01 May 2012, Sweetcrude, WASHINGTON DC — THE Senator Udoma Udo Udoma-led Special Taskforce on Petroleum Industry Bill, PIB, is expected to submit its report on the Bill within then next 10 days, the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, has said.
The minister disclosed this during an interactive session at Howard University, where she was conferred with the Centennial Professional Excellence Award on Government Affairs and Corporate Management by the Howard University in Washington DC, United States, weekend.
In response to a question on the continued delay in the passage of the PIB, the minister explained that the process had taken this long because the bill needed to be rejigged to reflect current realities.
She said: “Within the next 10 days, the PIB committee will conclude its findings and submit it’s report to me. The process has taken this long because we needed to look more critically with some of the provisions of the bill, especially the fiscal regime. This is why we invited all the stakeholders whose input will be incorporated to discuss various issues in the bill.”
Lull in investments
The minister argued that there was no question of holding unto the bill for longer than necessary because its delay in passage had taken a toll on investments in the industry.
She said: “It is important for us to pass the bill because if not, it will impact negatively on investments in the upstream petroleum sector, particularly in the deep offshore area where a lot of investment decisions have been put on hold.”
After years of delay, the PIB could not be passed in the 6th National Assembly on account of varied political interests, and protests by multinational oil companies against the fiscal terms that would guide future oil and gas operations in Nigeria.
Federal Government had sought to increase its take from the petroleum sector, which constitutes the bulk of its revenues (90 per cent), thereby increasing the contribution of the sector to the nation’s gross domestic product, GDP, which is currently below 40 per cent.
However, the oil companies protested that the new fiscal terms will dip too much into their earnings and profits, a development that made them restrict fresh investments in the sector to the barest to compel government to rescind the decision.
Inauguration of committee
At the inauguration of the eight man Special Taskforce and Technical Subcommittee, which was given a 30-day tenure to conclude its findings and report on January 19, the minister charged members to do a thorough work.
She said the bill “needed to be redefined and gingered up for speedy and very expedient passage by the 7th Assembly,” adding that government expected the committee “to put all indices in places to redefine the bill, look at certain sections and include strategic aspects so that we can get it right.”
With regard to why a top global producer like Nigeria was still importing refined fuel even from non-oil producing countries, Alison-Madueke attributed the trend to the politicking associated with fuel distribution in the country.
She said, “It has a been a very topical issue in recent times that being one of the world’s largest producers of crude, Nigeria would be expected to have sufficiency in refined petroleum products at this time. To do that of course, you would have to increase your refining capacity to a certain level. At this time, Nigereia’s petroleum products are subsidised heavily. In fact, this was the reason for a major strike in the country, when the country tried to deregulate, take away the subsidy and to help the country to first of all focus these particular natural resources to other parts of the economy, which we felt are much more critical.
“And also, we didn’t feel the subsidy was actually reaching the sector of the population that they were designed for in the first place, that in fact, they were enriching the middlemen in the petroleum industry instead. But as you will find in many developing countries of third economies particularly in Africa, there is a vicious circle of dependency on the government. It is not just Africa, but in developed countries as well. And so over years, it becomes more difficult, I think in emerging economies to remove dependency particularly where it concerns major infrastructure and logistics like in this case.”
She, therefore noted that subsidy has made refining “rather unappealing to major investors,” as the building of a refinery was not a cheap venture. “And anyone coming into the venture will need ofcourse be assured that it was commercially viable and that you will make the requisite returns on investment at the end the day. And this is one of the reasons why we try to deregulate to open up the sector to more and more investment.”
The minister equally admitted that Nigeria’s three local refineries have not done very well under government’s management, adding that this is part of the reasons for the ongoing reforms in the petroleum sector, which is aimed at instituting the “requisite enabling environment to bring a lot more equity investment into the refineries and other parts of the oil and gas industry and other parts of the economy as well.”
She explained that government is also to ensure equity participation in other areas such as the gas pipelines, tank farms, depots by the private sector, which is envisaged will reduce the high level of corruption associated with the sector.