Monday, September 12, 2011

The Petroleum Industry Bill (Part XIII)

12 September 2011

The Petroleum Industry Bill was first introduced to the National Assembly in 2008. In the ensuing three years there has been much talk of its strategic importance to investment and future revenue for Nigeria, but very little consistency on how this will be captured in an omnibus bill. Several versions have come and gone and an attempt to pass a Senate version, which seemed to favour oil companies failed at the end of the last National Assembly in May.
Now both the House of Representatives and the Senate have new drafts of the PIB. The House version appears to early readers to be a modest improvement on earlier versions and has the merit of opening with some laudable and understandable objectives. It has also eliminated a great deal of confusing language around a proposed 10% 'shareholding' for local communities and instead asks a new authority to come up with appropriate regulations within three months.

The Senate version may have reverted closer to earlier drafts from the Presidency and its worth noting the return of the IJV (international joint ventures). This is just one of many existing approaches which were to be eliminated in a new 'privatised' environment where the national oil company becomes 'just another company' rather than a necessary appendage to almost all oil operations. The political tussles have been intense - driven mostly by the tensions between interests in the Nigerian oil industry, Ministries, politicians, and international oil companies.

We agree that the PIB is fundamental both to the oil industry and Nigeria's future. However the arguments over revenue, investment and profits distract from another critical thread. The PIB must put an end to the conflicts of interest and lack of resources associated with all levels of regulation in the industry. Without the PIB supporting root and branch reform in this area there is a high risk that the liabilities from oil spills, theft and corruption will continue to increase and create a situation where oil operations are simply untenable

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