful passage of the bill or at least find a way of influencing its content so that they will remain at the winning end at the detriment of the nation.

The nation has over the years been losing billions of dollars to those oil companies who have been milking the nation for over 50 years, and are still determined to continue. This has to stop. It is however comforting that our leaders have realized the huge resources the nation loses as a result of the existing framework in the oil sector. It is also bolstering that our indigenous technocrats in the sector are firmly behind the PIB. It is now left for our lawmakers, who now have the ball in their court, to exhibit high sense of responsibility and patriotism. The lawmakers know more than any other Nigerian the depth of the murky waters in the nation’s oil and gas sector, a nuance of which was recently revealed to the public by the House of Assembly’s Oil Subsidy Probe. The National Assembly are therefore, expected to ensure thorough deliberations on the bill to make sure that the interest of the nation and the people are safeguarded. They should also make sure that the bill also addresses other critical issues in the oil sector, such as gas flaring, interests of the host communities, and environmental issues, among others.

It has become incumbent on the lawmakers to ensure the speedy and successful passage of the bill, which is also a golden opportunity for them to regain their lost public confidence following the recent unfortunate corruption scandals that threaded the National Assembly. It is time for Nigeria and Nigerians to reap more benefit from the abundant oil resources that God has endowed the country with, for the rapid socio-economic development of the nation.