Senate’s Passage of PIGB puts Pressure on PRESIDENCY to Expedite Assent …As Executive delay stalls allocation, renewal of oil blocks

-By Gideon Osaka

The Senate during plenary on Wednesday, April 17 passed the Petroleum Industry Governance Bill (PIGB), which it had reworked. The Senate passed the bills after its technical committee worked on President Buhari’s observations as reasons for his earlier decline of assent to them and re-drafted the affected clauses.

The PIGB seeks to make the Nigerian Petroleum Regulatory Commission (NPRC) the sole regulator overseeing the licensing, monitoring and supervising of petroleum operations. It also gives the NPRC the powers to enforce industry laws, regulations, and standards.

President Buhari had initially rejected the bills citing legal, constitutional and drafting issues as reasons for rejecting the bills after which the Senate set up a technical committee to review the bills.

The bill was however passed on Wednesday of April 17 after Ahmad Lawan, who is the Senate leader, moved a motion in that regard, and after the technical committee effected corrections. The bill will also have to be passed by the House of Representatives before they are finally sent by the National Assembly to the President for assent.

The prolonged period it has taken the National Assembly for passage of the PIGB and for it to be signed into law by the President appears to be taking its toll on the petroleum industry, which is the cash cow of the Nigerian economy, as more than 211 oil blocks are either idle or yet to be renewed.

Some experts have argued that the failure of the Federal Government to conduct the much awaited oil bid round may have robbed the country of revenues in the region of about N112 billion in signature bonuses.

Signature bonuses, according to the Nigerian National Petroleum Corporation (NNPC), are funds paid by oil companies to the Federal Government upon their successful bid for oil blocks. Since the last bid round was conducted in 2017, many investors who had hoped that the fields would be up for grabs are said to have since moved their resources to other countries where they consider the business environment more friendly.

The Founder and Principal Partner, Nextier, Patrick Okigbo, believes that the failure to secure presidential assent on the PIGB shows that significant uncertainty remains on the legal framework governing the petroleum sector in the country. Estimates by an industry advocacy group, “Publish What You Pay,” said the uncertainty costs Nigeria about N3 trillion yearly.

According to Okigbo, stakeholders in the sector must work with the Presidency to ensure assent to the bill, adding that the revolutionary bill must be signed before the end of the current administration to rekindle investors’ confidence.

“The Federal Ministry of Petroleum Resources and the National Assembly have worked together to address those issues, which the Presidency claimed were its reasons for the refusal of assent to the new version of the PIGB,” he added.

For Dada Thomas, former President, Nigerian Gas Association (NGA), and Chief Executive Officer, Frontier Oil Limited, it is shameful that Nigeria has not held a bid round since 2007.

“In that time, other African countries have held many bid rounds that people have watched and discovered were transparent. But for 11 years, Nigeria has not held one,” he said.

According to him, a new bid round is viable under a new legislation, considering that major oil companies are being deterred by the obscurity in the sector. He however warned that the country must ensure the passage of the PIGB before the end of the current administration.

“I am worried and sad for Nigeria. We need to rescue the Nigerian exploration and production sector. It’s a big problem and we need to solve it collectively as a nation,” he said. On the marginal fields, Thomas said government had been frustrating growth by not honouring the terms of agreement it signed with the operators.

“For example, the marginal field was supposed to be taxed at a 55 per cent PPT rate not the 67.5 per cent or 85 per cent that other fields are being taxed. That has never been implemented. Marginal fields are being taxed just like everybody else,” he added.