Non-passage of PIB: The intrigues and politicking

The Federal Government had promised to ensure the passage of the controversial petroleum industry bill (PIB) before the expiration of this present administration on May 28. But recent developments at the National Assembly could perhaps truncate this dream and it may never see the light of the day.

What does the PIB entail?
The PIB seeks to provide for the establishment of the legal and regulatory framework, inspection and regulatory authorities for the petroleum industry, establish guidelines for the operation of the upstream and downstream sectors of the petroleum and gas sectors. It is regarded as the piece of legislation that will change the fortune of the economy.
Over the last two decades, various administrations have actively sought a more homeward looking energy policy.

Between the lines of most policy documents, there are elements of resource nationalism.

As the gaps and inadequacies of the Act emerged overtime, the government piled new regulations, guidelines, afterthoughts, borrowed ideas onto the framework.

The collapse was the mess everyone has had to pay for like the militancy in the Niger delta region which has helped to shoot up the oil price.

During the period, the country experimented with broad ideas like incentivizing exploration through reserve addition bonus, a forward looking concept that was blighted by corruption and others like marginal field program, the indigenous concession program and special deepwater concessions.

The deepwater concessions and bonuses had encouraged the big oil companies to head into the deepwater and find big fishes like Bonga, Agbami and Erha Fields, with no corresponding incentives for onshore projects that were less remote and held more opportunities for locals and thus escalating the prevalence of poverty.

As volumes fell due to facility damage,  revenues from onshore and shallow water projects dropped; it hardly showed in the government’s books because the oil price was going strong and offshore production was increasing and so the government virtually went to sleep expecting the high tide to continue.

The birth of the PIB
As the global recession climaxed in 2008, the government was deep in thought about how to renegotiate its terms of engagement with oil producers.

Looking through the pile, the country found that decades of errors had so compounded that it couldn’t begin to fix one thing without touching the other.

In 2005, the federal government issued a comprehensive National Energy Policy which sought to define its aspirations about everything from coal to nuclear, though in a skimming fashion.

That policy however lacked the force of law. To propose a comprehensive energy law, the government constituted the Oil and Gas Sector Reform Implementation Committee (OGIC).

The ultimate product of that policy machine is the proposed Petroleum Industry Bill (PIB) which has been in the National Assembly since 2008.

It is the culmination of ten year-old work of the OGIC and over five decades of muted resource nationalism.

$150 billion investment affected
Stakeholders have expressed concern over loss of huge investment due to non-passage of the bill since 2008.

Speaking at the 2009 edition of the Nigerian Oil and Gas conference in Abuja, former Regional Vice-President, Shell Exploration and Production, Africa, Mr. Ann Pickard, disclosed that passage of the bill with provisions contained therein would make investments in Nigeria’s deepwater uneconomic and result in loss of $50 billion in investment.

Industry sources disclosed that investment to the tune of about $120 billion have been put on hold due to the non-passage of the bill. More so, some outstanding oil and gas projects have since been either deferred till 2014 or indefinitely owing to the uncertainty over the prevailing fiscal terms.

Conclusion
Following the escalation of crisis in the Middle East in the decade before 2000, the Gulf of Guinea which Nigeria dominates became the new destination of choice for new investment to find oil to satisfy the energy needs of the U.S and other Western economies.

Assigning titles to plum hydrocarbon blocks to NNPC, one of the world’s most financially insecure state-owned corporations as a capital basis for refinancing; this is parallel with organisational restructuring of the NNPC and stripping it of its regulatory powers.

Removing all confidentiality and entrenching transparency in the administration and management of the corporation’s investment portfolio.

Last week, when some civil society groups stormed the National Assembly over non-passage of the PIB, the Senate President, Senator David Mark, said “I think for the benefit of those who are actually watching, we are all as patriotic as those who send text messages all over the country; that PIB is a very important bill; it has to be taken when it is due to be taken.

I think putting us under pressure and blocking the road and not letting Senators in is not the best way to say that the PIB be taken.

We are concerned about the industry, we will take it but not the way people are trying blackmail the Senate.”

This is to show that many industry watchers cum stakeholders are really perturbed at the manner the National Assembly is handling the bill.

The National Assembly had set up a Joint Committee to work out modalities on the bill and submit its report.

The committee had Senator Lee Maeba and Hon. Bassey Oti as its chairmen. Senator Lee Maeba is the Chairman Senate committee on Petroleum (Upstream) while Hon. Bassey Oti is the chairman, House Committee on Petroleum (Upstream).

Bowing to public pressure, the Senate President later assured that the PIB would be passed before May.

In his comment, “this is one bill that we must pass before the end of the lifespan of this Senate.”

He stated that the bill was presented to the National Assembly late, but the Senate considered and passed clause one of the PIB.

Source : Tribune