By Anayo Ezugwu

NIGERIA does not have a functional oil and gas industry despite the fact that the sector accounts for 69 percent of the total inflow to the federation account. What the country has now is the extractive industry, which has no value addition chain, according to Israel Aye, an oil and gas lawyer, who added that the earlier it does that the better the economy will be.

At the one-day dialogue meeting on Petroleum Industry Governance bill, PIGB, organised by Facility for Oil Sector Transparency, FOSTER, in collaboration with the Centre for Financial Journalism, CFJ, Aye said one of the challenges hampering development of oil industry in Nigeria is mismanagement. According to him, managers of the sector had overtime failed to manage the resources coming from the sector.

As a result of this, he said the sector has fallen into crisis over lack of investments. Aye noted that the investments that came into the sector in the last 15 years came through the existing international oil companies, IOCs. “There is no enough investment coming into the sector. There are fears among investors and even the regulators because they don’t know whether to make decisions or financial provisions based on the existing laws or wait for the PIGB,” he said.

Aye also faulted the version of PIGB passed by the National Assembly. He stated that the bill failed to set up a backup office for the minister of petroleum resources because the minister is the head of policy. According to him, for the minister to have a robust policy that continues from time to time, there is need for a professionalised body behind the minister. He noted that because of politics and personal interests, the National Assembly failed to make the provision in the bill.

But he said since the PIGB is the only parts of the bill passed, it would propel the lawmakers to also work of the remaining ones. He said the PIGB if passed into law would help in boosting investors confidence in the sector. According to Aye, PIGB is very important because it will rescue the Nigerian economy and reposition the oil and gas industry.

He explained the former Petroleum Industry Bill, PIB, has been broken down into four parts namely: Petroleum Industry Governance Bill, PIGB; Petroleum Industry Fiscal Bill, PIFB; Petroleum Industry Host Community Bill, PIHB, and Petroleum Industry Administrative Bill, PIAB.

Aye said the PIGB was designed to handle the entire governance framework in the sector and also platform for the sector to develop and create more wealth and job opportunities. He noted that lack of governance framework in the Nigerian oil sector, adding that Ghana that recently joined oil producing countries is ahead of Nigeria in terms of international ranking on transparency.

“The Petroleum Industry Bill, particularly the PIGB is meant to take control of the industry through legal frameworks that will enable them work for the development of the Nigerian economy and welfare of Nigerian people. The PIGB deals essentially with the institutional framework,” he said.

He stated that the existing governance framework in the sector like the Nigerian National Petroleum Corporation, NNPC, Act is not well defined. “But the PIGB is designed to efficiently and effectively create institutions with clear and separate roles; commercially oriented and profit driven petroleum entities. Create a conducive business environment for petroleum industry operations.”

It is only the passage of the four parts of the PIB that will ensure the desired development in the oil sector, Aye warned, adding that it the only document that would guarantee the kind of oil economy Nigerians are yearning for. To him, for the local content to work in the oil sector, there must be an oil economy.