For close to two decades, uncertainty about the legal and fiscal regime operational in Nigeria’s oil and gas sector has discouraged companies from making fresh investments but the benefits of reforms go beyond monetary values.
According to Nigeria’s Department of Petroleum Resources (DPR), the repeated failure of attempts to adopt a new oil and gas law costs the country about $15 billion each year in lost investments.
It is therefore reasonable for President Muhammadu Buhari and his government to seek passage for the Petroleum Industry Bill (PIB) as soon as possible. This is also because Nigeria can ill afford to keep losing so much money — especially at a time when its oil and gas industry is under extra strain because of the extraordinary events of 2020, such as the economic fallouts from the coronavirus pandemic and its corollary of falling oil prices.
“But it is not just about the money. I believe there is an objective need for reform — and that the PIB can meet that need. Nigeria’s oil and gas sector has earned the reputation of being corrupt, non-transparent, and inefficient,” said NJ Ayuk, executive chairman, African Energy Chamber and managing partner of Centurion Law Group, a pan-African corporate law conglomerate that specialises in energy, extractive industries and the financial sector.
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Ayuk argued that Nigeria’s negative reputation drives potential investors away, thereby depriving the country of money. “Depriving it of jobs (in both the industry itself and in related sectors such as construction and transportation) and also of opportunities for partnerships, training, technology transfer, and other things that help support and amplify economic growth.”
President Buhari has expressed the intention of signing the PIB into law before the end of this year. But if the Senate continues to focus exclusively on the budget until November 24, it will have just over a month to meet that deadline — or even less, if the committees take the full eight weeks allotted to them for making legislative inputs.
In theory, the PIB could lose momentum during any of these stages. If the committee discussions run for the full eight weeks, they will end on December 15, leaving little time before the end of the year.
If legislators propose amendments during the third reading, they may need extra time to debate and vote on their proposals. If the House of Representatives and the Senate turn out different versions of the PIB and are unable to come to terms quickly, the initiative could stall. If President Buhari takes exception to any changes made during earlier steps in the legislative process, he could veto the bill.
Either way, it will have a great deal to do in a short time. It will have to wrap up committee discussions, pass the new oil and gas law in its third reading, secure the assent of both the House of Representatives and the Senate to the final version of the legislation, and then send it to the president for signature within just a few weeks.
The federal government completed the draft version of the PIB and submitted it to the National Assembly in August and secured pledges from both houses of the legislature to expedite discussions on the PIB so that it can be passed before the end of the year.
The bill passed its first reading in the House of Representatives and the Senate on September 30 and passed its second reading in the House of Representatives and the Senate on October 20.
This week, the African Energy Chamber will publish a report outlining its short-term predictions for the continent. That report, Africa Energy Outlook 2021, identifies Nigeria as the country with the most potential for increasing hydrocarbon production. But it also points out that Nigeria faced certain challenges with respect to realising this potential.
In other words, without the PIB, Nigeria cannot use its vast oil and gas reserves to optimal effect.
