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Unbundled PIB to be resubmitted to parliament in First Quarter 2016

By on October 24, 2015

In its bid to restructure the oil and gas sector, the federal government plans to split the Petroleum Industry Bill (PIB) stuck in the National Assembly for eight years and resubmit it by the first quarter of 2016, as its delay deters investment in the country, Vice-President Yemi Osinbajo has said.

The vice-president was reiterating a similar statement by the Group Managing Director of the state-run Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, who during his Senate screening last week advocated the unbundling of the bill, adding that the non-passage of the legislation had cost the country $15 billion annually.

Breaking up the PIB into smaller laws focused on fiscal and regulatory measures in Nigeria’s energy industry would make it easier to pass through parliament, Osinbajo was quoted by Bloomberg as saying.

The bill, first presented to parliament in 2007, will be resent to lawmakers in the first quarter of 2016.

“Separating the PIB, breaking it up, obviously is the way I would think that we’ll proceed,” Osinbajo said in an interview on Tuesday in the Aso Rock Villa presidential residence in Abuja. “That’s really what the market has been waiting for.”

The proposed law has been held up largely by political wrangling and objections by international oil companies, which maintained that the government was demanding too big an increase in its share of revenue.

Nigeria depends on crude exports for about two-thirds of state revenue and about 90 per cent of export earnings. A drop in crude prices in the past year has put pressure on public finances, while the naira has declined 7 per cent against the dollar this year.

While the government isn’t planning to sell its four refineries, which are running at a fraction of their capacity because of poor maintenance and aging equipment, Osinbajo said this administration wants to encourage private plants to cut Nigeria’s dependence on imports.

More than 30 licences for refineries have been granted and private refineries will be allowed to build near the state-run units so they can “benefit from the available infrastructure,” he said.

The country of about 180 million people subsidises fuel and relies on imports for more than 70 per cent of its supply. Of the four state-owned oil refineries, two units in the southern oil hub of Port Harcourt with a combined capacity of 210,000 barrels a day are currently producing at 67 per cent of capacity, while others in Warri and Kaduna have been shut, Kachikwu said.

“In the medium term, we will be able to get cheaper pump-price oil because we will be importing far less refined petroleum,” Osinbajo said.

Osinbajo was a lawyer in Lagos, until his inclusion as the running mate of former military ruler Muhammadu Buhari of the All Progressives Congress (APC) party.
After taking office in May by defeating former incumbent Goodluck Jonathan and his Peoples Democratic Party (PDP) in Nigeria’s first electoral transfer of power from one party to another, Buhari fired the board and management of the NNPC, which has been dogged by allegations of losing billions of dollars of revenue since the 1970s.

But the NNPC has started publishing monthly accounts and is reviewing contracts with joint venture partners to improve transparency at the national oil company, which had the worst disclosure record of 44 energy companies analysed in a 2011 report by anti-corruption nonprofit organisations Transparency International and the Revenue Watch Institute.

The NNPC’s divisions will be “unbundled” to make them more efficient and the corporation will become a more of a regulatory body “as the private sector takes most of the downstream,” Osinbajo said. However, the government isn’t considering selling its stakes in ventures with oil companies.

Set up to look after Nigeria’s interests with foreign oil companies, the NNPC controls an aggregate 55 per cent share in joint ventures with companies including Royal Dutch Shell Plc, Exxon Mobil Corp. and Chevron Corp.

“We think that we are able to resolve some of the cash call difficulties that we have experienced,” Osinbajo said. The partners may be allowed to “borrow even on behalf of the federal government and will be able to introduce their own capital.”

In another development, the NNPC yesterday announced that 91 companies consisting largely of indigenous vessel owners had submitted bids seeking to provide coastal and bunkering vessel services for its subsidiary, the Pipelines and Products Marketing Company (PPMC).

NNPC, in a statement from its Group General Manager Public Affairs, Ohi Alegbe, in Abuja, stated that the number was harvested at a public opening of the technical bids which the firms had submitted to for the services.

The corporation stated that the exercise was conducted with representatives of the bidding companies in attendance, as well as officials of the Bureau of Public Procurement (BPP) and the Nigeria Extractive Industry Transparency Initiative (NEITI) who were present as independent assessors.

According to the statement, Kachikwu had while declaring open the exercise, expressed delight with the good turnout of Nigerian companies and vessel owners in the bid process.

He reportedly said: “I am happy that there is much show of interest in this process.

“The process is going to be transparent from the beginning to the end and we want the best yield in terms of value addition and best services and obviously we are going to grow the Nigerian content in this regard.”

“I am hoping that you are going to be part of the journey that we are taking NNPC through,” he added.

Kachikwu also pledged to sustain the ongoing reform process in the NNPC, which according to him has seen the corporation commence the monthly publication of its financial and operational transactions for public scrutiny, as well as the recent public harvesting of bids tendered for the new Offshore Processing Agreements (OPAs).

The statement added that the exercise would seek to engage the services of reputable organisations with essentially three ranges of deadweight tonnage (DWT) – 5,000 to 8,000DWT, 10,000 to 20,000DWT, and 25,000 to 50,000DWT.

 

[ThisDay]