Is the PIB Dead?

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Alison-Madueke

Following the protracted delay in the passage of the Petroleum Industry Bill by the National Assembly, Nigerians are now wondering aloud whether the Bill is dead on arrival

By Anayo Ezugwu  |  Sep. 23, 2013 @ 01:00 GMT

THE hope of getting the contentious Petroleum Industry Bill, PIB, passed is fast dwindling. Since the bill made its debut in the National Assembly in 2008, it has passed through rough weather buffet on all sides with different vested interests opposing its passage. The unending debate surrounding the Bill is an indication that the ethnic groups and the oil majors opposed to it under the auspices of the Oil Producers Trade Section, OPTS, are winning the battle to kill the Bill.

David Mark, Senate president
David Mark, Senate president

It is not a secret that some federal legislators from the north and other stakeholders from the zone opposed the Bill from the onset over the proposal to set aside 10 percent of profits from petroleum operators for host communities to be known as petroleum host community fund, PHCF, and the powers which the Bill confers on the president and the minister of petroleum resources. Their hard stance shows that the Bill might soon be a forgotten issue.

Senator Ahmed Lawan, during the debate on the Bill, said that the legislators from the zone were against it because it contained certain clauses that gave too much powers to any sitting minister of petroleum resources. He said the lawmakers were also unhappy with the provisions in the bill in respect of the Petroleum Host Community Fund.

According to him, the proposed fund was another ploy by those who conceived the Bill to allocate more funds to the oil producing states in the Niger Delta, even when the states currently take home so much through the 13 percent derivation and the Niger Delta Development Commission. He debunked speculations that the northern Senators were trying to scuttle the passage of the PIB and insisted that the concerns being raised against the PIB were geared towards making it to work better for every part of Nigeria, including the non-oil producing states.

“I want to say that there is no senator who is not from the oil producing states that would like to see that Bill passed as it is. This Bill may be passed but it has to be given a very sound and solid legislative surgical operation. You cannot pass a Bill in which most parts of Nigeria that are not part of the oil producing states will be short-changed; you cannot a pass a Bill in which the minister of petroleum resources, Diezani Alison-Madueke, appropriates enormous, unnecessary and unwarranted powers to her office; you cannot pass a bill that the minister will have quasi-legislative powers in which she can change the provisions of the law. Whether it is Northern Senators or any Senator from any part of Nigeria which is not oil producing, I’m sure we will have to work on it properly and make it a pan-Nigerian Bill to make it work for every part of Nigeria and make it profitable to the public and the private sector,” he said.

Rabiu Kwankwaso, Kano State governor, during the northwest zonal public hearing organised by the House of Representatives ad-hoc committee on Petroleum Industry Bill in Kaduna, said that the bill as proposed by the executive, would have a devastating consequence on the economies of non-oil producing states and seriously undermine the security of the greater part of the nation. He stressed that section 116, 117 and 118 of the Bill, and another section for the establishment of the national frontier exploration agency should be expunged from the Bill for the interest of national unity, equity and fairness.

Kwankwaso
Kwankwaso

“The decision to kick against the bill came after due consultation with stakeholders and the ordinary citizens of Kano State. Northern legislators must not be bought over as was the case during the offshore/onshore debate in 2002. The people of Kano State will not be deceived to endorse the Petroleum Industry Bill. The South-South region has a federal ministry; it has 13 per cent derivation; it has an amnesty programme as well as Niger Delta Development Commission, NDDC, against other parts of the country,” Kwankwaso said.

Hauwa Dalhatu, permanent secretary, Kaduna State ministry of justice, on her part, said the term “host communities” in the Bill would amount to creating a fourth tier of government, federal, state, local and community governments. He noted that the oil producing states have the Niger Delta Development Commission and the ministry of Niger Delta, in addition to an autonomous amnesty programme to cater to the needs of restive youths and militants. “To create a host communities’ fund therefore, will not only be tantamount to creating a fourth tier of government, but also making provisions that will further alienate other parts of the country economically. The term host communities as used in the Bill is nebulous,” he said.

In the South-West public hearing heard in Lagos, Babatunde Fashola, governor of the state, said that the law makers should include communities in which petroleum facilities are accommodated in the host communities as contained in the Bill. Fashola explained that communities in which petroleum facilities, including pipelines, tank farms and depots are located were often subjected to conditions similar to that faced by oil producing areas when pipeline vandalism, oil spillage and gas flaring occur.

In Port Harcourt, Chibuike Amaechi, governor of Rivers State, urged the law makers to expedite action considering the importance of the Bill. He said that the country has been producing crude oil for almost 60 years but still imports petrol, kerosene and diesel. His counterpart in the South-East, Sullivan Chime, Enugu State governor, wanted the Bill to be people oriented devoid of ethnic and religious sentiments. He said that issues on the petroleum sector of the nation’s economy must be properly handled and exhaustively discussed, so that at the end of the day, both the Nigerian people and the economy would be better for it. “In your deliberations and decision making, you should eschew personal, ethnic, sectional and tribal interest and come out with Bills that posterity will record you on the positive side of history” Chime said.

Aside from the staunch opposition from ethnic groups, the OPTS, has also opposed the passage of the Bill saying that the proposed increase in royalties and taxes would make Nigeria’s fiscal regime one of the harshest in the world. Mark Ward, chairman, OPTS, said that the higher taxes proposed under the new PIB would make exploration projects uneconomical and constitute a competitive disadvantage for Nigeria in terms of investment. According to him, “if the PIB is passed as it is currently, oil and gas production in Nigeria will decline from 63 percent to about 25 percent.” He said that this would translate to about $185 billion loss in revenues for all stakeholders, as new projects would be stalled.

Lawan
Lawan

“The cumulative effect of this is a combination of higher royalties and taxes with reduced incentives such that: no new deepwater investments are economically viable and they will not go forward, 90 percent of new JV gas production will not happen, 30 percent of new JV oil production will not materialise. As part of our analysis of the PIB, we also compared the proposed fiscal terms with 20 other countries.

“What we see across the board is that when a country has relatively high royalties, they balance it with relatively lower taxes or higher taxes with lower royalties with incentives in both cases providing some balance. However, the PIB doesn’t have this balance and the result is that Nigeria would have one of the harshest fiscal regimes in the world. This will make it very difficult for Nigeria to attract the required foreign capital to offset decline let alone grow production. And this comes at a time when the global energy landscape is drastically changing,” he said.

In the midst of these sectional interests and unabated debates, the need to pass the Bill for President Goodluck Jonathan to sign it into law is growing stronger every day considering the new discoveries of oil in many countries across sub-Saharan Africa. The discoveries in Sudan, Ghana, the Democratic Republic of the Congo, Kenya and Angola pose a serious threat to Nigeria’s oil and gas industry if not transparently managed. That is what the PIB is out do.

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