Good Fate for the PIB

Now that the federal legislators have finally agreed to pass the Petroleum Industry Bill (PIB), one can boldly and proudly say that there is now good fate for the PIB which would be for the benefits of all Nigerians.  In the past,the PIB suffered from legislative delays and special attention from the relevant authorities to make it a reality. Since the importance of the bill has received or arrested the attention of the law makers, it may be appropriate to say ‘kudos’ to all Nigerians and other well wishers internationally.  

It is obvious that the PIB is mainly to increase government revenue with minimal or no extra expenditure.  In the words of Dapo Falade in the Nigerian Tribune of Friday, 28th October, 2011 page28, “Among the fundamental objectives of the bill is the vesting of petroleumand natural gas, in property and sovereign ownership of petroleum withinNigeria, its territorial waters, the continental shelf, the Exclusive EconomicZone and the extended continental shelf shall vest in the Nigeria for and onbehalf of Nigerians; and allocations of acreage, license, lease or contract forthe exploration and production of petroleum to any qualified  company under terms and conditions prescribed from time to time by the relevant institutions”. 

Whatever the case may be, the PIBis mainly to increase government revenue with minimal or no extraexpenditure.  In the words of an oil administrator cum technocrat and one-time oil Minister, Alhaji (Dr.) Rilwanu Lukman, “The PIB represents the largest overhaul of the government.  Petroleum revenue system in the last four decades through four control objectives, to simplify the collection of government revenue; to cream off windfall profits in case of high oil prices;to collect more revenues from large profitable field in the deep offshore waters; and finally to create Nigerian employment and business opportunities by encouraging investment in small oil and gas fields.  As a result, the willingness of the legislation to pass the proposed bill soonest possible should be seen as awelcome rarity because it would place Nigeria in putting oil affairs in the current and national perspectives.  A careful study of the bill reveals at a glance that it establishes the legal and regulatory framework, institutions and regulatory authorities for the Nigerian Petroleum Industry (NPI).  It went on to stipulate guidelines for operations in the upstream, midstream, and downstream sectors and for other purposes relevant to same. 

With the PIB in place, the texts of all licenses, leases and contracts and any of the changes got such documents will no longer be confidential.  I thinkthat was why the Minister bellowed “Nigeria will move in one step from one of the most opaque petroleum nations in Africa, to one of the most open and transparent in theworld”.  This is because payments to thegovernment of Nigeriawill be through public information. It will not be through secret or hidden agenda. 

According to President Umaru MusaYar’Adua (of blessed memory) the Bill will form foundation for a revival of an industry where attacks on pipelines and constraints on investment have fuelled a growing sense of crises among energy outfits.  Itis flabbergasting to say that the executives, from Nigeria’s biggest producers, whichinclude Exxon  Mobil, Royal Dutch Shell, Total and Chevron, said the preparednew terms were so stringent that they risked deterring investment rather thanencouraging it.  Where do we go from here according to a popular musician?

Happily, it is pertinent to statethat the Bill would definitely inject new vigour in the NNPC by reforming itsopaque, octopus-like structure to create discrete units to handle essentialtasks based on training, professionalism and experience (putting federal character principle in oblivion) such as exploration and production, regulation and research.  From my own point of view,the PIB would restructure joint ventures between the NNPC and Western majors toallow them to raise private capital, rather than rely on a notoriously unreliable injection of cash from Nigeria’s government at the expense of poor, frustrating and worried Nigerians who areliving under hard economic conditions, in other words, abject poverty.  

Furthermore, the benefits of thebill include making the government to increase its take from a growing number of deep-water developments.  Review ofthe royalties on gas by creating a new fiscal regime separate from rules governing oil.  Changes to the way taxbreaks are applied for new developments. To this end therefore, oil companies will be encouraged to refine atleast 50 percent of their production in Nigeria by the end of the decade,and in addition, new rules to boost employment of Nigerians in the oil industrywill take effect.  The issue ofincentives to encourage development of marginal fields as well as improve community programmes in the Niger Delta Region, the goose that lays the goldeneggs. 

Importantly, the PIB would restructure, repackage and revolutionize the oil industry in a system that would guarantee more returns on investment for Nigeria, which currently rely immensely on oil for 90% of its foreign exchange earnings.  The Bill combines sixteen (16) differentNigerian Petroleum Laws like the existing legislations as the Petroleum Act1969; the Petroleum Profits Act 1959 and the Nigerian Petroleum Corporation Actof 1977.  Other existing laws to beaffected include the Petroleum Profit Tax (PPT) Act of 1959; the Petroleum Act1969; the Petroleum Technology Development Act 1973; the Associated GasRe-injection Act 1979; the Petroleum Equalization Fund Act 1989; the OilPipelines Act 1990; the Nigerian National Petroleum Act 1997; and the PetroleumProducts Pricing Regulatory Agency Act 2003. The Oil Producing Trade Section (OPTS) which made a submission beforethe Senate public hearing in July 2009 also highlighted the importance and fateof the Bill.  

Writing on ‘What Fate Awaits the Petroleum Industry’ in the Thisday newspaper of Sunday, October 30, 2011page 109, Mr. Onwuka Nzeshi, traced the journey of the bill through the sixth session of the parliament.  According to him, the petroleum industry Bill was one of the most important, yet controversial that was presented during the sixth session of the National Assembly.  His words, “The much politicized bill isgeared towards enhancing greater transparency and accountability in oil and gasindustry in Nigeria.  It seeks to introduce a wide range of reformsin the petroleum sector and evolve a set of new regulations to govern the operations of oil companies, local and foreign, doing business in the country.  It was introduced by the government on the premise that the existing laws in the sector were old,archaic and had undermined transparency and accountability in the sector forseveral decades”. 

Interestingly, the Minister ofPetroleum Resources, Mrs. Diezani Allison-Madueke, sometime acknowledged thatthe signing of the Bill into law will move Nigerian businessmen and women intothe commanding heights of the oil and gas industry, while the oil bearing communities could attract incentives as much as $1.1 billion from oil revenue if the law comes into effect.  What abonanza and improvement on the standard of living of Nigerians!  She specifically pointed out that the Nigeria’sannual oil revenue is expected to rise to about $680 billion when the Petroleum Industry Bill is passed into law. Another bonanza for Nigeria,Nigerians indeed!    

Finally, as part of efforts toboost the activities of the oil industry, the Bill should be passed without further delay to give the NNPC (currently funded by the government the opportunities to create a viable and self-financing oil companies for the good and betterment of all Nigerians.  

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