By Lateef Adewole
At last, we are here! After 13 years of dilly-dally about the Petroleum Industry Bill (PIB), it was finally passed into law by the two chambers of the national assembly, despite the controversies that followed some of the provisions in the bill. The Senate passed it on the 15th of July, 2021 and the House of Representatives passed theirs on the following day. It was then transmitted to the executive arm for the president’s assent.
President Buhari signed the bill into law on the 16th of August, 2021, which made it to become an Act: Petroleum Industry Act (PIA) 2021. This act will effectively replace the obsolete laws made over 50 years ago but still being used to govern the sector. That was Petroleum Act of 1969 and others. The lack of this modern legal framework to govern the industry has led to humongous loss of investments in the sector and oil revenues to Nigeria.
Like the president said during the official ceremony that followed the signing of the bill on Wednesday: “This lack of progress has stagnated the growth of the industry and the prosperity of our economy. In the past ten years, Nigeria has lost an estimated US$50billion worth of investments due to uncertainty created by the non-passage of the PIB.”
It has also constrained the space and did not give investors the confidence required to invest in the sector over the years due to the uncertainties surrounding the industry. This is addressed substantially in the newly signed law. Warts and all, the 9th national assembly, under the leadership of Senator Hamed Lawan, should be commended for finally making this happen. Also, President Buhari deserves some kudos for signing it into law. No piece of legislation is perfect and there is always room for further amendments, which could come afterwards, where they are deemed necessary.
If there is one benefit that the “cordial” relationship between the executive and the current national assembly has produced, which is often criticised as being a “rubber-stamp”, this Act is it. The synergy between the two arms of government made it possible, unlike in the last assembly. In the 8th assembly, despite that it was just a part of the bill that was passed as Petroleum Industry Governance Bill (PIGB), the president declined assent. This was largely due to the love-lost, cat and mouse relationship between the then Senate President Bukola Saraki and President Buhari.
There have been mixed reactions following the signing. Majorly, the people of the oil producing areas have condemned the bill and the signing into law by the president, who they previously called upon to decline assent. Their grouse has to do with the provision of only 3 percent of operating cost of the oil exploration in Niger-Delta, as against their demand for 5 percent. Many leaders in the region and various groups have threatened to challenge that provision.
However, NNPC made it clear that the 3% is very huge, given that it is taking proportionally to how much is spent by all International Oil Companies (IOCs) in their operations in the region. An estimated over 500 billion naira is projected for 2021 alone. That’s truly massive. Although, one might argue that the destruction of lives and natural environment in the region cannot be equated or subtituted with money. However, if such money is well spent, it will make a great difference. But, has this been so over the years?
Where are the positive impacts of all the special interventions in the region all these years? There was Oil Mineral Producing Areas Development Commission (OMPADEC), established in 1993 to bring about rapid development to the oil-producing Niger Delta region. It was later transformed to Niger Delta Development Commission (NDDC) established in 2000, to which huge fundings were released over the years. What have they achieved?
We all witnessed the embarrassing situation at the hearing of national assembly committee investigating the NDDC early this year, where the Chairman of the commission “slumped” in a Nollywood movie-like scenerio, as he was being grilled. He had no answers to many of the questions or made ridiculous, even criminal claims as to how monies were spent. About 87 billion naira could not be properly accounted for in just few months.
What about the 13 percent derivation paid to the state governors monthly? What have they done with it? A visit to many states in Niger Delta would shock anyone who knows how much money goes into the region on monthly basis for years. It’s in a sorry state. Sadly, the people of the region prefer to dissipate their energies against the federal government without asking their respective state governors what they have done with the allocations. Amnesty Programme and Ministry of Niger Delta are other interventions to serve the region. How far have they gone?
Other part of the PIB that created controversy was the allocation of 30 percent of profits to exploration of oil in the river basins across the country. Many saw it through the usual Nigerian tribal lens. It was seen as a way to pump more money in search of oil in the north. While this is partly true, it is not limited to the north but all river basins across the country, including Anambra, Benue and any other basin with prospect at that.
However, with the global trend of decarbonisation and the world moving away from dependence on fosil fuel, and shift to renewable energy, what sense does it make to be investing such enormous amount of money in looking for crude oil in the river basins, rather than focus on divesting the economic base? The rhetorics of economic diversification as mouthed regularly by the government seems to be a fluke.
Moreover, huge funds have been committed to searching for crude oil in the Chad basin, Bauchi state and some other areas in the north for many years without success. Why still make a law to compel the continuation of such wasteful ventures? Globally, many countries have put deadlines to end production of vehicles using petroleum fuels and even ban their use. Electric vehicles are being manufactured and their cost, which was a major concern, is gradually reducing. Likewise, the battery technologies are continually being improved upon. What’s the point of that 30% for the river basins?
President Buhari has constituted an implementation committee, headed by the Minister of State for Petroleum, Timipre Sylva. They are given a 12-month mandate. Good as the promptness in constituting the committee might be, there are questions as to the suitability of some people included, with all due respect, and those who should have been included but not. Some included shouldn’t have, not because of being incompetent but being interested parties. “Nemo judex in causa sua” (you can’t be a judge in your own case). Nobody can beat himself to cry.
One of what PIA aims to achieve is the unbundling of NNPC to become a commercially viable business concern. How could the same people in NNPC and Ministry of Petroleum, whose powers and positions would be lost to such reorganisation be the ones to effectively and efficiently drive it? The Minister of State could be a good politician and could have garnered reasonable understanding and experience in the sector. However, I doubt if he could stand to be referred to as an “expert” in the industry. The president’s position as the substansive minister has been more or less ceremonial. It’s actually a short-one, in my opinion.
Many had expected that industry experts; technical, economic, financial, legal, administration and other needed and relevant fields would have been included to guide in the implementation. This reform is also like privatisation. The Bureau of Public Entreprises (BPE), National Economic Council (NEC) members, led by the Vice President, Professor Yemi Osinbajo, and other people from MDAs should have been part of the committee. Even the representative of the governors.
There was the expectations that the new law will also help in ending gas flaring, which has become a norm for many decades, since the punishment for doing so is like a slap on the wrist to the IOCs. We hope the existing IOCs will be mandated to convert those gases they waste away into useful energy source by investing in gas processing technology. Can anyone really blame them? Gas was “accidental discovery” in Nigeria. We didn’t set out looking for it. As the Yorubas would say: “ajogun ewu etu, ko moyi agbada nla” (he who inherits unexpected fortune, would never know the value of hardwork).
Ironically, it happens that Nigeria is actually more of a gas country than oil. We have one of the largest reserves in the world untapped, with many yet to be discovered, but what happened to our local gas economy? We can’t even get enough to cook. Its price is very exorbitant. How could a 12.5kg of cooking gas be sold for almost six thousand naira in many parts of the country? Nigeria is largely in darkness from epileptic power supply, while most of our power plants use gas. “Who do us this?”
The elephant in the room remains the subsidy on Premium Motor Spirit (PMS), popularly called petrol. The government has been caught in its own web of confusion as regards to what to do and how to go about it. Last year, Mr. Sylva and Mele Kyari were grandstanding that the subsidy regime was gone. This happened when Covid-19 hit the world hard and crude oil became cheaper than a satchet water. Countries were even paying to get buyers to take their tankers filled with crude oil on the high sea to mitigate their losses due to demurrage.
The price crash led to very low landing cost of petrol and positive net market pricing. NNPC called it overrecovery. When those my APC friends taunted me with that as an “achievement”, I simply told them to wait till the price of crude oil picks up. Then, we shall know if subsidy has truly gone or not. Alas, months later, price began to rise and landing cost of PMS went up beyond pump price. Government was in a dillema. A gradual tactical adjustments were surreptitiously made from 145 naira to the present 160-165 naira per litre. Now, the landing cost is said to be over 230 naira per litre.
With the outrageous daily consumption figures quoted by the NNPC, the waste in subsidy spending can only be imagined. In fact, it affected many months of revenues to be shared by the three tiers of governments. Few times, it was said that NNPC contributed nothing to the FAAC. That’s incredulous. Now we are here. What will the government do as the PIA takes off? Remove or not remove subsidy? It will be anathemal to the PIA to continue the subsidy regime. That will be counterproductive. How does government plan to manage the removal with the labour charging for a show down?
The situation looks like the saying: “the evil that men do, lives after them”. It seems it now lives with them. This is because, majority of the people who form the core of the APC and federal government in power today, were the sponsors of protests again the total removal of subsidy in 2012 by the previous administration as opposition party members. They grounded the country in conjunction with labour. It was said to have been done to “Save Nigeria”. Ojota was the place to be. The beehive of activities and daily entertainment by musicians, comedians and other artists attracted mammoth crowds. It was a total shut down for about one week before President Jonathan buckled and reduced to 97 naira per litre from 140. The spirit of that action has come back to haunt the country and government of today. Who is deceiving who?
With an effective implementation of the PIA, many agencies with duplicity of function would go. Petroleum Products Pricing Regulatory Agency (PPPRA) and Department of Petroleum Resources (DPR) are marked for extermination or transmutation. What about Petroleum Equalisation Fund (PEF)? Any removal of subsidy without cancellation of PEF is a fraud. A deception. PEF must also give way along with other agencies. I often tell people that the fraudulent wastages in PEF could match or surpass that of subsidy. This is because, whether high or low landing cost of petrol, the racketeering in PEF remains constant. Claims for bridging are always paid, albeit, without transparency.
This piece of legislation must be a beginning of greater things to happen to Nigeria and Nigeria’s oil and gas sector. Like the president said; “We are all aware that past Administrations have identified the need to further align the industry for global competitiveness, but there was lack of political will to actualize this needed transformation”. We commend Mr. President for summoning the will to get the bill passed. However, it doesn’t end there. The true test of his resolve and political willingness to make it a success is in the effective implementation. Nigerians and the world look forward to that.
For those who might be aggrieved by some provisions in the act, they should either propose further amendments in the future or test their case in a court of competent jurisdiction. Resulting to self-help by attacking oil facilities, triggering unrests and sabotaging the national economy will be unpatriotic. It’s criminal. They should desist from taking such route. “Ojo a gun, ko la k’orun” (Rome was not built in a day). They should not expect that all their demands would be met in one fell swoop. It’s gradual.
May God continue to protect us and guide us aright.
God Bless Nigeria.
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