A Review of the Nigerian Energy Industry

PIB passage will save nation N3 trillion – Group

Oscarline Onwuemenyi

24 November 2011, Sweetcrude, ABUJA – A civil society group, Centre for Social Justice, CSJ, has charged the National Assembly to hasten the passage of the Petroleum Industry Bill, PIB, pointing out that its analysis has shown that more than N3 trillion could be saved within the economy with the implantation of the reform law.

The Director of CSJ, Mr. Eze Onyekwere, who addressed a press briefing on an analysis of the 2012 – 2015 Medium Term Expenditure Framework, MTEF, in Abuja, noted that the thrust of the analysis was to provide evidence-based review of the framework to ensure respect for the enabling law and to fast-track and facilitate the realization of the transformation agenda of the current administration.

According to him, the National Assembly should prioritize the passage of the Petroleum Industry Bill, PIB, in order to free up resources for investments in critical sectors.

He stated that, “Expert projections have estimated that over N3 trillion will accrue from the implementation of the PIB. Thus the larger picture of what gets more resources into the Treasury should supersede the immediate gratification of removing fuel subsidy.

“The recommendation is that additional income to be derived from the passage of the PIB should be factored into government spending from the year 2013. The National Assembly should take urgent and targeted steps to pass the bill to become law.”

He added that, “Plans to increase available revenue in the Medium Term Expenditure Framework ignored the increased income that would accrue to the nation if the PIB is passed into law and the fact that the burden of Joint Venture Cash Calls may be removed from the Treasury.”

Onyekwere further said government should continue the fuel subsidy but plug leaking pipes of corruption and waste that have led to abuse of the system, adding that “individuals and companies found to have abused the system should face punitive criminal justice sanctions.”

According to him, if the government was truly concerned about saving costs as it claims as motive for planned removal of fuel subsidy, it should begin from the passage of the PIB.

He said, “If the government is interested in saving costs for the entire nation, and not one that would serve pecuniary interests, it should quickly move for the passage of the PIB which will re-invigorate the entire oil and gas industry.

“We do not agree with the explanations given by government as reason for withdrawing fuel subsidy when a law that affects the entire industry including upstream, midstream and downstream, is languishing at the National Assembly.”

Onyekwere stressed that the argument that subsidy removal will free up funds for infrastructure development and open up windows for investment in refineries would be best served with the prompt passage of the PIB, which will create transparency in the sector as well as significantly increase domestic gas supplies for power generation and industrial development.

He noted that, “If the executive and the legislature agree that there is a need to free up funds for government to concentrate on development, particularly for infrastructure and the social sector, then the PIB should be passed expeditiously so that a proper picture about petroleum subsidies can emerge.

“The debate about removing subsidies on petroleum products to free up resources should be tied to the debate to free up resources that government continues to invest in joint venture operations and the fact that more resources would accrue to government if the PIB is passed into law.”

He noted that more money could be saved for the economy with the passage of the PIB, given the more robust and comprehensive nature of the reform bill.

“The government claims that that fuel subsidy removal would save the country more than N1.2 trillion annually; but it is very clear that passing the Petroleum Industry Bill, part of which stipulates comprehensive reform of the downstream system – of which crude refining is captured – will do the country far more good and would ensure more robust economic and infrastructure growth for the nation,” he stressed.

Onyekwere further charged the Executive arm to show leadership over the Petroleum Industry Bill, and take full charge to ensure prompt passage, if it must convince Nigerians that it is committed to reform in the oil and gas industry.

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