Between Patriotism and Self Interest

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Mike Akpan
Mike Akpan

|  Mike Akpan  |

NO person likes to suffer any change willingly especially if such a change is likely to deny him certain privileges and advantages he was enjoying before. This is exactly what the international oil companies, IOCs, are experiencing in Nigeria. For almost 60 years, the IOCs have operated in the Nigerian oil and gas industry without clear rules, regulations and procedures to guide their conduct or spell out their social responsibilities in their areas of operation. Worse still, there was nothing like transparency and accountability in the industry. Unlike what is operational in other oil producing countries in Europe, America and the Middle East, the oil industry in Nigeria was and is still shrouded in secrecy.  Up till today, Nigeria does not know the exact quantity of oil and gas that is produced daily within its territory.

This has been the pathetic situation in the country’s oil industry until late President Umaru Musa Yar’Adua decided to do something about it in 2007.  On the basis of the report of the Oil and Gas Reform Implementation Committee, OGIC, which he reconstituted that same year, the government decided to bring sanity into the oil industry. That was how the idea of the Petroleum Industry Bill, PIB, came about.  The PIB was designed to set standards and levels of efficiency expected of a 21st century oil and gas industry in Nigeria. It was to usher in a new dawn in the sector by streamlining the activities of industry operators and also entrenching transparency, accountability and good governance. Moreover, it was also to address issues regarding revenues, small field development, modern acreage management, role of the Nigerian National Petroleum Corporation, NNPC, incorporated joint ventures, Nigerian content, host community/ social responsibility and the gas master plan.

The PIB, as conceived then, combined 16 different Nigerian petroleum laws in a single transparent and coherent document. As Rilwanu Lukman, the then minister of petroleum resources, succinctly put: “This is the first time that such a large-scale consolidation has happened anywhere in the world.”Hitherto, the main laws governing the oil and gas sector were the Petroleum Act 1969, the Petroleum Profits Tax 1959 and the Nigerian National Petroleum Corporation Act 1977. These, and practically, every other law governing the industry, needed to be holistically updated to be in line with the dynamic nature of the oil and gas industry worldwide.

Expectedly, the IOCs felt threatened by the move of the Nigerian government to bring about sanity as well as entrench transparency and accountability in the oil industry. They knew that with the passage of the PIB, it would be no more business as usual for them. The only way they felt they could have their way was to discredit the Bill through an aggressive negative campaign and also penetrating  both chambers of the National Assembly with petro dollars to influence the lawmakers to do their will. It worked out for them because, eventually, the Bill did not go far before the life of the sixth National Assembly expired.

With their petro dollars, the IOCs had succeeded in driving a wedge between some southern and northern lawmakers thereby making the northern legislators to see the Bill as anti-north because it was designed principally to favor the south, most especially the Niger Delta region. I could not believe my ears when some lawmakers from the north were arguing passionately that the PIB was anti-north. The question I then asked was: Could late President Yar’Adua and Lukman have intentionally come up with a Bill that would work against the interest of their people? The answer was very clear. The legislators were echoing the voices of their paymasters who were hell bent on killing the PIB, whose fake copies had also been printed and circulated among the lawmakers in order to cause more confusion. The resultant confusion prompted Diezani Allison-Madueke, petroleum resources minister, to set up another committee to harmonise the two versions of the Bill and come out with an authentic version of the PIB which is currently before the National Assembly for deliberation.

Like in the case of the first PIB, the IOCs are at it again. On November 11, a day before the House of Representatives started debate on the Bill, the IOCs, led by Shell and ExxonMobil, came out again in opposition to certain aspects of the PIB. According to them, there is a disconnect between the private sector operators in the oil industry and the plan of the federal government to use the PIB as a legislative framework to attract $108 billion investment into the oil and gas sector between 2012 and 2025. This time, they want the federal government to fine-tune the Bill to address certain areas of differences such as the high rents and royalties envisaged therein. According to the IOCs, increasing the gas tax from 30 percent to 80 percent and royalties from 7 to 12.5 percent for big producers and minimal tax allowances for investment incentives on gas, cannot simply work. But a Nigerian oil expert has dismissed the objection as untenable arguing that the Nigerian tax regime in the oil industry is one of the lowest in the world.

The IOCs are also contending that the PIB, in its current form, will stifle their planned investment in the oil and gas sector in view of the fact that there is an expected 64 percent increase in crude oil production between now and the year 2025 and that the federal government expects as much as $30 billion investment from them in the next 13 years. Besides, they argue that the Bill has not properly addressed the issue of gas pricing, marketing and infrastructure as well as properly define the upstream and downstream of the sector for purposes of taxation. More so, they argue that the PIB, if passed in its present form, would lead to an unattractive economic environment in Nigeria. Again, the Nigerian oil expert has dismissed all the submissions of the IOCs as self- serving. According to him, all the issues   raised amount to jumping the gun because the PIB and the gas master plan will adequately address them. But the truth is that the IOCs are not comfortable with the PIB because Nigeria now wants to be in the driver’s in the oil industry. With the PIB in force, they will not be able to fleece the country as much as they had been doing in more than 50 years.

But the battle is not yet over. The IOCs still feel they can use their petro dollars to influence the direction of the debate on the Bill. They hope to use the federal lawmakers to either kill, unnecessarily delay the passage of the Bill or water it down to a level that will not be too harmful to their economic interests. Already, the dollars seem to be talking. Some members of the National Assembly are busy looking for some loopholes in the Bill in order to exploit them. Some are said to be threatening that unless the PIB incorporates the Bill on National New Frontier Exploration Agency, which will pursue oil exploration in the Chad, Dahomey, Imo and Sokoto river basins and the Benue trough, it is not likely to go far. The question to ask here is: Does Nigeria need such a Bill in order to have the mandate to explore and exploit oil and gas in any part of its territory? Whatever be the answer, there is no doubt whatsoever, that the PIB is a desirable legislation which will take the oil industry in Nigeria to a new level. That will be possible only if the patriotism of our federal lawmakers rises above their self interests.

— Dec. 17, 2012 @ 01:00 GMT

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