By Teddy Nwanunobi
A petroleum economist, Professor Wumi Iladare, has expressed concern for the institution of the Minister of Petroleum Resources, noting that the Ministry lacks the capacity to support functions of the Minister, as captured in the Petroleum Industry Bill (PIB) that was passed by the National Assembly last Thursday.
As a result, Iladare, who is a Fellow of the United States Association for Energy Economics (USAEE), has made a call to reconfigure, restructure and rebound the Ministry, so as to support the PIB demand for policy sustainability beyond a one term Minister in the office.
“First, let me commend the 9th NASS for doing what the 6th, 7th, and 8th NASS could not do. Secondly, I must also commend the executive team for staying the course with commitment and political will to support passing PIB 2020.
“I must also display my deep satisfaction having been an active participant, over the years, in the PIB debate. Certainly seeing a passed PIB on its way to the Presidency for signature is gratifying.
“Having expressed all the above commendation, I look for consistency, equitability, and constitutionality over some key provisions keeping posterity in view as we race towards the finish line and enter the implementation stage.
“First, the institution of the Minister is of great concern. I hasten to say that the capacity in the Ministry of Petroleum (Resources) is limited, and not equipped to support the functions of the Office of the Minister in PIB 2020. The Ministry needs a reconfiguration, restructuring and rebounding in order to support the PIB demand for policy sustainability beyond a one term Minister in the office.
“Second, the Bill seems to have settled for two regulatory institutions, and I like the fact that some coordinations among the institutions are envisaged. But I do not see where it is mandated. Perhaps in the general and related sections, a mandatory coordination section may be appropriate. I also think the Board of the Authority Geopolical Fulfillment beyond qualifications seems like ‘jobs for the boys’,” he said.
Iladare, who was reacting to the passage of the Bill, after about 20 failed attempts, however, supported the opinion that a good bill is better than a non-existing perfect bill.
Valuechain reports that there has been outrage, especially in the Niger Delta region, over the three per cent share that was recommended by the federal lawmakers in the Senate, while passing the Bill.
A former Minister, Edwin Clerk, had described the Bill as “satanic and unjust”, warning that the oil companies may be stopped from their production activities, if the percentage of revenue allocated to oil communities is not reviewed upward.
Also, Southern governors, in their meeting on Monday in Lagos State, rejected the three per cent for the host communities, saying that the five per cent share would have been better.
The House of Representatives had recommended 5 per cent as equity holding for the host communities.
But the Minister of Niger Delta Affairs, Senator Godswill Akpabio, however, urged the President Muhammadu Buhari to go ahead and assent to the Bill, if it is brought before him.
“No matter the percentage that is given to the oil communities, we may end up with communal clashes. So, I think that we should get started. The journey of a thousand miles begins with a step. We can have 10 per cent of nothing.
“I want us to get started. Even if they arrive at one per cent – that was never there before. Let’s see how the host communities would make use of what they have. From there, we can say, ‘It’s okay. You have managed it properly. Let’s amend the law.’
“The law is amendable. There is always an amendment of the law whenever the need arises. Of course, if they use the money very well, there is always an opportunity for amendment,” he submitted last Monday during the Town Hall Meeting on Protecting Oil and Gas Infrastructure at the NAF Conference Centre, Abuja.
Lending his voice to having something to work on, rather than not having a perfect one, Iladare said that he would not ask to sacrifice a good bill for a non-existing perfect bill.
“Finally, please I stand (to be) corrected, if my opinions are wacko to you. They are nothing more than a perspective of a Professor Emeritus in a subject matter, as follows:
“First, the 9th NASS even though succeeded where the 8th failed, I think I see the flaws in this Bill that could have been avoided, if the 9th NASS had allowed its technical advisory team to continue the journey with them to the end.
“(Second,) the fiscal framework looks generously competitive, attractive, and progressive as well, but I do not see fiscal neutrality and pareto optimisation of mutuality of interest. It is badly skewed to the investors at the expense of the government. No HT for a relatively de-risked deep water all because there is now a progressive deepwater royalty scheme with a cap of 7.5 per cent, irrespective of fiscal arrangements.
“Of course, I understand it was zero before this reform. But it should have been progressively set at 10 per cent for investors in a concessionary arrangement framework.
“Third, the government should have used this reform to get out of the direct EP funding through JV or PSC altogether. An asset management company outside NNPC would enhance NNOC effectiveness, and perhaps efficiency. That was what the 8th NASS did!
“Too much government involvement, more than sixty year after the first oil, beyond governance, regulatory, and administration, is no longer good for Nigeria oil and gas. Of course, a national petroleum company for commercial national energy security might be tolerable.
“In conclusion, I am not, in any way, asking to sacrifice a good bill for a non-existing perfect bill. I have only brought out some observations for consideration in order to achieve (an) equitable, efficient, effective and ethical implementation strategy,” he said.
Iladare had earlier argued that the 30 per cent share for NNPC frontier exploration is not a coup against any section of the country, as suggested by some analysts.
According to him, such analysts were trying to sow seeds of discourse.
“Regarding the host community development, the framework in the PIB is laudable. However, even if NASS settled at last for 5 per cent of the preceding year OPEX, it will not resolve the ownership agitation. I just cannot comprehend why it is constitutional to surrender 30 per cent of PSC PO for frontier explorations, but NASS cannot surrender 10 per cent of royalty for HCD instead of 5 per cent of OPEX. It seems like a selective interpretation of the constitution to me.
“Please don’t take the above remarks to imply I am in support of 30 per cent earmarked for frontier exploration. That is a petroleum revenue management issue with federation funds being significantly affected.
“However, let me quickly pass some comments on the provision of 30 per cent of PO share for NNPC frontier exploration. Well, it is not the 30 per cent NNPC profit that is earmarked. It is also not a coup against any section of the country, please, as suggested by some analysts trying to sow seeds of discourse, in my opinion. Certainly the optics look unbelievable to sound minds, including PWI. As an educated elite, with 40 years, following the industry policy and technical operations, this earmark reflects a sort of political power arrogance in the minds of the minority. It is perceived to be a display of the arrogance of the political power of the majority, setting a funding mechanism to ‘chase the wind’.
“Apart from the conjectural constitutionality of spending federation money before it gets into the federation account, it does not seem to make economic sense, more so, with the results of energy transition dynamics looming larger than life. Even if it seems to be politically expedient for now, the expediency may not be sustainable beyond a political cycle. Political power is just too transient for such sentimental actions to be sustainable. The provision needs to be expunged,” he suggested.
While describing the idea of making the NNPC a limited company as “a noble idea”, Iladare, however, said that he did not see the complete removal of its agency role.
“I am also shocked at the prescription of 10 per cent management fee, which was rejected in the PIGB. Of course, forcing NNPC to incorporate IJVs does not to me show a commitment to the full commercialisation of NNPC with limited political interference. I know NNPC was fully engaged in this process, perhaps, he who pays the piper ended up dictating the tune,” he added.