Despite assurances from top Nigerian officials and high-ranking
legislators that the Petroleum Industry Bill (PIB) would be passed in
2013, the bill remains stuck in the National Assembly (parliament) and
may not be passed before the 2015 national elections.
Last year, Petroleum Resources Minister Diezani Alison-Madueke, other
key officials of the Nigerian National Petroleum Corp.
(NNPC), and the parliament said on several occasions that the PIB would
be approved in 2013, but this did not happen, although the PIB scaled the
second reading in the House of Representatives in November 2012 and the
Senate passed the second reading in March 2013.
Afterward, the Senate
referred the PIB to its Joint Committees on Petroleum Upstream,
Downstream, Gas, Judiciary, Human Rights and Legal Matters for further
legislation. The committee concluded a two-day public hearing on the
bill in July 2013.
Some of the PIB’s objectives are to replace all existing oil and gas
legislation, redesign the oil and gas governance structure,
commercialize and restructure the NNPC, revise fiscal regime for
onshore, shallow water and deepwater oil and gas production, and change
provisions for awarding, renewing, and revoking licenses and leases.
Oil industry stakeholders said it is uncertain whether the PIB will
be passed in 2014 because of sharp political divisions in the ruling
People’s Democratic Party (PDP), the new strength of the opposition All
Progressives Party (APC), the two state governorship elections in the
country’s southwest region slated for June 2014, and the 2015 general
elections including the presidential poll.
After the 2011 general elections, the PDP had the majority in the
House. But 37 of its members defected to the APC on the House floor Dec.
18, 2013, thereby reducing PDP’s majority. In addition, several PDP
senators are threatening to defect to the APC this year following the
divisions and disagreements in the ruling party with the past six
months.
The APC, which has called for the impeachment of President Goodluck Jonathan, may vote against the PIB in the house.
“President Jonathan cannot bank on the National Assembly as now
constituted to pass the PIB. It was not passed when his ruling party had
a comfortable majority in the assembly. So the bill may not be passed
until after the 2015 elections,” an oil and gas industry expert in Lagos
said.
But two high-ranking members of the National Assembly have said the
bill would be passed by the National Assembly before the 2015 general
elections. During the 2013 Oil Trade and Logistics (OTL) Exhibition for
Downstream Operations in Lagos in November 2013, Magnus Abe, chairman of
the Senate Committee on the Downstream Sector, said the PIB would be
passed before the 2015 general elections.
“The senate experienced some delays in dealing with the bill because
of events outside the control of the lawmakers,” Abe said. “We have
decided to come out with a timetable on how to deal with issues
affecting the bill.”
Some of the contentious issues in the bill are the new fiscal regimes
opposed by international oil companies (IOCs) operating in Nigeria,
wide powers of the petroleum minister, the president’s powers on oil
licensing, the 10% fund for host communities, and the new frontier
exploration agency.
The Oil Producers Trade Section (OPTS) of the Lagos Chamber of
Commerce and Industry – which includes Shell, Chevron, ExxonMobil,
Total, and Eni SpA – opposed the bill in its present form because,
according to the OPTS, “the proposed increased taxes in the bill would
make exploration and projects uneconomical.”
As part of the bill, the minister has powers to reassign licenses to
operators, revoke leases, and supervise all institutions of the
industry, while the president has powers to grant or award oil block
licenses to investors or stakeholders.
Oil unions, political leaders, and several other groups have called
for the removal of these powers from the PIB before passage because they
are against international best practices.
Political leaders from the northern region of Nigeria have not
relaxed their opposition to the 10% Petroleum Host Community Fund (PHCF)
aimed to boost the economy and improve the social infrastructure of
communities in petroleum-producing areas. Oil companies will contribute
10% of the net profits to the PHCF after royalties and other taxes have
been deducted, if the bill is passed without amendments.
The northern leaders opposed the fund because oil-producing
communities already receive 13% of the oil derivation fund, comprised of
oil proceeds received by Nigeria. Allocating the additional 10% fund in
the PIB would give the Niger Delta communities “too much money” to the
detriment of other communities, especially in the north, which has no
oil, the leaders said.
Also, the Revenue Mobilization, Allocation and Fiscal Commission
(RMAFC), which is in charge of monitoring and disbursing federal
revenue including oil money to the country’s 36 states, the Nigerian
Extractive Industries Transparency Initiative (NEITI), and the non-oil
producing states are opposed to the 10% host community fund because of
the same reason voiced by northern leaders.
Speaking after the senate public hearing on the bill, Alison-Madueke
“the powers (of the minister) complained of are even less than what my
counterparts in advanced oil-producing countries enjoy.”
Babatunde Ogun, president of the Petroleum and Natural Gas Senior
Staff Association of Nigeria, said “As long as the PIB is still in
limbo, no investment will come to Niger Delta and no investment will
come to oil and gas industry. The consequence for the union is that we
are losing members, multinationals are afraid of kidnapping, vandalism
and uncertainty; they will keep back their funds or in the alternative,
use it … in other countries. That is driving away investors from
Nigeria.”
The bill’s journey has been long, and it has created some interesting records. The bill has:
• Taken the longest amount of time to prepare in Nigeria’s history. The
groundwork for the bill was laid by the Oil and Gas Sector Reform
Implementation Committee (OGIC) that was inaugurated in April 2000. Its
report and that of the second OGIC formed the basis of the first PIB
submitted to parliament in 2008;
• Spent the longest amount of time in Nigeria’s parliament without passage; and
• Been unable to gain parliament approval by two administrations, that
of former President Musa Yar`dua and Jonathan, who presented a new draft
of the bill to parliament in July 2012.
Nigeria, which is Africa’s largest oil producer, earns more than 90%
of its foreign exchange and 80% of government revenue from oil exports.
[ENERGY MIX REPORT]
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