• Thursday, February 22, 2024
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BusinessDay

BPE picks holes in current version of PIB in National Assembly

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The failure of the current version of the Petroleum Industry Bill (PIB) in the National Assembly to separate the powers of policy formulation, regulation and operation will threaten investment in the oil and gas industry if the bill is passed in its current state, BDSUNDAY has learnt.

The PIB, which is aimed at overhauling the Nigerian oil and gas industry, has been in the works for the past six years.

Primarily, the PIB when passed will establish the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry.

“On the reform initiatives that we have, we believe that the Petroleum Industry Bill which was originally midwifed by the BPE and had even gone to the National Assembly during Yar’Adua’s administration had already passed second reading. Politics killed it. If that version of PIB we submitted is passed, it would unleash a lot of economic growth to the Nigerian economy,” said Benjamin Dikki, director general, Bureau of Public Enterprises (BPE).

He continued: “Any reforms, for it to succeed must have two or three things. It must clearly separate the powers of policy formulation, regulation and operation. No single party, would perform the same function, they must be distinctly separated.”

The bill first found its way into the National Assembly in 2008 when the late Umaru Yar’Adua-led government forwarded the PIB 2008 to the 6th National Assembly. But it was not passed into law during that legislative regime.

While in the 6th National Assembly, the bill passed first reading stage in 2008, second reading in 2009, clause by clause consideration in 2010 and third reading in 2011 before opposing forces put the brakes on its onward movement.

Noting that policy formulation is domiciled with the Ministry that provides the general policy guidelines for the sector, Dikki said there must be an independent regulator that has all the powers to regulate, sanction and ensure fair play on that relevant sector.

“Thirdly, the operators must not have any policy or regulatory powers. They must all come under the same level field of policy and regulatory framework. Presently as we have it, the oil and gas industry has regulatory powers dispersed in many agencies. The Petroleum Ministry has some regulatory powers. The Department of Petroleum Resources exercises some regulatory powers, just like the NNPC. PPPRA has some regulatory powers,” he said.

“All we need to do is to simply pass that PIB – the correct version that separates the roles, because the recent version that went to the National Assembly did not succeed in separating the roles. As long as those roles are not separated, investors would not come,” Dikki said.

He noted that the lack of clear regulatory and policy framework has hampered investment in the industry, especially in harnessing the huge gas reserves in the country and increasing refining capacity.

Nigeria is the largest holder of natural gas reserves in Africa, with about 187 trillion cubic feet (Tcf) of proven gas reserves and 600 Tcf of unproven gas reserves.

The country imports more than 80 percent of its refined petroleum products for the servicing of its economy, because of its inadequate domestic refining capacity. Its four refineries with a combined capacity of about 445,000 bpd have for long been operating far below their installed capacity as they are in various states of disrepair.

“Why is it that several people have refining licences, but up till today none of them has opened the refinery? The fact is that the regulatory and policy framework are not just clear,” Dikki said. “If you cross one regulatory hurdle, the other one is waiting for you. So, that has completely discouraged investment in the oil and gas sector.”

He said this has implications in two areas. “One is pricing of gas. That is why all the oil majors have not made any investment in harnessing the huge gas potentials of Nigeria.”

“If today, there is a regulator – a single regulator in the sector, it would do what NERC did for the power tariff. The regulator would collect all the inputs and scientifically determine cost reflective tariff which tells you what you require to invest to mine gas and pipe it to the last user and give a cost reflective tariff that would encourage investments and would provide a clear playing field for those who are refining.”

He said there are so many industries that would spin up on the waste of petroleum refining. “Eleme Petrochemical is just one. Today, Eleme Petrochemical is probably one of the most profitable in Nigeria. There are 10 different industries that could spin up, from the bye product of refined petroleum and we sit down here and we are crying unemployment.

“Here we are here sitting on one sector that could transform the Nigerian economy and we are playing politics with it. My appeal is that the National Assembly, like they usually do, when it comes to national interest and critical situations would rise up to the occasion and pass the correct version of the PIB.

“I don’t know the version they are considering, but I know that the National Assembly is considering the PIB and it has passed through the second reading. We are providing information and advice and inputs under the informal basis,” said Dikki.

President Goodluck Jonathan had in July 2012 forwarded the repackaged version of the bill to the National Assembly, following work on the bill by a Technical Committee and a Special Task Force on the PIB. The committee was to harmonise the various versions of the draft bill, while the task force was saddled with the responsibility of incorporating all changes made by the committee, among other things. The process culminated into the PIB 2012.