What is PIB?
The PIB is a draft proposed Law that aims to aggregate all the Laws that govern the Nigerian Petroleum Industry from upstream to downstream sector. It is an attempt at bringing about sixteen (16) Petroleum Acts into a manageable single entity with a clear role for all the sections under the Bill. The Bill is expected to establish and clarify the rules, procedures, and institutions that will entrench good governance, transparency, and accountability in the Oil and Gas sector.
Oil was discovered in Nigeria in 1958 in the Oloibiri, in the present-day Bayelsa. Despite this extended period of oil exploration, and the massive commercial activities in the oil and gas sector over the years, Nigeria does not have a comprehensive law for the administration of the sector but has about 16 Petroleum Acts many of which overlapped in functions and responsibilities.
Nigeria has engaged in a number of unincorporated Joint Ventures with International Oil Companies to develop the industry. However, the country has been mostly cash strapped as it was unable to fund its own side of the JV agreements. This led to the establishment of a Production Sharing Contract, PSC as an alternative funding mechanism. This system, however, is opaque, lacking transparency and good governance which are not in line with international best practices.
As a result of lack of transparency in the sector, the government under President Olusegun Obasanjo established the first reform Implementation Committee in 2000 where he tasked the members to proffer recommendations and the way forward. Among the recommendations of the Committee was the need for the government to separate the Commercial institution from the Policy and regulatory institution.
In 2011, the government under Late Umar Yaradua decided to take a holistic approach to the subject by establishing an OGIC under the chairmanship of Dr. RIliwan Lukmon. The Riliwanu Lukmon-led committee recommended regulatory and institutional framework which when implemented will generate greater transparency and accountability. This report was however very controversial, even as it started the beginning of the PIB which was submitted as an Executive Bill. The National Assembly (both the House of Rep and Senate) subsequently made efforts toward coming out with a modified version of the Bill: An exercise which eventually led to the PIB.
Goals of PIB
The draft Bill proposes to repeal much of the current Legislations in the petroleum industry. It proposes a wide range of provisions that would significantly alter the composition and operations of the various government agencies that currently administer the oil sector. it is anchored on five major goals which include:
- Creation of new regulatory institutions, and strengthening/reforming of existing ones,
- Transformation of contractual agreements,
- Introducing new fiscal regimes,
- Deregulation of the downstream sector and restructuring government participation in the industry
- Introducing transparency in contractual agreements.
If fully implemented, the will benefit Nigerians in so many ways, among which are:
- Job creation from for Nigerians and strengthening of Nigerian Local Content enforcement. This applies to both human and materials resources.
- Acceleration of Nigerian Skill development in the sector
- The above means more jobs for Nigerian local contractors, especially those from the oil-producing regions
- Development of Natural Gas has not been fully tapped along with its potential for power generation in the country which is needed for Nigerian industrialization and domestic consumption.
- The government also sought to maximize its revenue from the Oil and Gas industry.
- More transparency and accountability in the sector.
- Environmental Protection as well as the development of the Host communities where the exploration and Oil and Gas facilities are domiciled.
- The open and competitive bidding process for Oil and Gas Businesses.
- More Local firms are expected to benefit from the PIB just as more company, due to the strict enforcement of the Local Content aspect of the law.
- In addition to the above, the PIB will provide for the establishment of Frontier Oil Services Agency (FOSA), which would be saddled with the task of prospecting for more opportunities in the Frontier states that are capable of producing Oil and Gas.
- What is more, Nigerians would have the opportunity to own shares in Oil and Gas companies to be set up under the Act. The National Petroleum Company and the National Gas Company would be listed under the Nigerian Stock Exchange and would open its door for the public to buy shares. To create a conducive business environment for petroleum operations in the country and encourage more investment in the Nigerian petroleum industry
It is clear that the PIB holds many benefits to Nigeria and the Nigerians. It also offers the foreigners fairness in operating in the country as the Bill aims at encouraging investment, thus allaying the fear of International Oil Companies. The Bill is an excellent work that would bring a measure of sanity to the sector in the interest of all. When fully in operation, and implemented to the letter, it is capable of fast-tracking Nigerian technological development, not just in oil and gas but also in other sectors of the economy. It is, for this reason, stakeholders and well-meaning Nigerians look forward to its implementation.