The Petroleum Industry Bill (PIB) was submitted to the National Assembly for it action over a year and half ago. To date, that piece of vital legislation is still awaiting passage into law by the lawmakers. The much-touted reform in the oil sector of the economy, which the proposed law is supposed to herald, has consequently been in abeyance.
The Bill has suffered several delays due to disputes, most them contrived, over its content which some investors in the sector claim is inimical to their interests. Its non-passage is doing more damage to the nation’s economy than any perceived harm to any foreign interest. A recent report by oil experts indicated that the country has so far lost over 3bn dollars in the last twelve months alone, due to the unnecessary delays in the passage of the law. According to analysts, once the law becomes operational, the industry is expected to yield at least 300m dollars additional revenue monthly. This is because Article 439 of the proposed law provides for payment of Nigerian Hydrocarbon Tax (NHT) by oil firms engaged in upstream petroleum operations. The Bill also proposes to regard oil and gas production as separate and taxable commercial entities, unlike what currently obtains, where both products are treated as one.
Although the Bill also seeks other critical reforms like increased manpower development and local content, the multinationals’ primary point of discord seems to be the new fiscal terms that they consider ‘harsh enough to stall investments’. Led by Shell in the protest, the multinationals argue that oil and gas production has failed to grow over the years due to ‘hostile policy regimes and harsh fiscal terms’ adding that the proposed Bill was a clear example.
Furthermore, Shell argued that the Bill would end investment in Nigeria’s deepwater and that the 50bn dollar planned investment in that area may not be possible unless government dropped the fiscal terms introduced into the legislation. On its part, the federal government said the Bill was put in place in line with economic realities of the country. It further cited countries like Angola, United Kingdom, United States, etc, that it said have introduced similar measures to address such economic realities. So far, Nigerians have been inundated with all manner of arguments that more or less do not address the issue, while the Ministry of Petroleum Resources and the Nigeria National Petroleum Corporations (NNPC), which should be seen as proponents of the law have apparently chosen to stay aloof. The fate of the Bill calls for serious concern, in the light of recent disclosure by the whistle blowing WikiLeaks website quoting US diplomatic sources as saying that Shell boasts of deploying spies who reported on happenings on the inner workings of the Nigerian government. This astounding revelation has placed the agencies involved in the process, specifically the Ministry of Petroleum Resources, whose minister was a one-time Shell employee, in a much compromised position. To extrapolate, the disclosure means that top government officials, in collaboration with foreign agents, are frustrating efforts to do legislative work in Nigeria. It’s a disgraceful and unacceptable scenario, which must not be allowed to subsist.
Given that Nigeria is in dire need of reform in the economic sphere, especially in the provision of electricity and other critical infrastructure for industrial growth, the PIB law is a sine qua non to effort at achieving the target. The lawmakers should ensure that only fair amendments, where necessary, are accommodated in the original draft. Besides the general expectation that the petroleum industry reforms will ultimately help the citizens to benefit more from the nation’s oil wealth, it is expected that the PIB will facilitate, amongst others, the petroleum sector’s intervention in the power sector to accelerate generation capacity and supply natural gas fuel to fire thermal generating plants in the country.
There is also the expectation on the much talked-about National Gas Master Plan (NGMP) and the Trans-Sahara Gas Pipeline (TSGP) proposed by the federal government to aid in the drive for more foreign exchange. Because of these expected direct benefits and the likely multiplier effects on other sectors of the economy, it is imperative therefore, for the lawmakers to discard personal interests and undue external influences and ensure that the Bill sails through and accordingly signed into law by the president before the general elections. It is in the interest of the nation that they do so.
Daily Trust