President Muhammadu Buhari has withheld assent to the Petroleum Industrial Governance Bill (PIGB). The decision is coming after 17 years of rigorous consultations and legislative hassles on the document.
Sources told The Guardian yesterday that Buhari hinged his action on the argument that the bill reduces the president’s control of an industry that contributes the largest chunk to the national economy.
“The president said those he contacted among his ministers, especially the attorney general and minister of justice, claimed that presidential powers have been passed to a technocrat who might undermine the interest of the president.”
In the works for almost two decades, the PIGB has passed through both the House of Representatives and the Senate. In its torturous journey to the president’s table, contributions were taken from industry operators, oil-bearing communities, and all levels of government.
The bill was particularly being championed by Minister of State for Petroleum Resources, Ibe Kachikwu, who described it as the solution to the problems bedeviling the nation’s oil industry.
Originally called Petroleum Industry Bill (PIB) when it was presented, it was whittled down to accommodate all the variables against its passage before it received the nod of the House of Representatives as PIGB in January this year. The House and Senate versions were harmonised on March 28 before it was presented for assent.
A source said the bitter politics between the presidency and the leadership of the National Assembly could be the reason the bill was rejected.
It is also feared that Nigeria might lose its membership of the Organisation of Petroleum Exporting Countries (OPEC), if Buhari signs the bill.
This warning came from Joseph Ellah, former Group General Manager, Corporate Planning and Development Division at the Nigerian National Petroleum Corporation (NNPC).
In a new report, ‘Implication of the PIGB for Nigeria,’ published by the Claude Ake Chair of Political Economy of the University of Port Harcourt and made available to The Guardian, Ellah argued that if Buhari signs the bill, thus paving the way for government divestment, the country would contravene an OPEC resolution, which requires members to own as much as 55 per cent of their oil wealth, if they were to exercise considerable influence over it.
The PIGB states that government shall within five years from the date of incorporation of the National Petroleum Company divest in a transparent manner not less than 10 per cent of the shares of the company, which will be created after the unbundling of the NNPC. Furthermore, it is expected that within 10 years, the National Petroleum Company should divest not less than an additional 30 per cent of its shares to institutional or strategic investors.
Ellah explained that the concept of divestment, which the PIGB is designed to achieve, is actually aimed at putting the country’s future in the hands of oil multinationals and private foreign capital or their local fronts, as well as a few genuine Nigerian investors. According to him, signing the PIGB into law will succeed in recreating conditions that prevailed in the 1960s before OPEC was formed.
He observed that the National Assembly’s quest to privatise national assets not mired in debt, suggests either the country is under pressure from international financial institutions and is bowing to that pressure or that the National Assembly does not know the move is detrimental to the interest of the country.
Ellah, who was also a World Bank consultant to the Ministry of Finance, recommended the commercialisation of the NNPC and its subsidiaries, implying total elimination or drastic reduction of political interference and nepotism.
But a past president of the Nigerian Association of Petroleum Explorationists, Mayowa Afe, disagreed, saying the PIGB is advocating the unbundling of the NNPC and not privatisation as portrayed in some quarters.
He said the idea of unbundling the corporation is to make it more viable, profitable and accountable and not raise money, as is the reason for most privatisation moves.
“For instance, the Nigerian Petroleum Development Company (NPDC) is doing very well today because it is an autonomous exploration and production arm of the corporation. Not every country that produces oil is a member of OPEC. We can as well do the same if OPEC is against the PIGB. What is the big deal being in OPEC?”
Also, the chief executive officer at Cowry Asset Management Limited, Johnson Chukwu, said: “If really and truly OPEC is taking this position, it might be premised on false assumptions. Apart from the PIGB, there are other provisions for host communities, which will ensure that they are being carried along. Equity holdings of the joint ventures will be sold to the public. Nothing in the law applies that the oil assets will be sold to the international oil companies. Countries that apply the welfarist approach to managing their oil assets have always ended in crisis. Venezuela, with its huge oil asset, is an example.”
Furthermore, the immediate past executive secretary, Major Oil Marketers Association of Nigeria, Femi Olawore, said: “I don’t think the PIGB should affect Nigeria’s membership of OPEC. I don’t think it will make sense if Nigeria is pushed out of OPEC because of the PIGB. I don’t think one of OPEC’s objectives is to have member states run national oil companies that are fully owned by government.”
The Bureau of Public Procurement, meanwhile, has insisted that the Federal Government is determined in its support for local content, to ensure that the Economic Recovery and Growth Plan (ERGP) is achieved.
The Director General of the BPP, Mamman Ahmadu, stated this at the annual conference of the Chartered Institute of Purchasing and Supply Management of Nigeria (CIPSMN) in Abuja yesterday.