petroleum-industry-billJust as Salman Rushdie, author of the controversial Satanic Verses, courted the angst of a section of the Moslem Ummah across the globe, it seems, in all appearances, that the much-hyped Petroleum Industry Bill (PIB) in its present form is not in sync with the thinking of a majority who are clearly opposed to its passage because of what they consider some “irreconcilable differences.”

Growing stalemate

The overriding objective of the much-hyped bill when it was first put forward in 2000, as stated in its forward document, is “A Bill for an Act to provide for the establishment of a legal, fiscal and regulatory framework for the petroleum industry in Nigeria and for other related matters.”

But almost 13 years after, the bill has been returned to the Executive for fine-tuning many times over, to no avail.

The much-awaited bill which has continued to go back and forth in the chambers of the National Assembly is scheduled to go on a road show across the nation’s six geo-political zones. But there are fears that what may eventually be passed by the legislators could be a shadow of the original document.

Ouster clauses

The 223-page document, made up of 362 items, gives clear views on what should be the structure of ownership, and management of petroleum resources in the country, including the roles and functions of managers and other stakeholders in the petroleum sub-sector.

But it does not appear that this is not as simple as it gets because in the contention of many opposed to its passage, especially oil majors, there is more to it than really meets the eye.

There are many areas which the multinationals appear not to be comfortable with.

According to analysts, the new bill is bound to be a game changer, as far as the regulation of the upstream and downstream sector of the petroleum industry is concerned.

Corroborating the foregoing, President of the Institute of Mediators and Conciliators, ICMC, Dr. Brown Ogbeifun, while ventilating his views on the bill, among others, said: “The Petroleum Industry Bill has very good intentions. The laws we currently use to drive oil and gas process in Nigeria are dispersed in about16 pieces. This Bill seems to streamline these into one readable text.

“Furthermore, the laws and fiscal regimes put in place at the infancy of the oil and gas industry when we were virtually begging investors to invest in Nigeria are still applied today and time is running out in the oil and gas industry.”

Waxing philosophical, he said: “It is like saying that the clothes a child wore in its infancy should still be worn at 18 years. Paradoxical, is not it? This definitely cannot develop our oil and gas sector beyond developing other economies. If we must fix the energy sector, unemployment, infrastructure, then we do not have readymade alternatives to PIB. Secondly, the agencies involved in oil and gas business have several overlapping and chaotic functions that need to be streamlined. This Bill is supposed to do that.

“Thirdly, the federal government has been accused of opacity in running the oil and gas business. The Bill in all intents and purposes is trying to enthrone openness, transparency and accountability in the governance structure of the oil and gas post –PIB. If the Bill is passed, it becomes easier to monitor the inflow and outflow from crude business. The issues of deregulation, subsidy and the commercialisation of critical agencies in the value chain of the oil and gas sector become a done deal from the point of law. We shall now do oil and gas business as a world class industry.”

PIB in brief

A cursory view of the PIB bill reveals that it clearly gives direction of what to expect in the sector.

Among other things, it canvasses the establishment of a number of agencies including the Upstream Petroleum Inspectorate, National Petroleum Asset Corporation of Nigeria, National Oil Company, National Gas Company Plc.

Other far-reaching changes the bill is expected to bring about is the introduction of the Petroleum Technical Development Fund, Petroleum Host Communities Fund, Downstream Petroleum Regulatory Agency, Petroleum Technical Bureau, to mention just a few.

Growing fears over PIB

It is, however, instructive to note that many oil majors are less than comfortable with the bill as it is currently constituted.

Sharing similar sentiments, a top management staff of Mobil Producing Unlimited, which is a joint venture partner with the federal government, who would not be named, said many operators have palpable fears as far as the implementation of the bill is concerned.

“Agreed, there are some areas where the international oil companies (IOCs) are favoured, like the fact that they won’t have to be tied to the apron strings of the NNPC. But all in all, the bill is skewed in favour of Nigeria, leaving little or no room for outside players.”

The consequence is that many would be persuaded to close shop in the country, the source said.

But Ogbeifun does not share such sentiments.

If anything, he holds the view, and very strongly too, that the bill, a well-articulated and intentioned PIB, will lead to job creation in the long run. “My appeal is that all the stakeholders must come together and see Nigeria as the essential goose that should be protected against dangers and death in order for her to continue to lay golden eggs.”

Expatiating, he said: “Even without PIB they are already divesting massively from Nigeria to other areas of Africa because of insecurity, illegal bunkering, corruption, policy inconsistency, tax issues, vandalism of their pipelines and equipment by vandals. All these have been articulated as causes of increasing overhead, which is compounded by the yearly negotiation cycles between them and their unions; and the increasing hard stance of the union. Rightly or wrongly, they may have their justifications for the assertions. PIB or no PIB, those that will go shall still go and those that will stay will.”

Best practice abroad

Investigation by The Nation revealed that in several oil-producing countries, the counterpart subsidiaries of the Nigerian companies operate strictly according to the laws of the countries where they are resident.

In more than 80 percent of the countries that have oil and gas driving their economies, expatriates do not remain on the job for more than two years.

However, in Nigeria, most expatriates stay on the job for so many years without due compliance with the understudy clauses. The result is that Nigerians are not empowered to take over their duties.

Like Nigeria, like others.

Apart from Nigeria, no government allows the luxury of breaching the expatriate rules as they do in Nigeria. The fiscal regimes in most of those countries are more stringent, compared to what obtains in the country, yet they are not forced to divest or quit from those countries.

“The truth is that going by our current fiscal regimes, monitoring strategies and expatriate quota policy, Nigeria remains the most generous and our take in financial terms remains one of the lowest in the world. So the truth is companies are allowed to relocate where they so desire. It is for the Nigerian nation to know who our true friends in plenty and adversities are and respond appropriately when we are out of the woods. Lastly, those who will remain will surely do so no matter the turn of events,” emphasised Ogbeifun.

View in government quarters

Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has described the draft oil reform law, currently before the National Assembly for legislative action, as a vibrant document which would remain relevant to the oil and gas industry long after the exit of President Goodluck Jonathan’s administration.

She spoke to newsmen recently as at the end of the two-day Senate Public Hearing on the Petroleum Industry Bill.

Mrs. Alison-Madueke called on stakeholders in the oil and gas industry not to politicise/personalise provisions of the bill, stressing that the draft legislation was not proposed or written with any administration in mind.

“By the time the PIB is fully articulated and implemented, the current president and minister of petroleum resources may no longer be in office. This bill takes a while before it is operational,” she stressed.

Drawing a parallel between the PIB and the Power Sector Reform Act of 2004, which was passed over eight years ago and is currently being implemented by the Jonathan administration, Alison-Madueke argued that it was important for the law to sufficiently empower any administration to act in the best interest of Nigerians.

Shedding more light on the what the minister said, a statement by Tumini Green, Acting Group General Manager, Public Affairs Division of the Nigerian National Petroleum Corporation, NNPC, said that contrary to fears in some quarters that the proposed law vests too much discretionary power in the president and petroleum minister, she explained that the responsibility for the exercise of the powers proposed in the bill for the president and petroleum minister will ultimately rest on any administration in power at the time and so should not be personalised.

It would be recalled that President Goodluck Jonathan had, in the heat of the tension arising over the passage of the bill late last year, mandated the petroleum ministry to constitute a task force to ensure the speedy passage of the bill.

In the memo to the minister, the SGF, Anyim Pius Anyim, had noted that given the president’s desire for the accelerated passage of the bill, he had mandated the ministry to set up a bi-partisan Special PIB Task Force to work with the ministry to further facilitate the quick passage of the bill.

The taskforce headed by Senator Udoma Udo Udoma as chair had other members including Senators Tunde Ugbeha, Lawan Shuaibu and members of the lower chamber like Hon. Chibudom Nwuche, Abdullahi Gumel, Habeeb Fashinro and former president of the Trade Union Congress, Mr. Peter Esele.

But as it turned out, the committee could not achieve its set objective, even as speculations were rife that some had elected to do the bidding of some of the IOCs.

Although Nigerians are desirous of taking ownership of the petroleum industry, which they hope the PIB will help to actualise, it appears it is going to be a long wait as there are still many unresolved issues with the PIB.


Information from The Nation was used in this report.