Nigeria Loses Investment in Oil Sector to Non-passage of PIB

The Petroleum and Natural Gas Senior Staff Association of Nigeria urges legislators to pass the Petroleum Fiscal Framework Bill among others to attract investment into the oil and gas sector

By Anayo Ezugwu  |  Jun 12, 2017 @ 01:00 GMT  |

NIGERIA has lost more than $235 billion due to non passage of the Petroleum Industry Bill, PIB, into law by the National Assembly. The country is also not attracting new investments into the oil and gas sector because other aspects of the bill have not been passed. This is why the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, is urging  the National Assembly to pass the other aspects of the PIB.

The other aspects of the PIB are – the Petroleum Fiscal Framework Bill; the Petroleum Industry Downstream Administration Bill; the Petroleum Industry Revenue Management Framework Bill and the Petroleum Host Community Bill, into law.

In a statement, Chika Hyginus Onuegbu, chairman, NUPENG and PENGASSAN Petroleum Industry Bill Committee, commended the Senate led by the Senate President Senator Bukola Saraki and its Joint Committee on the Petroleum Industry Governance Bill, PIGB, led by Senator Tayo Alasoadura for the passage of the Petroleum industry Governance Bill, PIGB, 2016.

He said the passage of the PIGB was a milestone achievement, especially as it was not an executive bill.

Onuegbu, however, noted that the PIGB only deals with the one aspect of the PIB, which is the governance and institutional framework of the Nigerian petroleum industry. “Also, when you consider that Nigeria has lost over $235 billion due to its inability to pass the Petroleum Industry Bill into law since the reform in the Nigerian Petroleum industry was kick-started 17 years ago. We therefore look forward to the concurrent passage of the Petroleum Industry Governance Bill (PIGB) into law by the Federal House of Representatives and also eventual accent by the President of Nigeria.”

He added that the passage of the PIGB is commendable but it will not deliver the full benefits of the intended reforms except if the other aspects of the PIB are also legislated. Onuegbu also argued that there is no mention of the Petroleum Host Community Fund in the PIGB, adding that one of the major challenges facing the industry is host community and Niger Delta issues.

According to him, before the recent truce initiated by the acting president when he visited the Niger Delta, militant attacks in the region had led to significant amounts of shut-in production at onshore and shallow offshore fields. “You will recall for instance that Nigeria’s 2016 budget was based on Crude oil export of 2.2mln bpd with MTEF projections of 2.347mln and 2.469mln bpd for 2017 and 2018, respectively. Unfortunately, due to the militancy in the Niger Delta, Nigeria’s crude oil export in 2016 only averaged some 1.5mln bpd creating a deficit of some 700,000 bpd in export, thereby worsening her economic crises and pushing the country deeper into recession, exchange rate crises, and stagflation.

Therefore, it is important that any legislation to address the challenges in the Nigerian oil and gas industry must make provisions on how to effectively address the Petroleum Host community issues.”

The chairman also stressed that fiscal regimes aspect of the PIB is not included in the PIGB, adding that this aspect will “guide the final decision of the International investors on how much to invest as it has direct impact on the profitability or other wise of the investments in the Nigerian oil and gas sector vis–a-vis other petroleum host countries”.

The Senate had on Thursday, May 25, passed the Petroleum Industry Governance Bill, PIGB. The bill has gone through five sessions of the National Assembly, beginning from the 4th Assembly which was inaugurated in 1999 under President Olusegun Obasanjo.

An attempt to pass the bill by the 7th Senate presided over by Senator David Mark was met with a lot of controversy and a rejection of certain clauses in the bill, forcing the Senate then to drop the bill at the point of passage. However, the passage of the Bill by the 8th Senate followed the submission of a report by Joint Committee on Gas: Petroleum (Upstream) and Petroleum (Downstream) chaired by Sen. Tayo Alasoadura.

After a clause-by-clause consideration, with few amendments, the Senate approved the bill which promises to change the way things are done in the oil sector. The bill seeks to open up the sector to more and better business opportunities, make the sector more transparent, and ensure better accountability of revenue derived from oil.

If the bill scales through assent by the President, it would restructure the Nigeria National Petroleum Cooperation, Department for Petroleum Resources and also create new agencies with more responsibilities. The President of the Senate, Bukola Saraki, in his remark, congratulated members of the upper legislative chamber for a job well done. “I congratulate the 8th Senate with the passage of this landmark bill which has not been passed for many years,” he said.

Recall that after inauguration of the 8th Senate in 2015, the President of the Senate had promised to, among other things, deliver the Petroleum Industry Bill as well as make laws that would better the lot of Nigerian businesses.

The PIB is one of 11 Bills which the Senate promised to pass to steer Nigeria out of recession.