PIB and the dangers of delay

…Why N/Assembly should act fast

Yemie Adeoye

21 July 2012, Sweetcrude, LAGOS – THE Petroleum Industry Bill, PIB, has been described as an Act to establish the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry, to establish guidelines for the operation of the upstream and downstream sectors, and for purposes connected with the same.

It is however worrisome that well over 10 years after the moves commenced for a law governing the oil sector and almost half a decade after the Late President Umar Yar’Adua forwarded the PIB to the sixth National Assembly the bill is yet to see the light of day.

This report takes a critical look at the importance of this bill not just to the oil and gas sector but to the entire Nigerian economy, negative effects of its non passage, the controversies surrounding the bill as well as the newly approved draft bill as brought forward by the Special Task Force on PIB amongst other relevant issues.

At the tail end of the sixth National Assembly in 2011, one of the major worries of investors in the Nigerian economy and stakeholders in the oil and gas sector was the Petroleum Industry Bill, popularly initialed as the PIB, this was because not a few of these experts were of the opinion that with the wounding up of all relevant activities at the National Assembly this most import piece of legislation would again suffer another rounds of delay.

This was brought to bear especially with the fact that the federal government through the Petroleum Minister had given different time frames for the passage of the bill all of which never came to pass.

Specifically, the importance of the PIB in a mono-dependent economy such as Nigeria’s cannot be over-emphasized, as over 95 percent of foreign exchange earnings is derived from this sector, even as there is very little to show for the over 50 years of commercial oil exports, especially in terms of infrastructures and national development as well as the integration of host communities in oil activities as a means to stem the tide of violent uprising which can derail oil production activities in the country, all of these and more is what the PIB intends to regulate.

The Petroleum Industry Bill (PIB) is conceived to repeal the Petroleum Act of 1969, and consolidate about 16 other petroleum industry laws into a transparent and coherent document. The objective, according to its proponents, is to establish a comprehensive legal and regulatory framework for good governance, transparency and accountability, with regard to operational and fiscal terms for revenue management, and removal of confidentiality clauses in licences, leases, and contracts in the nation’s petroleum industry.

However, the failure of the National Assembly to pass this all anticipated bill until the end of the sixth Assembly in March 2011after assurances by the federal government brought about uncertainties as it would be recalled that the Petroleum Minister, Mrs. Diezani Allison-Madueke, declared earlier in 2010 that the PIB would be passed before the end of August, and subsequently shifted it to the end of November, while Presidential Advisor on Petroleum Matters, Dr. Emmanuel Egbogah hinted that the bill would be legislated before the end of the year.

With the non passage of the PIB, at the end of 2010, emphasis shifted to March 2011, But March came and gone with the bill making no progress. It was envisaged that PIB would be one of the few pending bills that would be given accelerated passage before the elections, at least to boost President Goodluck Jonathan’s bid to return to power. The president and his supporters are pushing for the approval of the PIB as Oil sector reforms have been a key element of his manifesto, but all attempts to trash out the various conflicting clauses had proved abortive as was demonstrated in the House of Representatives in March, 2011.

Although, there were indications from the National Assembly that most of the technical huddles that have plagued the bill for months, especially the new tax regime that was opposed by mostly international oil companies, have been resolved, analysts insist that intense lobbying involving multinational and indigenous companies as well as political groups with personal interest in the outcome of the bill is the major cause of the delay.

Given the ongoing dispute over the final contents of the PIB at the National Assembly, the oil industry will continually face uncertainties over the outcome of the bill when it is passed.

Chairman of the Senate Committee on Rules and Business, Senator Solomon Ita Enang said in a recent interview in Abuja “There is no Petroleum Industry Bill in the National Assembly and in particular, in the Senate because, that Bill was introduced during the Sixth National Assembly and it lapsed with the Sixth Assembly.”

Speaking further he said “The Senate is inaugurated for a period of four years. At the end of the four years, the Senate stands dissolved and anything that is pending stands dead unless it is re-introduced.”

“Therefore, if the President wants it, he has to send a letter, re-introducing it. The President has to send a covering letter, which he will attach to the Bill he wants because on the Bill that was earlier sent, there may be need for adjustments and some alterations, after all, they did some public hearings on the Bill. They would have known areas which will not fly.”

This amongst other controversial issues surrounding the non passage of this all-important Bill forced the petroleum Minister Mrs Diezani Alison-Madueke to inaugurate the Special Task Force on PIB which was Chaired by Senator Udo Udoma.

The Task force has carried out an intensive review of the PIB and issues affecting its swift passage at the National Assembly while taking into cognizance all the efforts that have been put into the Bill by all stakeholders especially after several public hearings at the National Assembly and came up with the new draft bill which the Federal Executive Council has approved for dispatch to the National Assembly for prompt deliberations and passage into law.

This move has been hailed by several stakeholders as not a few of them can stand the almost zero investment in the Oil and gas sector much longer. During a visit by members of the 7th Assembly to Nigerdock sometimes in 2011, the Chairman of the company Anwar Jarmakani told members of the Senate committee visiting his facility on Snake Island, in Lagos the dangers of further delay in the passage of the Bill.

According to him further investments in the oil sector is seriously threatened due to the none availability of a piece of legislation guiding the industry and the resultant effect of this would be intensive job cuts ‘which has since commenced’.

“The situation is heightened due to the non availability of contract jobs to service companies who forms the bulk of employers in the sector, and it goes without saying that because most service companies who hitherto get jobs from Multinational Oil Companies no longer get these jobs it would be difficult to retain and pay their workforce.

Please distinguished Senators when you get back to Abuja impress it on your colleagues to ensure the passage of this Bill in whatever form, amendments can be carried out afterwards but the Bill should be passed as it had stayed far too long at the detriment of investments which keeps going to neigbouring countries like Ghana and Angola. Hence if the economy of this country must be saved the PIB must be passed.”

A major controversy that had affected the quick passage of the Bill had been the tax regime and royalties, an issue which rattled most IOC’s prompting some of them to establish a full division with strategically and statutorily dedicated staff to consistently review and deliberate on the Bill aimed at protecting the interest of the organization.

Sadly though the government prior to this time did not deem it fit to establish such a team of dedicated people to critically look at the Bill with the singular aim of protecting the nation’s interest especially after claims of exploits by the multinationals in the past, it is for this reason that the inauguration of the Udo Udoma committee was hailed by several industry watchers as it has become clear that the 7th Assembly would not have anything to do with the Bill since it ended with the 6th Assembly.

Part of what the new Bill seems to be proposing is the scrapping of the Petroleum Products Pricing and Regulatory Agency as well as the Petroleum Equalization Fund (PEF) two federal agencies which has come under intense criticism in recent past and if governments assurances to fully deregulate the downstream sector of the petroleum industry is to be effected then the Agencies would have outlived their usefulness hence the move would signal federal government’s commitment to total deregulation in harmony with the yearnings of most Nigerians.

Now that the President has signaled intention to forward the bill to the National Assembly, intensive deliberations and a swift passage of the bill should be the primary concern of all lawmakers at the National Assembly especially as it has been established that job cuts are systematically ongoing in the oil sector as a result of zero investment by multinationals due to non-availability of a law to guide investments and there would be more job losses if the
National Assembly fails to see this onerous task as a life saving one, hence all efforts should be made in order for the delays and waste of public funds witnessed in the sixth Assembly regarding this Bill never to re-occur again in this National Assembly.

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  • The PIB is the most critical piece of legislation before the national assembly. We hope lawmakers are adequately seized of this fact and are able to rise to the occasion by giving it the expedient treatment it deserves.