PIB: A HISTORICAL BACKGROUND

The Birth 0f the Petroleum Industry Bill (PIB)

Nigeria is ranked Africa’s number 1 and ranked number 12^th globally among oil-producing countries [in barrels per day], according to 2011 statistics by the United States Energy Information Administration[1]. Despite being among the world’s top oil producers, Nigeria’s oil and gas industry has been plagued by institutionalized corruption and impunity, with grave environmental and humanitarian devastations. With the kind of technological advancements and innovative developmental strategies of the 21^st century witnessed in oil industry operations across the globe, it became obvious that the legal, institutional and governance structures driving Nigeria’s oil sector operations were in dire need of a comprehensive overhaul. Legal standards and operational procedures put in place in the sixties and seventies – such as Petroleum Act (1969), the Associated Gas Re-injection Act, Nigerian National Petroleum Corporation (NNPC) Act (1977) - when the industry was still at its  infancy had become obsolete, outdated and out of tune with contemporary global business realities. 

Decades of mismanagement have deprived Nigerians of the benefits from the sector, just as vested interests continue to block and/or stall important reforms. The country is losing over 10% of its gross domestic product through fraud and could still not produce reliable accounts for national oil and gas production. Fresh in Nigerian minds are the mass protests opposing government attempts to abolish the subsidy on local fuel in January. The protests propelled high-powered probes which exposed the unprecedented financial mismanagement and horrendous malfeasance entrenched in the administration of fuel subsidies.

The Nigerian oil industry is further afflicted by too many regulatory institutions with duplicated roles and responsibilities, ill-equipped to formulate and implement transformative policies and programs that will keep the sector at par with counterparts across the globe. Worse still, the laws governing the activities in the oil sector were dispersed in several pieces of legislation, coupled with the numerous amendments, policy statements and regulations. Not only were the maze of legal framework often difficult to locate, but the absence of a coherent legal regime posed huge obstacles to efforts at improving local crude oil refining, energy efficiency, reducing oil imports and pollution, job creation and environmental protection. Revising the PIB became necessary for Nigeria to move towards an improvement in operational efficiency, productivity, viability and the general standard of operations in the Nigerian oil sector.

The oil sector reforms started under Olusegun Obasanjo’s administration, with the establishment of the Oil and Gas Sector Reform Implementation Committee (OGIC), mandated to review the operations of the oil and gas sector, harmonise the 16 legislations that governed the industry, and produce a comprehensive legislation that would overhaul the oil and gas industry;  make such recommendations for a far reaching restructuring of Nigeria’s oil and gas industry, and in the process, unlock billions of dollars of delayed investment. The Committee was inaugurated on the 24th of April, 2000 under the Chairmanship of Dr. Rilwanu Lukman (CFR) then serving as the Presidential Adviser on Petroleum and Energy (The Chairmanship later passed on to Dr. Edmund Daukuru, former Minister of State for Energy). The Committee comprising of a wide spectrum of individuals from both the public and private spheres of the industry, worked for four years to produce the first draft of the Petroleum Industry Bill. 

The PIB was first presented to the sixth assembly in 2009, but efforts to pass it were hampered by what industry experts described as political intrigues, wrangling between the National Assembly and the executive, and the dearth of effective citizen engagement on key provisions of the Bill. Lawmakers, citizens and industry stakeholders hardly had access to adequate information and resources on the basis of which they could make informed decisions regarding the PIB. Low levels of awareness and the lack of public consultations fuelled popular resistance, consequently foiling a major 2009 legislative attempt to have the Bill passed.

A new version is now ready for consideration by the lawmakers. The new draft PIB is an aggregation of several legislations on the oil and gas industry. The new policy covers in a comprehensive manner all the relevant aspects of the industry: Upstream, Downstream, Gas, Petrochemicals and many other industry related matters. The thrust of the new policy, however, is to ensure the separation and clarity of roles between the different public agencies operating in the industry, mainly through the unbundling of the national oil company, the Nigerian National Petroleum Company (NNPC). Equally of significant concern is the need to infuse strict commercial orientation in all the relevant aspects of the industry mainly by moving the control of the downstream oil and gas sector from government controlled monopoly to private participation. 

Until the January uprising, citizens either lacked interest or were largely indifferent about oil sector activities, resulting in decades of under-reported and unchallenged corruption and impunity in the sector.  The new PIB now offers a unique opportunity for citizens to participate and engage in the reform processes and activities in the oil sector, aimed at sanitizing the industry of endemic sleaze, and freeing up resources that will be re-channeled towards infrastructural development and poverty eradication. 

The scope and influence of the new PIB is wide, requiring intense citizen engagement to avoid ‘politicisation’ and “capture” of the legislative processes.  Initial commentaries however suggest that this version has been watered down to appease certain vested interests. Several provisions on transparency and accountability principles are believed to have been either removed or softened. Perception is also growing that the newly-created governance structures require some modification, and tend to give unfettered powers to some officials. These concerns, and many more informed the convening of the E-Conference, The PIB & YOU.

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[1] See site for further review http://www.eia.gov/countries/index.cfm

[2] The new PIB 2012 was drafted by a new committee headed by Senator Udoma Udo Udoma, in collaboration with a technical sub-committee headed by the Director General of Department for Petroleum Resources (DPR), Mr. Osten Olorunsola.