The absence of a stable fiscal environment for the petroleum industry is inhibiting growth in the upstream sector of the industry, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, has said.
This is amid the continuous agitation by civil society groups for the National Assembly to pass the Petroleum Industry Bill (PIB) without further delay.
Mr Kyari lamented that international investors in the oil and gas industry were fast losing confidence in Nigeria as a result of the absence of a petroleum industry law to guarantee a stable investment environment.
He was addressing members of the House of Representatives Committee on Petroleum Resources (Upstream) who were on an oversight visit to his office at the NNPC headquarters in Abuja on Tuesday.
Need for quick passage of PIB
“We need to act quickly to move from this unstable situation to a very stable one by getting the Petroleum Industry Bill (PIB) to work so that countries and investors can work with us. The PIB can work if it is passed into law immediately to regulate the operations of the industry,” the GMD said.
Mr Kyari, who underscored the significance of foreign capital in the operations of the upstream sector of the petroleum industry, said the only way to attract it was to have stable laws and a friendly business environment that guarantees cost recovery and a decent return on investment for investors.
He said the uncertainty in the petroleum sector as a result of the long delay in the passage of the PIB has forced a number existing multi-national partners in the country into divestments from the country in the recent past, while prospective investors that could have come to Nigeria are compelled to look elsewhere due to unstable legal and fiscal terms.
The NNPC Chief said if the PIB were to have been in place, it could have enhanced the drive by the NNPC management to entrench the culture of transparency and accountability in the corporation’s operations.
The policy of transparency, accountability and performance excellence (TAPE), he said has significantly improved the corporation’s business fortunes and creditworthiness as lenders are now willing to grant credit to it to support its operations.
Why PIB passage is delayed
Recent reports said the restructured draft PIB sent to the National Assembly for consideration and approval was withdrawn as the Federal Inland Revenue Service (FIRS) was said to have made the request to ensure the new amendments in the fiscal terms in the 2020 Finance Act as they affect the oil and gas industry were accommodated in the petroleum law.
The Minister of State for Petroleum Resources, Timipreye Sylva, said the restructured PIB submitted by the present administration are broken into two – the Petroleum Industry Governance, Administrative and Host Community Bill (PIGAB) and the Petroleum Industry Fiscal Bill (PIFB).
While the PIGAB covers the governance and administrative issues, the minister said the PIFB covers the details relating to the fiscal provisions relating to taxes.
Since the withdrawal of the draft PIB sent to the National Assembly, a consortium of Civil Society Organizations (CSOs) led by the Nigeria Natural Resource Charter (NNRC) have continued the advocacy for the return of the PIB to enable the lawmakers do the needful and pass it into law, without further delay.
The consortium include Civil Society Legislative Advocacy Centre (CISLAC), BudgIT, Connected Development (CODE), Media Initiative for Transparency in Extractive Industries (MITEI), Order Paper Advocacy Initiative, Women in Extractives (WiE), Extractive 360, and the Centre for the Study of the Economies of Africa (CSEA).
Others include the Youth Forum on Extractive Industry Transparency Initiative (Youth Forum on EITI), Publish What You Pay (PWYP), Africa Network for Environment and Economic Justice (ANEEJ), African Centre for Leadership Strategy and Development (CentreLSD), Centre for Development Support Initiatives (CEDSI), Centre for Transparency Advocacy (CTA) and Koyenum Immalah Foundation (KIF).
In a recent statement, the CSOs noted that apart from the effective operations of the upstream sector of the petroleum industry, the effective running of the downstream sector of the industry have equally suffered with the continued delay in the passage of the PIB.
The groups drew attention to the hiccups currently experienced in the implementation of the deregulation policy in the downstream sector of the petroleum industry, saying with the PIB, the appropriate legislation would be available to regulate the process.
The consortium called for the repeal of the PEF(M)B Act and PPPRA Act that established the Petroleum Equalization Fund and the Petroleum Products Pricing and Regulatory Agency (PPPRA) to signal the government’s commitment to the implementation of full deregulation of the sub-sector.
Lawmakers give commitment
The Chairman of the Committee, Musa Sarki Adar, in his response said the lawmakers were ready to provide the necessary support necessary to assist the Corporation to discharge its duties without hindrance.
Mr Adar acknowledged the Corporation’s efforts at deepening transparency and accountability, and commended the level of professionalism exhibited by the NNPC management, particularly the leadership role played by the GMD in rallying the oil and gas industry to provide support for the Federal Government’s fight against the COVID-19 pandemic.
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