PIGB to attract $30bn investment to Nigeria

Nigeria could attract  investments worth over $30billion in the next three years with the passage of the Petroleum Industry Governance Bill (PIGB).

Chairman, Senate Committee on Gas, Bassey Akpan, stated this while speaking with BusinessDay, after the passage of PIGB by the Senate Thursday.

“PIGB could attract a minimum of $30billion investment to Nigeria in the next three years”, Akpan told BusinessDay.

This comes as industry analysts estimate that Nigeria has lost over $120 billion in withheld or diverted investment due to the inability to pass the PIGB over the past eight years.

Although the Senate passed the long awaited bill on Thursday, it will have to get the concurrence of the House of Representatives and presidential assent to become law.

Experts say initiation of PIGB as a separate bill from the fiscal and host community aspect would facilitate the ‘ease of execution’.

Already, the Host Community Bill and Petroleum Industry Fiscal Bill are at different stages at the upper legislative chamber.

The PIGB seeks to create efficient and effective governing institutions with clear and separate roles for the petroleum industry;  establish a framework for the creation of commercially oriented and profit driven petroleum entities that ensure value addition and internationalisation of the industry; promote transparency and accountability in the administration of petroleum resources of Nigeria and foster a conducive business environment for petroleum industry operations.

It also seeks to remove powers from different regulatory agencies and scrap the Department of Petroleum Resources (DPR), Petroleum Products Pricing and Regulatory Agency (PPPRA) and Petroleum Equalisation Fund (PEF).

This bill was passed after its clause by clause consideration at Thursday plenary.

Diran Fawibe , the  chairman and    chief executive  officer  of International Energy  Service  ( IES) said  finally after  12 years, what looks  like a Petroleum Industry Bill  has been passed into law adding  that even  though   there  are still  some hurdles, what  they have done is the right thing.

According  to Fawibe,  the passage  would put  pressure  on  the  House of Representatives  to pass  its  own bill.

He said even though the Senate and the House of  Representatives and the executive have different documents, he was optimistic that  the legislature and  the  executive would find a meeting  point  through  the harmonisation of their documentsfor the benefit of  the petroleum industry and  Nigeria as whole.

He said the objective of passing the bill into law is having a vibrant Oil and Gas industry.

In his own reaction, Olufemi Olawore, executive secretary of the Major Oil Marketers Association of Nigeria (MOMAN) said a single regulator for the industry would create  some difficulties. Olawore said the recommendation of his group was to have two different regulators, one for upstream and another for downstream.

“One regulator would be an omnibus. There was a time the country had a single regulator in the name of Petroleum Inspectorate. Currently the Department of Petroleum Resources (DPR ) alone  cannot effectively monitor both the  downstream and upstream”, he said.

Taiwo Oyedele, Head of Tax at PwC, says there seems to be a lot of uncertainty around the fiscal framework, issues with communities and levies to NDDC. Oyedele says this governance bill while not addressing fiscal issues, is still a good development.

“But anything we do as a country that provides certainty to some extent to investors is good for the economy, because it restores confidence, that is what people want.

“If I know who has what power to do what and things are transparent, and you don’t have to go under the table to get things signed because you know the minister or the president, to the extent that this is bringing more transparency and clarity of purpose, it is good thing.

NNPC has been in existence for so many years and its been pretty much a case of leakages and wastage they don’t think like commercial organisation. You have national oil companies indifferent countries many of them are multinationals making a lot of money for their own government, ours keep wasting money, so whatever we are doing to try to reform it for efficiency and also part of the plan is to lift at some point, I think it is a positive development.

PIGB focuses mainly on administration and privatisation of the petroleum industry as it splits the NNPC into three different entities namely: the Nigeria Petroleum Regulatory Commission (NPRC), National Petroleum Assets Management Company (NPAMC) and Nigeria Petroleum Company (NPC).

While the NPRC will serve as a regulatory entity for the entire petroleum industry (upstream, midstream and downstream), the NPAMC will act as the counterpart and administrator of production sharing agreements and such other risk-based agreements, even as it proposes NPC as an integrated oil and gas company.

The bill also makes provision for funding the NPRC as provided in Section 26, which states that: “The Commission shall establish and maintain a Fund from which all expenditures incurred by the Commission shall be defrayed”.

The NPRC is to spend 10 percent of what it generates for its operations.

Formerly known as Petroleum Industry Bill (PIB), it was first introduced into the Sixth National Assembly in 2008 as an executive bill by late president, Umaru Yar’Adua. The Sixth National Assembly failed to pass the bill.

The bill was re-introduced into the Seventh National Assembly in 2012 by former President Goodluck Jonathan.

Although the Seventh House of Representatives passed it towards the end of its tenure, it failed to get a concurrent passage from the Senate, thus ending the life of the bill.

Unlike the two unsuccessful attempts, the current proposal in the Eighth Senate is a private member bill sponsored by the Chairman,  Senate Committee on Petroleum Upstream, Tayo Alasoadura.

Akpan disclosed that Nigeria has not attracted investment in the oil and gas industry in the last ten years due to uncertainty.

“The passage of the PIGB puts an end to the mentality that Nigerian business is no man’s business because all the entities to be created and its related subsidiaries are to work as profit-making ventures. So, Nigeria’s journey to abundance has just started. Because Mexico, just by simply rewriting of the Oil and Gas law in their country, attracted an investment of over $60billion in three years.

“Nigeria has not attracted any investment in the oil and gas industry in the last ten years because of uncertainty,” he said.

On his part, Alasoadura who doubles as Chairman, Joint Committees on Petroleum Upstream, Downstream and Gas, said the bill will transform the Nigerian petroleum industry and attract substantial investments, required to stimulate growth in the Nigerian economy.

He said: “Our report proposes a slim, focused yet robust framework for effective institutional governance of the Nigeria Petroleum Industry. We supported and enhanced the creation of an independent one-stop-shop regulatory agency which will absorb the present Department of Petroleum Resources (DPR), Petroleum Products Pricing Regulatory Agency (PPPRA) and the Petroleum Equalisation Fund (PEF) into one agency. We have streamlined and sharpened the role of the Minister.

“In carrying out our assignment we have ensured that the major lapses associated with prior institutional frameworks have been remedied”.

 

OWEDE AGBAJILEKE ,Abuja, OLUSOLA BELLO & ISAAC Anyaogu, Lagos