PIB: Still a Long Walk After FEC’s Approval

By Emeka Ugwuanyi

(THE NATION)

 

The problem of passage of the PIB doesn’t reside in submission to the National Assembly but in persuading the lawmakers to understand the importance of the document to the growth of the petroleum industry and the economy, and doing what they ought to do at the appropriate time.

The fears

Many stakeholders express fear that if the passage of the bill exceeds mid next year, it might be difficult to pass into law by the current seventh assembly as the executive and legislative members of the government, will preoccupy themselves with electioneering campaigns and strategies for reelection. 

The revised draft bill has fewer controversies. Most of the contentious issues that the international oil companies (IOCs) such as Shell, ExxonMobil, Chevron, Total and Agip stood against have been resolved. Unlike what obtained during the sixth assembly where there were several versions of the bill allegedly submitted to the National Assembly, the revised bill has no other version because interests of various groups have been harmonised, which makes possible for quick consideration and passage. However, the government should ensure that no controversy arises from any interest group to create situation for submission of another version. 

Costs to economy

The undue delay of passage of PIB has slowed down fresh investments, job opportunities, technology advancement and development of the economy and Nigerian people. For instance, Nigeria’s oil and gas industry chief regulator, Mr. Osten Olorunsola, said there was an obvious decline in oil reserves estimates between 2011 and 2012 and wondered what will happen between 2014 and 2017 in terms of oil and gas production, since no major investments have been recorded in exploration in the last five years.

He attributed the situation to the non-passage of the bill, adding that the gap created by lack of investment in the exploration and production segment of the industry, would take the country about five to six years to recover.  He expressed concern over diversion of investment from IOCs in Nigeria to other countries in East and West Africa, citing Shell and ConocoPhillips as examples.

The Minister of Petroleum Resources, Mrs. Alison-Madueke also noted that the PIB when passed into law is the key that would undoubtedly open the oil and gas industry into a new era. He added that the government is not unmindful that a lot of investment decisions are currently on hold, stressing that the government is losing potential revenues that could have accrued to it due to proposed changes in the deep water fiscal terms.

The Chairman, Emerald Energy Resources Limited and former Special Adviser on Petroleum Matters to President Musa Yar’Adua, Dr. Emmanuel Egbogah said that the “new draft of the long-awaited PIB is close to being finalized, potentially ending years of uncertainty that has blocked developments in the industry. 

“As you know, licensing rounds, contract renewals and investments have been put on hold for about five years now pending the new bill to regulate the oil and gas industry. The passage of the bill into law would serve as a breath of fresh investment air into the industry for the revival of our national economy.”

The revised draft PIB is critical to the well being of the oil and gas industry and the economy. It will change everything from fiscal terms to overhauling the Nigerian National Petroleum Corporation (NNPC). It is an enabling legislation, holistic in depth and scope and will bring the Nigeria oil and gas industry well into the 21st century modernity. It provides all the legal and commercial framework for full and comprehensive reformation/re-engineering of the industry. It will create a liberalized, deregulated professional oil and gas industry.

The bill will outlaw gas flaring from December 31, this year. Some sections of the bill said: “Natural gas shall not be flared or vented after December 2012 in any oil and gas production operation, block or field, onshore or offshore, or gas facility, except under exceptional and temporary circumstances. Any licensee who flares gas or vents gas without the permission of the minister (in special circumstances) shall be liable to pay a fine, which shall not be less than the value of the gas.

“There shall be no grant of discretionary awards’ but the grant of petroleum prospecting license or a petroleum mining lease shall be by open, transparent and competitive bidding process conducted by the Nigerian Petroleum Inspectorate, which shall be the successor to the assets and liabilities of the Petroleum Inspectorate of NNPC, DPR and the Petroleum Products Pricing Regulatory Authority  (PPPRA).”