Advocates of a reformed oil and gas sector in Nigeria have criticised President Muhammadu Buhari for refusing to sign the Petroleum Industry Governance Bill.
A financial consultant, Bayo Rotimi, said the decision sent the wrong signal to the international investors.
Mr Rotimi was speaking on a Channels TV programme on Tuesday following reports President Buhari withheld the much anticipated assent to the PIGB.
On June 8, the Senate had sent to the President the harmonised copy of the draft Bill earlier approved by the House of Representatives.
But, the presidential aide on National Assembly Matters, Ita Enang, confirmed to PREMIUM TIMES on Wednesday the president withheld assent to the draft law over certain provisions he was not comfortable with.
Although the presidential aide who did not say what the controversial provisions were, he promised to issue a formal statement later.
“I can confirm to you that president has declined assent to the PIGB,” Mr Enang said in a telephone chat from Abuja.
“He has stated the reasons he was doing so in his separate communications to the leadership of the Senate and House of Representatives about a month ago, around 28 or 29 of July. I hope to issue a formal statement on the reasons the president gave later.”
The Cable first reported Wednesday that the president frowned at the provision of the draft law which sought to whittle down the controlling power of the Minister of Petroleum Resources and vests same in the hands of technocrats.
Besides, the president was said to have been uncomfortable that there were no provisions that covered the “fiscal content” of the draft.
Lead director, Centre for Social Justice (CENSOJ), Eze Onyekpere, condemned the president’s decision to withhold assent to the Bill. He said it will worsen the already declining economy.
“Investors were waiting for this law to see if the environment will improve for them to make critical investment decisions. With the refusal of the President to give assent to the Bill, it has removed the last opportunity to turn the economy around,” Mr Onyekpere lamented.
PIGB: The Background
The PIGB is one of four parts of the proposed Petroleum Industry Bill (PIB), which seeks to update and replace the outdated provisions with a more comprehensive and current petroleum industry law that aligns with global standards.
Also, the PIB seeks to empower institutions and not individuals, take away bad governance which leads to inefficiency, ineffectiveness, rent-seeking tendencies, inequity, secrecy and corruption in the country’s petroleum industry.
The Bill proposes to reform the governing institutional framework of the Nigerian petroleum industry by setting up an independent regulatory agency, unbundling the NNPC into two limited liability companies and setting specific policy roles for the Minister of Petroleum Resources, amongst others.
The other parts of the draft law, which are still pending consideration by the National Assembly, include the Petroleum Industry Administration Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and Petroleum Host and Impacted Communities Bill (PHICB).
The PIAB focuses on establishing a transparent and efficient management of exploration and production operations, while the PIFB deals with fiscal terms, in term of tax regimes and contractual terms to help realize full value in line with global standards.
The PHICB takes care of the rights and opportunities for local benefits, in terms of restitution for environmental and social costs of resource extraction activities.
NBS Report & PIGB
On Monday, the NBS said the country’s economic growth declined by –0.45 per cent points, from about 1.95 per cent in the first quarter, to about 1.5 per cent in the second quarter.
Of significance was the statistics agency report that the oil sector GDP contracted to -3.95 per cent, from about 14.77 per cent in the first quarter, and a growth of about 3.53 per cent in the corresponding period in 2017.
In his review, Mr Rotimi, a financial consultant, said it was a matter for serious concern to Nigerians that at a period crude oil price was rising at the international oil market, the country’s oil and gas industry was reporting a decline.
Besides, he said it should be even more worrisome to policy and decision makers that at a time the country was facing less disruptions in oil operations as a result of attacks on oil facilities in the Niger Delta, oil production and exports were dropping.
“If the oil sector, which from all indications still remains the principal driver of the economy is struggling, amid rising crude oil price at the international oil market, it should be obvious the production elements in the industry were yet to be sorted out,” he noted.
“What the statistics show is that our economy is still over-dependent on oil. Between the first and second quarters, oil sector GDP growth declined by 18.71 per cent as a result of a drop in crude oil production from two million barrels to 1.64 million barrels per day.
“At a time of increasing crude oil price at the international oil market, the loss translates to about $1.1 billion on the average.”
Mr Rotimi blamed the decline in growth in the sector on the uncertain atmosphere over the regulatory framework in the industry, with the PIGB still pending assent by the president.
Recently, the international oil companies (IOCs) said new investments in the oil and gas sector would wait till the uncertainties associated with the absence of acceptable financial and operational terms were sorted out.
Consequently, the consultant said getting the policies and politics right was critical for the situation to turn around.
“The critical actors in the political space have to forgo their selfish interests and think about the nation. The present political tension and confusion are not helping anybody.
“The PIGB needs to be assented to immediately, to send the right signal to the IOCs that the country was ready for business. With all the issues sorted out, oil production will increase and export will drive up, to recover lost capacity at a time of rising crude oil prices,” he said.
At a recent roundtable on PIGB organized by the Nigerian Natural Resource Charter (NNRC), a non-governmental group focused on mobilizing support for the quick passage of the PIGB, a former Director. Department of Petroleum Resources, (DPR), Osten Olorunsola, highlighted the negative impact of the delay in passing the law.
Apart from a loss of about $15 trillion in fresh investment that could have come to the country through the existing IOCs, Mr Olorunsola said new investors that would have wanted to do business with Nigeria were diverting elsewhere due to the uncertainty in the industry.
The roundtable was organised in conjunction with the Media Initiative on Transparency in Extractive Industries (MITEI), a media advocacy coalition on the PIB.