NEITI calls on government to enact new law for petroleum sector

Nigeria Extractive Industries Transparency Initiative (NEITI) has called on President Muhammadu Buhari to take the lead and infuse urgency into the process of passing a new law for the Nigerian petroleum industry.
The call was made by NEITI in its latest policy brief titled “The Urgency of a New Petroleum Sector Law”.
According to NEITI “The process of enacting a new law for Nigeria’s petroleum sector has gone on far too long, and at enormous costs to the country. More urgency and better coordination are needed on the passage of this very important bill.”
It therefore advised, “The PIB ship should be rescued from a start-stop, unhurried and uncoordinated mode and brought swiftly ashore.”
NEITI maintained that the “PIB is one of the most important bills ever to be contemplated in Nigeria’s history, yet the one that has taken the most time and generated the most activity without legislation.”
NEITI underlined that as an agency set up to enthrone transparency and accountability in the extractive industries, it has legitimate interest in a petroleum law for the country.
It observed that the setbacks suffered by the bill were not due to poor understanding of the problems or the deficiency in expert inputs, but largely due to disagreements among stakeholders on the “regulatory frameworks, including power of the minister, ownership and control of the resources, host community benefits, environmental concerns, appropriate fiscal regime, etc and in the process, every administration has produced its own PIB draft(s), but not the law.”
NEITI therefore recommended that “an inclusive task team should be urgently empanelled, with the President in the lead and charged with building consensus among stakeholders. This task team should draw up a clear and well-communicated roadmap and fast-track the passage of the law in piece-meal rather than an omnibus approach.”
In the policy brief, NEITI expressed dismay at the inability of successive governments to enact a law for a sector that accounts for over 80% and 90% of its revenue and exports earnings respectively.
NEITI therefore calls on President Muhammadu Buhari to invest his “presidential capital on this all-important legislation, putting in place a mechanism for rallying the stakeholders to a consensus, and using this law as one of the pillars of the bridge to a much needed economic recovery.”
NEITI pointed out that Nigeria has experienced huge losses to the tune of about $200billion due to the failure of passing an enabling law for the petroleum industry. Some of these loses are projected investments due to regulatory uncertainty which experts have put at $120billion ($15billionyearly).
The policy brief noted that clear, unambiguous rules, predictable policy-making and efficient regulations have been lacking in Nigeria’s petroleum sector, since the process of enacting a law for the sector commenced.
According to NEITI, “governance deficiencies have been equally prolific.” It says its 2013 audit of the oil and gas sector revealed that $10.4 billion and N378.7 billion (N3.2trillionat the current exchange rate) were lost as a result of under-remittance, underpayments, inefficiencies, theft or absence of clear fiscal regime in Nigeria’s oil and gas sector.
The agency further stated that the losses in economic terms have equally been huge; the haemorrhage on Nigeria’s foreign reserves and value of the naira due to imports of over $26.4 billion worth of refined petroleum products that should otherwise have been done in – country and loss of jobs in their hundreds of thousands for the teeming unemployed Nigerians.
NEITI traced the journey towards the enactment of a petroleum law to the past sixteen years when the process of reforms for the sector started. It noted that Nigeria’s oil and gas sector has continued to deteriorate due to the fact that the laws governing the industry are not sufficient for effective regulation and in some instances, too outdated to be relevant in today’s global energy environment.
The situation, it said, is in contrast to Ghana’s experience in passing its own law. The group also noted that as a new oil producing country, Ghana’s petroleum sector may not be as complicated as that of Nigeria, however, the fact that Ghana passed the law for its petroleum sector two years after commencing the process should be a lesson for Nigeria.
NEITI while acknowledging the plurality of action on the petroleum sector law, said that there is no evidence that Nigeria has learnt from its past experiences to guarantee that the present journey will be any different.
It cautioned that the current efforts at reviving the process of enacting the law are already ‘exhibiting disturbingly familiar patterns’ and have added a new dimension on whether the bill should be taken en bloc or passed piece – meal.
NEITI posited that to rely on rules and methods put in place four decades ago for a dynamic and volatile industry like the oil and gas sector has been a wrong and very costly choice, adding that government should not lose sight of the reasons for reforms in the sector which were due to lack of transparency, accountability and efficiency.
NEITI further advised that enforceable sanctions, openness, transparency, accountability, participation of the citizens and efficiency of operations be incorporated in the new PIB, whose passage should be “prioritised as one of the planks of economic recovery”.
The NEITI policy brief aims at drawing the attention of policy makers and the populace to critical issues regarding the extractive sector engender informed debate, and drive policy changes in the extractive industry in Nigeria.
It is one of NEITI’s newly introduced policy and advocacy instruments that complement the NEITI Industry Audits. The first policy brief released in May 2016, by NEITI, captioned “The Need to Know Who Owns What in Nigeria’s Extractive Sector”, and centred on the benefits that Nigeria will derive in disclosing the real owners of companies operating in the extractive industry.