Petroleum Industry Bill: A Delay without End

In 2018, when President Muhammadu Buhari shockingly refused assent to one of the components of the Petroleum Industry Bill, the expectation of most Nigerians was that a new revised bill would be designed and forwarded to the National Assembly for action. Surprisingly, almost two years later, the PIB remains mirage despite promises made earlier in the year by Minister of State for Petroleum, Mr. Timipre Sylva, that the bill would be passed latest in June 2020. Nosa James-Igbinadolor report

It was on January 1, this year that Minister of State for Petroleum Resources Timipre Sylva declared that the Petroleum Industry Bill (PIB), would soon be passed by the National Assembly. According to Sylva, a review of the Petroleum Industry Bill was at an advanced stage and full passage of the bill was expected mid-2020.

He was to later posit on the side-lines of the OPEC meeting on March 5, 2020 that, “the PIB has been a long time coming and we think that when it comes out later this year, it will come out with a lot of sweetness.” He added, “We are very mindful of the fact that it’s a very competitive environment right now and we are taking that on board in the new law.”

Senate President Ahmad Lawan had earlier in the year pledged that the Senate would ensure the transmission of the approved version of the PIB to President Buhari for his assent before the end of 2020.

“Our petroleum industry is almost stagnant and for long needing profound reform. Our oil and gas-related committees are, therefore, expected to work hard to take the lead in our determination to reform this vital sector. It is the desire, indeed the design of this Senate that the Petroleum Industry Bill is passed before the end of 2020.”

The Petroleum Industry Bill, an omnibus law meant to regulate the entire sphere of the industry and repeal all current existing oil and gas legislation is one of the oldest bills in the legislature, and has struggled to see the light of day despite its introduction to the National Assembly over sixteen years ago. The utmost the country came to concretising the PIB 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 licences.

The depreciating fortunes of the oil and gas industry in Nigeria as a result of the COVID-19 epidemic has further accentuated the need to urgently reform the industry. In addition, 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 long 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.

According to oil and gas report, “a three-month delay in producing the documents has pushed the envelope in getting this most crucial assignment delivered by the end of the year. After they are approved by the 42-man FEC, the drafts will proceed to the National Assembly for deliberations that will shape them into acts of parliament, for the President to sign. It is unlikely that the bill; the Petroleum Industry Administratve Bill (PIAB), and the Petroleum Industry Fiscal Bill (PIFB), will get a first hearing at the bicameral house until July.

“The original plan was that the Executive arm of government, coordinated by the state hydrocarbon company NNPC, would have pieced together the draft documents as early as late February or early March. But as the work dragged on, “it got truncated by the COVID -19 lockdown”, in the words of people who are familiar with the process, and only got significant traction in the last three weeks.”

Lawmakers have been pondering despondently at the failure of President Muhammadu Buhari to transmit a revised version of the Petroleum Industry Bill (PIB) for legislative action. In August 2018, the President rejected the Petroleum Industry Governance Bill (PIGB), one of the four anthologies of the PIB that was harmonised and passed by both chambers for the president’s assent claiming that it would have whittled down his powers as petroleum minister. Attorney-General of the Federation, Abubakar Malami, had 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.”

Since then, lawmakers have waited to no avail for the president to transmit a revised version of the bill.

Many industry watchers including, Israel Aye, an energy expert and Senior Partner, Energy & Commercial Contracts, Primera Africa Legal posit that the bill should come from the executive in order to hasten its signing when passed into law.

THISDAY had earlier in the year urged that the statement by Minister Sylva that the PIB will soon be passed needs further clarification from him and from the federal government. This is because, “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.”

A Tartan Journey

The Petroleum Industry Bill (PIB) began its lengthy snaky journey to the Nigerian parliament under President Olusegun Obasanjo in 2000 with the inauguration of the Oil and Gas Reform Committee (OGRC) on 24th April 2000. The bill seeks to establish the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry, to establish guidelines for the operation of the upstream and downstream sectors, and for purposes connected with the same.

After four years of extensive work by the OGRC, the Oil and Gas Implementation Committee (OGIC) was set up on 21st June 2005 by the government “to develop strategies for the implementation of the content of the policy documents earlier developed by the National Committee on Oil and Gas Policy.” The OGIC made wide-ranging recommendations including the restructuring of the Nigeria National Petroleum Corporation (NNPC), deregulation of the sector, incentivising private investment in refineries, and harmonisation of existing petroleum laws etc. These were all integrated into one document to be presented to the National Assembly. However, a draft law could not be submitted to the National Assembly before the end of the tenure of the Obasanjo administration. In September 2008, the President Umaru Yar’Adua administration finally presented the first draft of the bill to the 6th National Assembly but this soon stalled over disagreements on the sharing of oil profits among international oil companies (IOCs), host communities and the federation.

In January 2012, four years after the presentation of the first draft, ex-President Goodluck Jonathan set up a special task force to fast-track the passage of a reworked PIB with more than sixteen existing laws harmonized into the new draft bill. The new draft bill was presented to the 7th National Assembly in July 2012. The disagreements over the provisions of the bill this time was more serious and led to the emergence of different versions of the same bill representing the conflicting interests of different stakeholders. This led to the complete withdrawal of the bill from the National Assembly amidst much confusion. A revised version of the bill presented to the National Assembly in 2014 also suffered the same fate until the end of the tenure of the 7th Assembly.

In 2018 the Petroleum Industry Governance Bill (PIGB), one of the four compendia of the PIB, was harmonised and passed by both chambers for the president’s concurrence. 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, something that had defied the last two governments. Buhari was to controversially decline assent to the bill.

As noted by THISDAY in January, “the PIB has faced persistent backlash and herculean assault from vested interests, including from the federal government’s fear 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.”

There seems to be an obvious fear of the socio-political repercussions of the Petroleum Industry Bill in certain quarters. It is however pertinent at this stage to question the interest and good faith of the executive in ensuring the quick passage, if at all, of the bill.