Another PIB Promise

Minister of State for Petroleum Resources, Timipre Sylva, on January 1, 2020 declared that the Petroleum Industry Bill would soon be passed by the National Assembly. The promise when held against the mirror of past promises and failures by the executive and the legislature, does not give room for hope, at least not anytime soon. Nigerian government officials have over the years become very adept at making political statements over fundamental national issues, not minding the economic impact of their ‘policy statements’ on the political economy of the country. Nosa James-Igbinadolor reports

While successive Nigerian governments have consistently touted their desire to overhaul and sanitise the sordid petroleum industry, by adopting global best practices through the instituting of efficiency and transparency in both upstream and downstream sectors, the Petroleum Industry Bill (PIB), which seeks to secure the long-term macroeconomic stability, reform the extractive industry institutional framework, support production to ensure Nigeria remains the top African oil producer, kick-start a domestic gas to power market, provide clarity and stability for the country and its partnership with the oil and gas industry for the next decade, and increase oil and gas production whilst protecting the environment, support economic diversification, has suffered deliberate yet consistent legislative delays and limited consideration from the executive.

The regulations guiding the Nigerian oil and gas industry are more than six decades old and it was this realisation and the need to make the sector more efficient and more aligning to global best practices that necessitated the conception of the PIB. The bill remains one of the more fundamental and far reaching act of legislation ever conceived, at the same time it remains perhaps the most time-consuming bill in the history of legislative activity in Nigeria.

Every legislative PIB process has always faded with each administration and exhumed practically from the legislative grave by the succeeding governments. Four president and six legislative tenures later, the bill remains a legislative and political embarrassment to Nigerians and the government.

Minister of State for Petroleum Resources, Chief Timipre Sylva, in a terse, yet shallow statement on January 1, 2020, announced that a review of the Petroleum Industry Bill was at an advanced stage and full passage of the bill is expected mid-2020. The thinness of the statement, itself exposed the uncertainty inherent in the minister’s promised declaration.

The furthest the country came to concretising the PIB since 2000 was in 2018 when the Petroleum Industry Governance Bill (PIGB), one of the four anthologies of the PIB, was harmonised and passed by both chambers for the president’s assent. The PIGB created four new entities whose powers included the ability to conduct bid rounds, award exploration licences and make recommendations to the oil minister on upstream licenses. The passage of the PIGB meant that the government could move forward with new taxation legislation, which would have made it more attractive for companies to invest, particularly offshore. Antony Goldman of PM Consulting defined it as, “an unprecedented step forward. The PIB is something that has defied the last two governments.

The detail of what is agreed will determine the extreme to which the bill takes politics out of the sector and tackles systemic corruption.”

Alhassan Ado Doguwa, the current majority leader in the House of Representatives and a key PIB lawmaker, had elatedly crowed, “we have broken the jinx after 17 years.”

Shockingly however, President Muhammadu Buhari rejected the bill, claiming that it would have whittled down his powers as petroleum minister. Attorney-General of the Federation, Abubakar Malami, backed the president when he asserted that, “that Bill (the PIG Bill) was fundamentally rejected among others, by the President because of the fact that the interest of the host community was compromised, in the sense that self-serving sections were brought into it, conferring powers on an individual as against the institution… and the public interest element of the role of the president requires that the public interest should be factored more as against public or individual interests.”

The reality is that the PIB has faced persistent backlash and herculean assault from vested interests, including from the federal government fearful of potential protests against any removal of the fuel subsidy arising from deregulation of the industry. In addition, concerns about regional imbalances in the distribution of oil revenues and, mounting pressure from foreign oil companies that are unwilling to pay more oil taxes, as well as from the leviathan NNPC afraid of the whittling of its hegemony have all coalesced to stifle the debut of the PIB.

The absence of business clarity and predictability in the petroleum industry as a result of the incapacity of the federal government to pass the PIB has had debilitating effects on the industry. Former Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, it was, who noted that the cost of uncertainty is far greater than the cost of simply not having the law itself. It has been estimated that over $120 billion has been lost to investment withheld or diverted by investors to other (more predictable) jurisdictions.

The Nigeria Extractive Industries Transparency Initiative (NEITI), in its 2016 occasional paper series, noted that the amount of funds previously allocated by international oil companies (IOCs) for investment in Nigeria, was almost shrinking due to the emergence of several other viable oil and gas projects across Africa, including Ghana, Senegal, Mozambique, Kenya, Uganda and Tanzania. Further estimates put lost investment earnings between 2007 and 2012 at $100 billion.

A review by NEITI, in early 2019, revealed that NNPC run refineries recorded an average capacity utilisation of 12.26 per cent in 2015, 2016 and 2017. NEITI stated that one striking feature of the NNPC financial operations report was the disclosure that the corporation lost the sum of N547billion in its operation for the three years. “Out of this amount, the NNPC corporate headquarters recorded the highest revenue loss to the tune of N336.268billion,” the organisation stated.

Within these contexts therefore, the statement by Minister Sylva that the PIB will soon be passed needs further clarification from him and the federal government. The promise when held against the mirror of past promises and failures by the executive and the legislature, does not give room for hope, at least not anytime soon. Nigerian government officials have over the years become very adept at making political statements over fundamental national issues, not minding the economic impact of their ‘policy statements’ on the political economy of the country.

It is pertinent that the Petroleum Industry Bill should not be subjected to further political sweepstakes by the President who is the minister of petroleum and leader of the executive branch of government, and by the National assembly. The reason is simple; the bill is too important to the growth of the Nigerian economy.

Speaking in August last year, during a visit of the National Executive of the Nigerian Guild of Editors led by its President, Funke Egbemode, Group Managing Director of NNPC, Mele Kyari stated that until and unless the petroleum legislation is passed, the volume of foreign investments flow into the country would be restricted.

“The petroleum legislation has been lingering since 1999 and we are aware that the present administration is committed to the passage of this very important legislation. “We need the NGE’s help to get the petroleum bill passed through sufficient enlightenment of the National Assembly and all other stakeholders,” Kyari had said.

After several failed attempts to pass the bill, it is time to question if this present National Assembly whose leadership is beholden to the president and have tied themselves irrevocably by their statements and actions to the whims and caprices of the president, have the political will and can summon enough courage to pass the bill to the benefit of Nigeria and Nigerians? Perhaps, it is also appropriate to ask whether Buhari and his circle of ultra-powerful advisers are really keen on the passing and implementation of the PIB.