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PIB in Distress: Killing The Bill… That Pays Their Bills

-By Yange Ikyaa

Time is running out on the 8th Assembly of the Nigerian legislature to pass in totality a draft bill that has been with them for almost nine years since 2008, and which was conceived and agreed to be drafted through a set committee almost in the year 2000, almost two decades.

This draft bill is called the Petroleum Industry Bill (PIB), and has now been segmented into four different bills.

If this law is not fully passed by the legislature and assented to by the executive, it could send negative signals to the public that Nigerian officials may be doing great disservice to their people and especially to a sector that pays their bills. This could otherwise mean that the two arms of government are killing the bill that is designed to better develop a sector that majorly pays their own bills, the petroleum sector.

So far, only the Petroleum Industry Governance Bill (PIGB) segment of the PIB has been passed by the National Assembly, but the President has declined assenting to it.

Other components of the Petroleum Industry Bill (PIB) which have neither been passed nor assented to are the Petroleum Industry Fiscal Bill (PIFB); Petroleum Host Community Bill (PHCB); and Petroleum Industry Administration Bill (PIAB).

The Petroleum Industry Fiscal Bill is to ensure progressive framework that encourages sustained investments, growth and revenue to government; serve the socioeconomic needs of all stakeholders; and clarify legislative aspects of the fiscal regime from the negotiable aspects of contractual obligations.

On the other hand, Petroleum Host Community Bill is to ensure shared prosperity and sustainable development of petroleum host communities; provide direct economic benefits to host communities; and assure inclusiveness, enhance peaceful co-existence and harmonious relationship, while Petroleum Industry Administration Bill is to enhance efficient, effective and sustainable development of the sector; encourage and facilitate local and foreign investment; promote transparency and accountability; promote liberalization of the downstream sector; and ensure best practices in petroleum operations.

In October 2016, the Nigeria Extractive Industries Transparency Initiative (NEITI) published a policy brief, entitled “The Urgency of a New Petroleum Sector Law.”

The paper estimated the cost of business uncertainty, lack of clarity, and inadequate transparency mechanisms in eight years at more than $200 billion.

The paper showed how Nigeria is increasingly in competition for oil and gas investments with many other African countries, not to talk of other oil jurisdictions.

In addition, the paper also traced the beginning of the search for a composite and more appropriate law for the sector to the inauguration of the Oil and Gas Reform Committee on 24th April 2000, about 19 years ago, and to the presentation of the first Petroleum Industry Bill (PIB) to the National Assembly in September 2008, over ten years ago.

However, President Muhammadu Buhari withheld assent to the harmonized Petroleum Industry Governance Bill (PIGB) for constitutional and legal reasons.

On June 8, 2018 the Senate sent to the president for final assent into law the harmonized draft Bill earlier approved by the House of Representatives.

But, the president declined assent to the draft law initiated to update the outdated Petroleum Act and replace its provisions with a more comprehensive and current legal framework that aligned with global standards.

Confirming the president’s decision to decline assent, Senator Ita Enang, the President’s Special Assistant on National Assembly Matters, who was also a former Senator, said the decision was conveyed in separate presidential communications delivered to the leadership of the two Chambers of the National Assembly on July 29, 2018.

“By Presidential communication of July 29, 2018 addressed to the Senate and House of Representatives, Mr President did communicate decline of assent to the Petroleum Industry Governance Bill, 2018 for constitutional and legal reasons stated therein,” the statement read.

Although Senator Enang said “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 urged the legislature to understand the peculiar circumstance under which the clarification was issued.

He blamed it on the misrepresentation of the communication in the media to the public domain apparently with a deliberate intent to blackmail the executive, and ”if not promptly handled, may set the two arms of government against the public and the international investment community”.

It has been alleged that the President withheld assent to the proposed law because he felt there were some sections that sought to whittle down the power of the Minister of Petroleum Resources and vest same in some technocrats.

It is also speculated that the President equally felt uncomfortable that there were no provisions that covered the Fiscal content of the draft law, and that some key Ministers the President consulted over the issue, including the Minister of Justice and Attorney General of the Federation, Abubakar Malami, refused to support his (Buhari) assent.

Another reason given for presidential decline of assent to the bill was that the provision of the Bill permitting the Petroleum Regulatory Commission to retain as much as 10 per cent of the revenue generated unduly increases the funds accruing to the Commission to the detriment of the revenue available to the Federal, States and Local governments as well as the Federal Capital Territory.

The Civil Society Legislative Advocacy Centre (CISLAC) had described as ‘disappointing’ the refusal by President Muhammadu Buhari to assent to the Petroleum Industry and Governance Bill (PIGB) sent to him by the National Assembly, urging him to re-think his decision in the national interest.

It said the refusal to assent to the Bill is a big failure on the part of Buhari’s government and a lost opportunity to reform and transform the sector to meet up with global standards.

It also said that it was worrisome that in spite of the established losses the nation incurs due to the absence of this law, which NEITI puts at $200 billion yearly and another $15 billion yearly in fresh investments, Buhari did not consider it a matter of national importance to assent to the Bill.

Executive Director of CISLAC, Auwal Ibrahim Rafsanjani, in a statement, said it was unfortunate that the President has refused to assent to the Bill in spite of his promise to reform the oil and gas sector in the country during his campaigns, and repeatedly after his election.

“CISLAC finds it worrisome that in spite of the established losses the nation incurs due to the absence of this law, which among other sources, the NEITI put at $200 billion yearly and another $15 billion yearly in fresh investments, the President did not consider it a matter of national importance to assent to the Bill.

“We find it frustrating and disappointing that this government has spent its tenure without properly addressing this key sector of our economy where corruption, inefficiency, community conflict and sabotage have been institutionalized.

“CISLAC considers this refusal to assent as a big failure on the part of this government and a lost opportunity to reform the sector and transform to meet up with global standards.

“The President, who doubles as the Minister of Petroleum Resources has only superficial reform to show under his leadership, as he was in the position to muster the political will to drive deeper reforms.

“We find it even more worrisome that the passage of the Bill had been due since 2016 according to the timeline contained in the 7 Big Wins released by the Federal Ministry of Petroleum Resources.

However, Vice President Yemi Osinbajo recently supported President Buhari, while revealing that the pressure mounted by state governments on President Muhammadu Buhari over fear of revenue decline forced him to decline assent to the Petroleum Industry Governance Bill (PIGB).

Speaking at the Royal Society Investment Forum in London hosted by Jeune Afrique Media Group, with the theme: `Investing in Africa’, Osinbajo said that the faulty fiscal framework as well as issues relating to host communities were also reasons for the President’s refusal to assent to the much sought after bills.

Responding to a question from a member of the audience at the event, the VP said that “states were concerned” that if the bill was signed into law, the revenue accruing to the states would decline.

He, however, raised the hope of Nigerians that the bill would be signed into law before the end of the 8th Assembly, after all the necessary amendments have been made.

“We hope that the bill will become law before the end of the 8th Assembly,” Osinbajo said.

The vice president pointed out that since coming to power in 2015, the All Progressives Congress (APC)-led government had invested over N2.7 trillion on infrastructural development, even as he appealed to Nigerians to support forthrightness which President Muhammadu Buhari’s government represents.

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, has also made a case for the domestication of oil and gas technologies within the African continent, using the instrumentality of the PIGB.

He said such will develop the capacity of the people, improve the economies and emplace national oil and gas companies on the path of sustainable growth and development.

Baru said African countries must react positively to the new reality by deploying new policies and stabilizing their business environment to attract meaningful investments.

He stated that critical to achieving that for Nigeria was the passage of the four components of the Petroleum Industry Bill (PIB), which is expected to usher in a new legislation that would not only enhance the investment climate in the country, but also change the fortunes of the country’s oil and gas business for the better.

Speaking on ‘Foundations for New Investment,’ at the 19th CERA Week conference which took place in Houston, United States (US), the NNPC Chief Executive added that over 319 trillion cubic feet of gas was yet to be discovered in the region, informing delegates that the corporation was opening up its business environment to ensure transparency and accountability in its dealings with all stakeholders.

He also lauded the federal government for its peace initiatives in the Niger Delta communities, which he said had seen the country hitting very high oil and gas production figures in recent years.

Baru explained that over 41 billion barrels of crude oil is stranded in Sub-Saharan Africa, noting that the currently drilling activities in Kolmani River-II Well in the Benue Trough, one of Nigeria’s several frontier inland basins, would provide additional 400 Bcf of gas.

For Africa, particularly Nigeria, to harness these resources, he insisted that a new legislation, especially the Petroleum Industry Bill, must be passed to enhance investment, adding that from available information, the African global crude oil and gas outlook remained positive and on the upward trajectory.

According to him, West Africa as a sub-region holds the ace, in terms of offshore deep-water exploration hotspots, stating that a prolific 1.0 billion barrels of crude oil find was recently made at the Owowo Field, offshore Nigeria.

He urged foreign investors to explore the Nigerian ultra-deep terrain, which he described as largely untested.

However, if the PIB is not passed before May 29, 2019, the country would have missed a huge opportunity to set the necessary regulatory stage with its long serving and experienced legislators for foreign investors to come into the Nigerian petroleum industry, as they await patiently the new laws in the making before making further investment commitments that are traditionally long term and not easily reversible.

If the older legislators fail to deliver on this mandate, the new ones may come and start learning how to conduct the business of legislation and it may take time before they could understand the nature of any inconclusive bills previously debated by the 8th assembly. But if the job is done now, the President remains the same man who refused to give executive assent to the bill and will know what improvements he needs to see on the draft bill before he finally signs it into law.

There is a claim by the current legislators that they have been able to pass more bills than it has been done by tenure of the National Assembly since the country returned to democracy in 1999, but the most important one, the PIB has enjoyed only a partial passage of 25 percent, as only one out of its four segments has been passed, yet denied assent by the President.

The opportunity to proceed with speed on the PIB debate was missed during the early days of the 8th Assembly, when the federal lawmakers were trying to elect their principal officers and rather got distracted from their main function of lawmaking due to unnecessary legislature/executive tussles for political supremacy.

This unfortunate scenario eventually dominated most of the rest of the four years that are now coming to an end by the first week of June, when the Nigerian Senate is normally dissolved after a routine, four-year tenure for new or returning lawmakers to commence legislative business.

With less than 70 days to the expiration of the tenure of the 8th National Assembly, it is highly anticipated that they pass the Petroleum Industry Bill which has been on their table for far too long.

This will help boost the Nigerian economy, which majorly depends on foreign oil revenues for sustenance, and save the nation the estimated cost of business uncertainty, lack of clarity, and inadequate transparency mechanisms that, according to NEITI, reached more than $200 billion within a period of eight years.