Why Petroleum Industry Bill Is Important To The Nation

Why Petroleum Industry Bill Is Important To The Nation

Hon Abdullahi Mahmud Gaya

AREWA AGENDA – The passage of the Petroleum Industry Bill (PIB) remains a significant development in the Nigerian oil and gas sector. The bill would’ve major instrument of reform the oil and gas sector, with a number of significant for the sector and the economy as a whole and also a big blessing for Nigeria.

Nigeria has lost a lot in terms of direct foreign investment in our oil and gas industry, as a result of obsolete laws affecting oil and gas industry. The Nation’s oil industry is being governed by laws enacted more than 50 years ago which has extremely not conversant with current oil and gas modern reality. PIB signifies the focus of the Nigerian government in sanitising the sector and increasing investor confidence.

Like we all know Crude oil is the country’s main source of export value and foreign currencies. In recent years oil prices experienced a sharp fall. Which Nigeria’s economy was significantly impacted by the free fall of oil price in international market.

In spite, Nigeria is the largest oil and gas reserves in Africa but country only received 4 per cent ($3 billion) of $75 billion invested in the continent between 2015 and 2019. The potential investments were not coming, in the absence of fiscal policies that will stimulate investment.

PIB would clear the concerns raised by investors and have greater clarity on the direction of the industry, especially with respect to the new fiscal rules and Nigeria’s oil and gas industry and Nigeria’s economy to witness an exponential growth soon.

For 13 years, non passage of the Bill remained a major drag on the petroleum industry, which has significantly limiting country’s potentiality to attract both local and foreign capital at a time when many other countries in Africa are scrambling to exploit their oil and gas resources.

The passage of the PIB into law would mark the beginning of the repositioning of the oil and gas industry and if the President assents to it, it would be the beginning of wisdom which is the reform that we have been expecting in the oil and gas industry. It is the beginning of deregulation in the downstream sector. PIB would allow market forces to determine petrol prices and curb smuggling of the product

The bill in its entirety will promote the competitive and liberalised downstream sector of the petroleum industry as well as the development of fuel and chemical industries. Going by the standard legislative procedures, the Conference Committee of the National Assembly would meet to reconcile the differing positions of the Senate and the House.

The Bill consists of Five distinct chapters, with Miscellaneous Provisions comprising 319 clauses and 8 schedules. Most importantly, the PIB will create a sustainable investment climate, where business in the sector will flourish.

To complement the plea of the Host Communities as the people’s representatives despite there is little contentious issue concerning Host Community Development Fund, where Senate set aside 3 per cent, Reps 5 and Executive 2.5 percent which will be solve when the passed bill reflect harmonised stage by both legislative chamber. The per cent shall be paid annually as contribution to the Host Community Development Fund Operating Expenditure Of Oil Companies (OPEX).

In addition to this all funds received from gas flaring should be channeled for the purpose of Environmental Remediation and Relief of the host communities as against the development of infrastructure in midstream gas operations.

Both chambers okayed 30 per cent of profits accruing from oil and gas operations by the NNPC Limited for the exploration of oil in the frontier basins of Chad Basin, Gongola Basin, Anambra Basin, Sokoto Basin, Dahomey Basin, Bida Basin and Benue Trough.

Even though the NNPC Limited is to operate as a commercial entity, the Bill vests on it the power to act as the concessionaire of all Production Sharing Contracts (PSC) as the national oil company on behalf of the Federation in line with its competencies. It will also have the sole right “to lift and sell royalty oil and tax oil on behalf of the Corporation and the Service respectively for an agreed commercial fee.

In the case of profit oil and gas payable to the concessionaire, NNPC Limited shall promptly remit the proceeds of the sales of the profit oil and gas to the Federation less its 10 per cent for management fee and 30 per cent for Frontier Exploration Fund as specified in (section) 9(4) of this Act”. It will also have the power to “be a supplier of last resort for security reasons. All associated costs shall be for the account of the federation”.

The NNPC as it is today will metamorphose into a Limited Liability Company to reappear as NNPC Limited, so, that its operation will be commercially oriented, devoid of political interference and the much-needed dividends will be brought to the Nigerians.

The initial shareholders are going to be the Ministry of Finance Incorporated and Ministry of Petroleum Incorporated and subsequently open for the general public to invest. Then with regards to the fiscal regime, the laws will bring it in tandem with international best practices, to make the oil and gas industry in Nigeria much more competitive and attract the much-needed investments into the country.”

Nigerians, oil and gas stakeholders expect Mr President to give expeditious assent to the bill when it is transmitted by the National Assembly.

Hon Gaya, Writes in From the House of Representatives Abuja

Arewa Agenda is a Publication of Young writers/journalist from Northern Nigeria towards Peaceful Coexistence and National Development through positive narratives