A Review of the Nigerian Energy Industry

Egbogah Urges Buhari to Refine PIB Prior to Passage

11 August 2015, Lagos – A former Presidential Adviser on Petroleum, Dr. Emmanuel Egbogah has urged President Muhammadu Buhari to withdraw the current version of the Petroleum Industry Bill (PIB) from the National Assembly, saying that in its present form, it is inconceivable that the National Assembly would pass the bill, although it had passed its second reading.
PIB-600x330Speaking at a recent lunch meeting of the Petroleum Club in Lagos, Egbogah suggested that Buhari should make refinements to be bill, particularly the Host Community Fund, royalty and governance, for clarity, to aid its successful implementation.

According to him, the bill will then be resubmitted to the 8th Assembly for speedy passage into law.

Egbogah, who is also the Chairman of Emerald Energy Resources Limited, argued that the reform bill was both a challenge and an opportunity.

He stated that the bill presents the opportunity for a demonstration effect and a serious attempt to signal a clean-up of the policy space.

The renowned petroleum engineer, however, noted that the people of Nigeria and the National Assembly probably did see the challenge but certainly did not recognise and embrace the huge opportunity.

He argued that the NNPC and its Strategic Business Units (SBUs) are presently concerned with more than commercial operations.

“However, the PIB streamlines all commercial functions and designates such for the new National Oil Company (NOC), the new National Gas Company Ltd, the new National Petroleum Assets Management Corporation, and the new Nigerian Petroleum Assets Management Company Ltd, according to the separation of the oil and gas value chain. Additionally, all these new companies are incorporated as companies limited by shares, and vested with certain assets and liabilities of the NNPC. Their functions are exclusively commercial,” he said.

According to him, the NNPC grew to become the single body that oversaw commercial, policy and regulatory functions for the sector.

“This structure may have been appropriate for a time when the country lacked the human capital required for separation of roles. Attempts have been made over the years to re-establish formal regulatory oversight for the sector but with no real success, as evidenced by the current state and controversies that surround the operations of the NNPC. Account must be taken in terms of real and opportunity cost of this policy reversal in Nigeria. Was the NNPC structure a natural experiment gone bad or cynical attempt by interest groups to corner the resources of the nation? The question is also asked: why has separation of functions in the country’s HC sector been ineffective thus far? The answer, we believe, lies in the poor nature of the policy evclarity ironment largely defined by ineffective governance institutions,” he further explained.

“Nigeria’s 2012 PIB has adopted certain elements of the Norwegian governance model by separating the commercial, regulatory and policy making responsibilities within the oil industry. That, however, is where the similarity ends between what Norway practices and Nigeria’s proposed governance model for its NOC. What is most significant about the Norwegian approach to corporate governance on NOC is not the fact of: Norway having a high overall level of bureaucratic capacity, a long tradition of democratic competition and intra-governmental checks and balances or that through the Ministry of Petroleum and Energy, Norway’s strong and competent bureaucracy asserted control over HC policy and licensing, but that: Directors of the national oil company are elected by the Corporate Assembly (CA), on the recommendation of the Nomination Committee. The Nigerian PIB proposes a model where government drives the policy that controls the activity of a “commercial” entity i.e. the NOC. This model has already been tested and it has failed,” Egbogah added.

He suggested loosening the ties between government and the operations of the NOC, saying this is the key to its success, adding also that that is what the Norwegians have so elegantly done and what Nigeria must do.


– This Day

In this article

Join the Conversation