Stakeholders in the oil and gas industry are worried that the uncertainties surrounding the Petroleum Industry Bill (PIB) would persist and nobody knows long it would take.
This has sent wrong signals to investors in the industry. Any action taken on the bill would be an indicator which provides an important signal to investors, they said.
The PIB which would ensure the government can move forward with new fiscal regimes that will make oil and gas attractive for companies to invest, was stalled in November 2018 when President Muhammadu Buhari withheld his assent to it.
To worsen the Nigerian situation this year is the production cap placed by OPEC on it members which may have some negative implications in terms of investments in new frontiers, according to industry operators. In the case of Nigeria, for instance, production has been cut to 1.6 million barrels per day from this January.
This situation, the operators say, could make oil companies to limit their investments on production alone and not extend to exploration, Nigeria needs to improve on her reserves.
According to Bank- Anthony Okorafor, President of Petroleum Technology Association of Nigeria, stresses that it is imperative for the government to pass the bill for the good of the industry. “My thinking is that it will be signed after the elections,” he said.
The nation and oil and gas industry in particular were shocked when the president refused to sign the bill into law.
There has been a general feeling among investors that if the bill is signed into law the oil and gas industry would have access to a new lifeline which would increase the tempo of activities in the upstream of the industry and boost crude oil exploration and production.
This explains now the thinking among operators that the action of the president was a big setback to the industry, the nation and the economy generally, especially for a country which operates a monolithic economy .
In the past 11 years there have not been any major exploratory and seismic activities in the sector. All the investments into the sector so far have been for production, and not exploration. The government has been claiming that Nigeria has 37 billion oil reserves for several years. But it has not been able to make new discoveries thereby depleting even the so-called 37 billion barrels on a daily basis. This is because of the uncertainty that has surrounded the passage of the PIB
With all the efforts put into making the document by the National Assembly members and the general public, this coupled with the interest it has generated both locally and internationally, fuelled the optimism in the operators that president Buhari would this time around assent to the bill, no matter the anomalies associated with it, while the shortcoming in it would be fine-tuned later as it becomes operational.
The Global extractive industry watchdog, Publish What You Pay, PWYP, has stated that Nigeria is losing N3 trillion annually for failing to put in place a proper legislation for the oil and gas industry. The concerns of Nigerians and stakeholders alike stem from the fact that past legislatures promised to pass the PIB, only to renege at the end of their tenures
The prospect that the other segments of the bill, which are fiscal, host community would be signed into law when work on them are completed is now very slim, given what has happened to the PIGB .
Obviousl, the much expected investment inflow into the oil and gas industry may be far from coming this year because of this.
President Muhammadu Buhari refused to sign into law the PIGB on account that the bill permits the Petroleum Regulatory Commission to retain as much as 10% of the revenue generated in oil and gas industry.
Ita Enang, Senior Special Assistant to the president on National Assembly Matters, stated that the bill unduly increased the funds accruing to the commission to the detriment of the revenue available to the Federal, State, Federal capital Territory and Local Governments in the country.
Other reasons include expanding the scope of Petroleum Equalisation Fund and some provisions in divergence from this administration’s policy and indeed conflicting provisions on independent petroleum equalisation fund.He also stated that some legislative drafting concerns which, if assented to in the form presented will create ambiguity and conflict in interpretation.
“By convention, it is inappropriate to speak on the content of executive communication addressed to the Legislature until same has been read on the floor in plenary,” he said.
OLUSOLA BELLO
