Civil society urges government to be tactical on petroleum industry law

Petroleum Minister Diezani Alison-Madueke

Though the absence of a stable legal, regulatory and fiscal regime in the country’s petroleum industry is a strong disincentive to prospective and existing investors, civil society groups say government should hasten slowly in pursuing the passage of the Petroleum Industry Bill (PIB) by the National Assembly to avoid mistakes that could cost the country her strategic interests.

The groups made their fears known during a roundtable on the PIB organized by Facility for Oil Sector Transparency (FOSTER), a United KingdomDepartment for International Development (DFID)-funded programme implemented by the Oxford Policy Management in conjunction with Centre for the Study of the Economies of Africa (CSEA) and Revenue Watch Institute (RWI).

Sensing danger at the sudden interest shown by the Presidency, the groups said if President Goodluck Jonathan had demonstrated similar interest and commitment the previous draft that was pending before the 6th National Assembly for more than four years would not have lapsed.

Saheed Kolawole of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), who underscored the need to hurry up the process to get the PIB passed into law, said virtually all the multinational oil companies are currently not making any fresh investments in Nigeria.

“Everybody is being cautious in their business decisions,” Mr. Kolawole said. “No one is sure of the regulatory and fiscal regimes that would be included in the PIB. While not suggesting that the country rushes into passing the law, government should make haste to have in place a document everyone can be sure of, to help make investment decisions on whether to stay or go to other destinations. Reforming NNPC is key to the PIB, and the best point to start is to review the NNPC Act and amend its provisions.”

“Concerned Nigerians should be wary of the undue haste by the Federal Government is pursuing the passage of the PIB,” Auwal Rafsanjani of Civil Society Legislative Advocacy Centre (CISLAC) said. “But for the recent nationwide protest against the petrol subsidy removal spearheaded by the organized Labour, passage of the PIB was never in government’s agenda, even in the near future.

“Clearly, government was pressurized into the decision to constitute a ministerial task force to prepare another draft PIB to be presented to the current National Assembly. Because it was not prepared, its intention has already been compromised, with the task force made up of people with vested interest in the oil industry.”

Urging extreme caution, Mr. Rafsanjani challenged civil society organizations, stakeholders and the media to prepare to constructively engage the National Assembly on issues that border on the country’s strategic interest, pointing out that as the mainstay of the economy, all Nigerians must be interested in what provisions are included in the final PIB.

“Rushing to pass the PIB is a bad idea. We need to slow things down until the stakeholders have made thorough inputs to its provisions. The issues in the Bill are so grave that speed becomes dangerous,” Benibo Smith of the Centre for Public Policy Alternatives (CPPA) said.

Mr. Smith faulted the idea of constituting a ministerial task force to work with a technical committee populated with officials of the Nigerian National Petroleum Corporation (NNPC) in preparing another draft PIB , pointing out that the process must ensure that a cross section of Nigerians are given the opportunity to contribute to the final provisions.

“The right way to go would be for all Nigerians to make their inputs in the discussion on the various issues contained in the draft PIB before a public hearing is held by the National Assembly. This would require taking the discussion to all sections of the country. But, I do not think the task force would be able to do that within the 30 days deadline it was given,” he said.

In his presentation on ‘PIB overview and burning issues’, Deoye Adefulu of FOSTER, identified some key issues he believed should be of critical concern to the handlers of the proposed draft Bill.

These include lack of security in contracts, which allows existing agreements to be altered or abrogated mid-way, resulting in lots of litigations and loss of investments; lack of transparency and accountability, particularly in issuing of licenses to operate in the upstream sector or and contracts to lift NNPC’s share of crude from the joint ventures as well as downstream marketing of petroleum products.   

Mr. Adefulu continued, ”All licenses and contracts must be awarded through open, competitive, transparent processes”, Mr. Adefulu proffered. “There should not be powers for discretionary award of licenses by any government official. There is no real commercial reason not to publish online complete details of tenders on bid rounds, licenses and contracts.

“There is no reason to have technical and commercial licenses for the same line of business, in view of the bureaucratic tendencies that might frustrate the business. Though there are some valid reasons for confidentiality clauses in contracts, but it is inexcusable with respect to information relating to revenue payment by the oil companies to government.

“It should be mandatory for a functional central repository for industry data and information by the regulatory agencies. There is no sound commercial reason why information should not be open to the public on company by company daily production figures and crude oil liftings as well as marketing of imported products.

“NNPC is a big hole in the middle of the PIB. It should be mandatory for it to publish a full annual report of its operations on its website on a regular basis as well as audit reports by independent bodies, like other oil companies do in other parts of the country as against the current practice where such reports are sent only to the Presidency, Ministry and National Assembly.”

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