Nigeria’s oil and gas industry and by extension Nigeria’s economy has due to the non passage of the petroleum Industry Bill lost a total of N53 trillion .
However some of this money may still be recovered if President Muhammadu Buhari eventually signs the new bill, popularly called Petroleum Industry Bill (PIB) into law.
If he does, the country could regain over $200billion revenue dip and $10.4bn and N378.7bn lost through under-remittances, inefficiencies, theft or absence of a clear governance framework for the oil and gas industry, according to the agency.
More importantly, it would save the Nigerian National Petroleum Corporation NNPC from the clutches of government that always sees it as it cash cow even for political expediencies.
Different investors would be free to come to the industry both at the upstream, downstream and Midstream and set up companies.
According to the executive secretary of Nigeria Extractive Industries Transparency Initiative (NEITI), Orji Ogbonnaya Orji,he described the decision of the Senate and the House of Representatives to consider the Bill as priority resulting in its eventual passage as bold, courageous and progressive given the challenges the bill has passed through in its legislative journey for over fifteen years.
He said:“NEITI as an agency set up to enthrone transparency and accountability in the management of extractive industries in Nigeria has demonstrated genuine and legitimate interest in the PIB from the onset.
NEITI’s interest is in view of the urgency and strategic importance of a new law to replace the existing archaic legislations that have aided huge revenue losses, impeded transparency, accountability and investment opportunities in the nation’s oil and gas industry”.
He recalled that as NEITI boldly alerted the nation through a special Policy Brief “The urgency of a new petroleum sector law” that the current stagnation of investment opportunities in the Petroleum Industry was as a result of the absence of a new law for the sector.
This,he said,has led to huge revenue losses to the tune of over $200billion. In that publication which was widely circulated, NEITI argued that the “revenue losses were as a result of investments withheld or diverted by investors to other (more predictable) jurisdictions.” The publication added that “The hedging by investors stems from the expectation that the old rules would no longer apply, but not knowing when the new ones would materialise.”
NEITI reports in the sector had also disclosed that over $10.4bn and N378.7bn were lost through under-remittances, inefficiencies, theft or absence of a clear governance framework for the oil and gas industry.
With the new governance law there is the optimism among stakeholders in the industry,that these huge revenue losses to the nation as a result of process lapses and outright stealing will be strictly checked if not eliminated.
“The implementation of the global Extractive Industries Transparency Initiative which Nigeria is a key signatory, have over the years been frustrated by the absence of a dynamic law that suits modern business modules and trends in the ever evolving oil and gas industry”.
The PIB when assented to by the President will provide a dynamic governance framework required to re-position the Petroleum industry to fully embrace competition, openness, accountability, professionalism and better profit returns on investments to both companies and government.
Justifying the passage of the bill, former Director General of the Lagos Chamber of commerce and Industry, LCCI, Muda Yusuf, said that the passage of the bill marks positive steps toward achieving its stated goals.
He said the oil and gas industry is a major contributor to the Nigerian economy and government revenue and as such should be freed from political influence.
According to him, Nigeria, with the largest oil and gas reserves in Africa, has huge untapped potential to achieve its economic development goals including gas-to-power ambitions, but the investments are not coming in the absence of fiscal policies that will stimulate investment.
He said Nigeria despite having the largest reserves in Africa, Nigeria only received 4 per cent ($3 billion) of $75 billion invested in the continent between 2015-19.
He said the development underscores the need to create a competitive environment to attract investment to the oil and gas sector.
He said the fundamental shift in global energy markets driven by advances in unlocking unconventional petroleum resources and increasing traction for cleaner energy sources has resulted in a global oversupply of crude oil, putting pressure on prices.
He added that this has been further worsened by the COVID-19 pandemic, potentially putting at risk the viability of ongoing and future projects and driving fierce competition for scarce investments around the world.
Nigeria’s petroleum industry,he disclosed, faces many country-specific challenges including Joint Venture Funding and Arrears, regulatory overlaps, insecurity and inadequate infrastructure for domestic gas development, which the Bill will resolve.
He said the Chamber is fully supportive of the Government’s efforts to drive industry reform through the Bill which among other things will reform the institutional and fiscal framework, develop Nigeria’s gas sector further, create a framework to support the development of host communities and foster sustainable prosperity, and further bring in new investments to grow the country’s production capacity
He added:”The Bill mandates that ministries, departments, and agencies to consult with the Commission prior to introducing overlapping legislation which will impact the oil and gas industry. It also allows for consultation with industry stakeholders before making regulations.The commercialisation of NNPC aims to improve business efficiency and effectiveness, especially in relation to Joint Venture activities”
Nnimmo Bassey,an environmentalistsaid the passage of the bill would have salutary effects on the oil and gas industry, but regretted that it came rather too late when there is ongoing global energy transition.
He blamed the major oil company for deliberately delaying the passage of the bill to feather their nest as well as water it down.
He punctured the 3percent provision for the host communities in the new law,saying it was inadequate and inconsiderate on the part of the law makers.
He also picked holes in the power given oil companies to determine who the host communities are and who should be entitled to certain resources,saying the development shows the country is yet to wean itself from the dominance of foreign oil companies .