…PIB’ll open up investment in petroleum sector – Uwaleke
…signing marks a significant milestone for Nigeria’s oil industry — OPEC
…it has ended decades of uncertainty in Nigeria’s oil and gas sector – NEITI
By Uthman Salami
Since it was presented to the National Assembly in 2008, President Muhammadu Buhari on Monday signed the Petroleum Industry Bill (PIB ) 2021 into law.
The signing was effective when the bill was passed by the two chambers of the National Assembly in July 2021.
The PIB seeks to ensure reforms, promote transparency and attract capital flows into the oil and gas sector.
The bill comprises five major parts, including Governance and Institutions; Administration; Host Communities Development; Petroleum Industry Framework; and Miscellaneous Provisions comprising 319 clauses and eight schedules.
One of the key recommendations of the bill is the unbundling of the NNPC and a revision of the funding mechanism.
The statement signed by presidential spokesperson Femi Adesina on Monday noted that Buhari signed the bill into law while in quarantine, after his arrival from the United Kingdom.
“The ceremonial part of the new legislation will be done on Wednesday, after the days of mandatory isolation would have been fulfilled,” the statement said.
The Petroleum Industry Act provides legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities, and related matters.
The Senate had passed the bill on July 15 and the House of Representatives followed suit on July 16.
The act is expected to replace the obsolete Petroleum Act of 1969.
The PIB since 2008 faced several obstacles while undergoing numerous revisions and debates.
There was some progress in 2015 when the House of Representatives passed a version, but it didn’t go through at the Senate.
In 2015, the Buhari administration proposed passing the PIB in various segments, forming four separate bills (Petroleum Industry Governance Bill, Fiscal Regime Bill, Upstream and Midstream Administration Bill, Petroleum Host Communities Bill).
A hot debate at the National Assembly over allocation to host communities last month typified the contentious nature of the bill.
With the assent into law of the PIB Nigeria’s oil and gas sector is now set to be in the path of huge growth and Investments, Prof. Uche Uwaleke, finance and economy expert has said.
He said the assent to the PIB at long last will open up the petroleum sector for more investments thereby boosting economic growth.
According to him, “The Bill makes provision for speedy granting of licenses to investors especially in the downstream sector.
“This is likely to translate to the establishment of more refineries in Nigeria which will go a long way to meet local consumption with prospects of ending fuel importation and the loss of forex associated with it. This could strengthen the value of the naira in the long run as well as create job opportunities in the petroleum value chain.
“The Bill also provided for the application of cost-reflective tariffs by operators and the commercialization of NNPC Limited. One implication of this is that fuel subsidies will completely be removed. The reality is that fuel subsidy is causing incalculable damage to the economy.
“A situation where the government spends close to N1 trillion subsidizing fuel consumption is counter productive. First and foremost, the fiscal situation of the government can no longer support it given the rising fiscal deficit.
“Again, it has been one scheme that is fraught with corruption given the fact that there is no accurate figure of the volume of domestic fuel consumption. More importantly, fuel subsidy is regressive in the sense that it benefits the rich more than the poor. It also crowds out developmental funds which benefit the poor.”
Uwaleke added that there is no doubt that the removal of fuel subsidy will result in some hardship by way of rising inflation in the near term.
But in the medium to long term, it is in the overall interest of the economy as it will free up more resources to fund critical sectors of the economy.
In order to cushion effects, he posits that, “To cushion the impact of fuel subsidy removal on the ordinary Nigerian, the government should quickly roll out compensation schemes in the area of Health, such as by expanding the National Health Insurance Scheme, Education and Mass Transportation.
“Be that as it may, it’s important to point out that the Petroleum Industry Bill now signed into law still has grey areas.
“For instance, the PIB made attempt to curb pipelines vandalism and restiveness in the Niger Delta region through various provisions that entitle the Host Communities to a percentage of oil revenue. Unfortunately, this area has not been properly tidied up as the percentage of oil revenue initially proposed for Host Communities was reduced.”
Speaking with Nigerian NewsDirect as regards three per cent profit generated from oil exploration to hosting communities, Professor of international law and Diplomacy, Akin Oyebode, expressed that, “I think we have to recognize that what we really have are oil bearing areas.
“These communities are not oil producing area. The three per cent is a pittance for those who suffer at the encumbrances of producing oil.
“The concomitant effect of ravage to the environment and heat coming from fires plus cancer and effect on other things affecting areas needed to be compensated for.
“We all agree that the ordinary areas are the goose that lay the golden eggs. So, they have to survive and they have to be cushioned and defended from the vagaries of oil production.
“This is a good beginning and we will see how far it goes. It’s taking such a long time to have the PIB passed into law. It’s a fine place to start to see whether we need further amendment of the PIB going forward in other to make progress.”
Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) has congratulated President Muhammadu Buhari for signing into law the PIB.
The Secretary General of OPEC, Dr Mohammed Barkindo, in a congratulatory letter, said, “I wish to extend my congratulations to you on signing into law the Petroleum Industry Bill (PIB), which marks a significant milestone for Nigeria’s oil industry and an historic achievement for your Presidency.
“With the stroke of a pen, you have inaugurated a new era for the industry following years of legislative efforts to strengthen the legal, regulatory, fiscal and governance framework of the petroleum sector.
“Indeed, the new law will enhance the Nigerian petroleum industry’s reputation, open the door to new investment and ultimately strengthen its position to meet the world’s growing demand for energy,” he said.
He added that the enactment of the legislation was timely as the investment outlook had become clouded by efforts aimed at accelerating a lower-carbon future.
According to him, the new law will help harness Nigeria’s potential to achieve its programme of raising oil production to 4 mb/d and oil reserves to 40 billion barrels, while also drawing on the country’s vast natural gas reserves to provide clean and efficient energy.
“In addition, these resources will be vital to supplying world markets with a broad portfolio of energy options, and support global efforts to alleviate energy poverty as outlined in the United Nations’ Sustainable Development Goal 7.
“The passage of the PIB by both houses of the National Assembly on 16 July and your act of signing it into law coincide with another significant milestone in our country’s history – the 50th anniversary of Nigeria’s Membership of OPEC.
“This golden moment provides a unique opportunity to reflect upon Nigeria’s rise as a global energy supplier and partner,” he noted.
The OPEC scribe said since the 24th OPEC Conference on 12 July 1971, when Nigeria was welcomed as the 11th member country of the organisation, it had symbolised Africa’s leadership within OPEC and its pivotal support for global oil market stability.
He said the past year had been a time of enormous challenges for the world, for OPEC and for each member country.
“Yet throughout this difficult period, we have demonstrated the enduring importance of OPEC and its timeless commitment to dialogue, cooperation, multilateralism and respect among all nations.
“I wish to express my sincere gratitude for your instrumental support in establishing the Declaration of Cooperation (DoC) that was agreed on 10 December 2016.
“We could not envision at that time how important this framework would become during the COVID-19-related market crisis.
“It enabled bold, swift and decisive actions to address the historically unprecedented market downfall in 2020, and it has been vital to the ongoing efforts to provide a platform for recovery and future growth,” he added
In addition, the Nigeria Extractive Industries Transparency Initiative (NEITI) has described as a historic development, the assent of Buhari to the PIB.
The Executive Secretary of NEITI, Dr Orji Ogbonnaya Orji, said this in a statement signed by Mrs Obiageli Onuorah, Head Communication and Advocacy, in Abuja, on Monday.
Orji said the new Petroleum Industry Law had ended decades of uncertainty concerning the future of Nigeria’s oil and gas sector.
“The new law has opened a new phase of wider opportunities in the oil and gas industry.
“For us in NEITI, President Muhammadu Buhari has broken new grounds, created new business horizon built on healthy legal frameworks with realistic optimism for inflow of investments, revenue growth and job opportunities,” he said.
He applauded the Presidential assent to the bill, adding that NEITI looked forward to playing active roles in designing a new future for Nigeria’s oil and gas industry under the new Petroleum Industry Act.
“The signing into Law of the PIB has demonstrated government’s resolve to strengthen governance processes and systems, especially in the extractive industry through an institutional and legal framework.
“NEITI is encouraged by the development,” he noted.
Orji further expressed delight that the “The Petroleum Industry Law will provide the dynamic legal governance framework required to re-position Nigeria’s petroleum industry to fully embrace competition, openness, accountability and professionalism.
According to him, the law will bring about better returns on investments to both companies and government.
“I want to also use this opportunity to call on companies, government agencies and civil societies involved in the oil and gas sector governance to give this law a chance to succeed.
“NEITI will study the contents of the new law and work with national and global partners, especially the EITI to use the law to open the Nigeria oil and gas sector for transparency, accountability and inflow of foreign direct investments into Nigeria.
“NEITI is hopeful that the huge revenue losses which Nigeria has witnessed over these years as a result of process lapses and weaknesses in previous laws will be checked, while restoring investors’ confidence in Nigeria’s oil and gas sector,” he said.