A Review of the Nigerian Energy Industry

The N'Assembly's unfulfilled promises on PIB

joint sitting of the national assembly11 February 2014, Abuja – The failure by the National Assembly to keep its public promises of giving the Petroleum Industry Bill expeditious passage is further eroding people’s trust in the institution. 

The National Assembly has promised for the umpteenth time to pass the long- overdue Petroleum Industry Bill (PIB) before the end of this year.

Chairman, House of Representatives committee on petroleum (downstream), Mr. Dakuku Peterside made the latest pledge during an oversight visit to the Petroleum Equalisation Fund (PEF) last week.

Peterside said the PIB, which had scaled first and critical second reading in the House of Representatives is currently with the ad-hoc committee, rekindling the hope of its passage before the end of this year.

The lawmaker was more authoritative as if he has under his belt a magic formula that is going to work wonders this time around.

His words: “Nigeria’s oil and gas sector is almost in transition to another phase, which is post-Petroleum Industry Bill (PIB) phase. In the next one-year we expect to have a new legal framework governed by the PIB.”

The PIB is proposed as a transformative piece of legislation that aims to consolidate 16 different Nigerian petroleum laws into a single document, establish a new legal and regulatory framework as well as new institutions and regulatory authorities.

The bill, which was first presented to the national assembly in 2008 by the late President Umaru Musa Yar’Adua also seeks among other objectives: to enhance exploration and exploitation of Nigeria’s petroleum resources; significantly increase domestic gas supplies especially for power and other industry uses; create a competitive business environment for the exploitation of oil and gas resources; and establish a fiscal framework that is flexible, stable and competitively attractive to investors across board.

Global financial watchdog, the International Monetary Fund (MF), last year commended the bill, saying, it “would boost investment, government revenue, and fiscal transparency.”

The IMF’s endorsement and series of calls for its expeditious passage underscore its importance to the international community, particularly, the business community, given that the oil and gas sector is the epicenter of Nigerian economy.

In 2012, President Goodluck Jonathan had forwarded the updated version of the bill to the seventh national assembly and expressed optimism that it would be given speedy passage. However, this was not to be, as various interest groups have continued to kick against its passage.

Multinational oil companies, Shell Petroleum Development Company, Mobil Producing, Agip and Total had picked holes in some of the provisions in the bill, particularly, the fiscal terms, contending that the tax terms are uncompetitive and could make offshore oil and gas projects unviable.

The oil majors are also opposed to the deepwater profit tax and argued that the bill, if passed without significant changes, will stifle investments in the oil and gas sector and hamper Nigeria’s aspirations to grow the business and the industry.

But the PIB team led by the Group Executive Director (GED) in charge of Exploration and Production at the NNPC, Mr. Abiye Membere, had insisted that government’s take in terms of royalty is very competitive and lowest among peer countries such as Angola and Norway.The proposed fiscal regime, according to him, was predicated on production as opposed to terrain and investment.

According to the GED, the proposed royalty by production captures the output of a company as opposed to its location; creates a fair balance between small and big producers operating in the same region; enables operators to continue to make fair returns during field decline; lowers rates proposed for condensate for Non-Associated Gas (NAG) fields as well as rates proposed for frontier and ultra deepwater basins.

Broken Promises
Despite admitting that the PIB was critical to the future of the Nigerian oil and gas industry and by extension the economy of Nigeria, the national assembly failed to accord it expeditious treatment, as political intrigues and sectional interests have continued to delay its passage.

President of the Senate David Mark had described the bill “as the Bible of the Nigerian oil and gas industry” and promised that the lawmakers would not take anything for granted in its consideration of the bill.

Also, deputy senate president, Ike Ekweremadu, during the presentation of the bill to the leadership of the Senate by the Petroleum Minister, Mrs. Diezani Alison-Madueke in February 2013, reaffirmed the legislators commitment to the speedy passage of the bill.

Similarly, their counterpart in the lower legislative chamber, Mr. Samson Osaige also gave a firm assurance that the bill would be passed before the end of last year. Osagie, who is deputy chairman, House of Representative committee on the PIB, also pledged that all contentious issues would be resolved to significantly address the concerns of relevant stakeholders, but noted that national interest would take precedent over personal interests.

Admittedly, the national assembly can delay a bill in order to give it more careful scrutiny. It is also very normal to have various interest groups oppose to certain aspects of a bill, or certain concerned groups may feel they did not get a chance to be heard, such personal interest should not take precedent over national interest.

Stakeholders’ positions
The national assembly’s many broken promises have continued to attract the ire of stakeholders in the oil and gas industry. An industry analysts who have been following the trend, weekend dismissed Peterside’s latest comments on the PIB as mere assertions and one of the many unfulfilled promises by the national assembly since 2008 the bill made its entry into the legislative houses.

He argued that the many broken promises by the legislative body, clearly illustrate a sad display of its lack of commitment to ensure expeditious passage of the bill.

“This is not the first time these lawmakers are promising that the PIB will be passed. Since 2009, they have been making these promises every year, that the PIB will be passed before that particular year ends, but five years down the line, the bill is yet to be passed. The question now is how much longer are we going to wait for the national assembly to deliver on its promises”, the industry stakeholder asked rhetorically.

He argued that when promises are broken time and time again, they are capable of eroding the confidence a promisee has on a promisor, who in this case is the National Assembly.


– Chika Amanze-Nwachuku, This Day

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