If you think that the tortuous journey of the Petroleum Industry Bill, which started in 2008, is about to end, you will have to think again. Even though the Senator Paulkner Committee has now been asked to fine-tune the bill, to make it acceptable for passage into an Act, it must still read the lips of two major lobbies that stand against the bill. This is because these two lobbies are very influential and powerful, indeed. The first lobby is made up of Northern senators who are willing to liberally use their numerical majority in the National Assembly to stymie the passage of the bill. It is important to note that these senators will be physically present whenever the bill will be debated and voted upon. The second lobby, made up of the (foreign) oil majors, can use their enormous financial resources, near-monopoly of mining technology and operational capacity in Nigeria, to halt or slow down work on the oil fields. The rumour mill says they are frantically lobbying the National Assembly with every form of ‘cajolement,’ and are threatening to leave Nigeria if the bill is passed as it is.
The Northern senators oppose the bill for a number of reasons, the most important being the ceding of another 10 per cent net profit of oil companies to oil producing communities. They wonder why the oil producing communities should get this additional concession, considering that they already have enough concessions in the Ministry of Niger Delta Affairs and Niger Delta Development Commission, that come with substantial financial votes, dedicated to their welfare, and the 13 per cent of revenue derived by the federation from petroleum resources. But even though the North or the other regions or zones of Nigeria may argue against the additional concession, the Chairman of the Senate Housing Committee, Senator Bukar Abba-Ibrahim, needs not add that the perceived lopsidedness of the gains of the petroleum sector in favour of the Niger Delta would threaten national peace and security.
Other regions, like the South-West and South-East, can support the North with the argument that ownership of the petroleum and gas resources is still vested in the sovereign state of Nigeria, and not in the Niger Delta region. So the interests of other regions should be taken into consideration too. Perhaps, when the issue of fiscal federalism is settled, and ownership of all mining resources within Nigeria is vested in host communities, the host communities of the Niger Delta can begin to exercise complete control of the remuneration from the resource. They would then only need to contribute an agreed portion to the running of the central government. The Onirus of Lagos exploit their land resources, and only pay tax to the Lagos State Government. The North says that the bill ignores exploration of oil in the North. The bill ignores oil exploration in other regions of the nation too. The bill must address the lapse.
Oil majors have their grouse against the bill. They wouldn’t like to pay an additional 10 per cent non-tax deductible to the host communities. It’s not good for their bottom line. Other conditions that will rein in their present free-ranging operational modus include the Petroleum Technical Bureau, a think-tank, resident in the Ministry of Petroleum Resources, to help the minister arrive at more technically-based and better formulated industry policies. If you catch the drift, this animal kind of, brings into the equation, the employment of thieves, who know how to trail the disappearing footprints of thieves on the rocks. Again, this is bad for business. Also, the accounting and monitoring of the operations and the profit of the upstream sector of the petroleum sector, hitherto shrouded in mystery, is going to be stricter and more stringent. Right now, there is no way to measure the actual quantity of oil and gas produced, the quantity of oil leakage or gas flared. The new regime of probity, transparency and accountability is a major source of worry for the oil majors who had been profiting from their voodoo accounting system. And the music is about to stop, as the oil majors now have to contend with a legion of new regulatory agencies. Even though this could be a bit distractive, but they asked for it.
The bill establishes a legal, fiscal and regulatory framework for Nigeria’s petroleum industry; creates conducive environment for its operations; enhances exploration and exploitation of petroleum resources for the benefit of Nigerians; makes gas available for domestic use in local industry and for power generation; delivers optimal revenue to the Federal Government; seeks to establish viable oil and gas entities; establishes more effective regulatory agencies; promotes Nigerian content in the industry; and safeguards occupational and community health. The bill also seeks to ensure an orderly, fair and competitive petroleum industry, with clear and effective legal and institutional framework, to ensure higher return on investment to investors and for the general benefit of Nigerians. The Nigerian National Petroleum Corporation, the opaque behemoth, will yield to the National Oil Company, that will be 30 per cent owned by the public, and the National Company that also will be owned 49 per cent by the public. You should be looking forward to seeing more of those NNPC mega petrol stations. Even so, government will still retain exclusive control over joint venture partnership agreements. But individuals can also invest in loading facilities, jetties and storage depots. The PIB will allow private investors to operate refineries, and the oil and gas pipelines. This dovetails into the present provision that allows private investment in land transportation of petroleum products, as well as investment in petroleum and gas products.
The Senate Majority Leader, Victor Ndoma-Egba, insists that the bill will fundamentally change the legal and fiscal regime of the oil industry. There is some merit to his claim. In spite of the defence of turf by Northern senators, and of the protection of profitability by the oil majors, the bill has apparent advantages for the man on the street: These include the Petroleum Technology Fund that will fund human capital training and research in the petroleum and gas industry; retention of some kind of oil subsidy through the Equalisation Fund; the access given to the private citizens to buy shares in the national oil and gas companies, and accompanying financial disclosures required by the stock market.
The bill encourages private investment in refineries; private investment in oil and gas pipelines; a reliable strategic stock of oil and gas; ensuring availability of petroleum and gas products for local consumption before consideration for export; and the opening up of the oil industry to more competition that should force prices of petroleum products to go down. It pointedly removes the artificial barriers militating against indigenous participation in both the upstream and downstream segments of the industry; and seeks to migrate more financial resources and technical competence of the oil majors to the downstream segment of the industry. All this should discourage hoarding, smuggling and pipeline vandalising. Now, that the artificial scarcity of petroleum products that the oil majors, and their collaborative indigenous vultures, prey upon, is about to end, one may understand their issues with the bill. But whose interest is being served by the Northern senators’ stance against the passage of the bill?
