This was written in March 2011
The National Assembly’s continued delay in passing the Petroleum Industry Bill (PIB) into law is still a source of worry for Nigerians. Both industry watchers and non-governmental groups raise concerns that the delay casts dark shadows over our country’s readiness to tackle transparency issues in the extractive sector. Speculations abound that both the executive and the legislative arms of government are under pressure by oil industry players to keep the bill under the carpet until after the April elections. And, thereafter, probably kill it.
Worried observers believe that, following the conclusion of public hearings which ended a while ago, the PIB left the public domain and has since been held on the surgical table by the government, while the oil companies control both the surgical knives and the anaesthetic valves.
The most strident arguments over the bill have come from the oil companies, who have for decades enjoyed the unfettered privilege of calling the shots in the sector. They have enjoyed unrestricted extraction and have gone without accountability, aided by an entrenched architecture of impunity.
Even the extractive industries audits of recent years have not factored environmental destruction and social dislocations into their accounting processes. Without bringing these into the equation, it is impossible to see how the decimated livelihoods of the poor communities and peoples in the oil fields can be redressed.
The major concern of the oil companies has been over the margins of profit the new regimes proposed in the bill would allow them. In seeking to address one of their concerns, the companies impressed on government to turn the existing unincorporated Joint Ventures between the international oil companies (Shell, Total, Mobil, AGIP, Chevron, Mobil) and the Nigerian National Petroleum Corporation (NNPC) into Incorporated Joint Ventures (IJVs). While government agreed to this realignment, the companies seethe over its insistence on retaining control of the venture. They believe that the funding situation would not be different from what currently pertains, since they would not be able to raise funds for the ventures from the capital market.
The delay in passing the bill into law until probably after the forthcoming elections is seen as a clear case of playing politics over this urgent matter. Even non-governmental campaigners for the swift passage of the bill demand ‘all political parties to mainstream the debate on the PIB into their political campaigns as a demonstration of their commitment to transparency in the oil and gas sector.’ This demand can be understood as a tacit acceptance that the PIB will likely only come into force on the nod of whoever wins the elections. If that is so, it would mean that the earliest date the bill could become law would be sometime after May 29, 2011, after the winners of the election are sworn in. It could also be that what the agitators are demanding is that all politicians should seek the immediate passage of the PIB into law. Which is which?
Reports on how and why the PIB will not see the light of day before May 29 make interesting reading. Some speculate that the National Assembly will simply not act on the bill until after the elections. Others say that even if the Assembly passes the bill, some insiders in the corridors of power will work out plausible reasons the president could offer for not signing the bill into law. The speculators are all casting their readings on the basis that the power of industry is setting booby traps everywhere and squeezing the bill under the carpet. We need to know. Government should urgently speak up on this.
We hear the minister of petroleum waxing positive about the PIB and suggesting that its passage is imminent. Recent reports quote her as saying that oil-producing communities would earn about N1.1 billion as yearly dividend payments from oil revenues, as part of incentives in the bill. It will be great to know the mechanisms that would ensure that such sums trickle down to the people.
She is also quoted as saying, ‘There have been so many discussions, modifications and debates by stakeholders in order to ensure a viable legal and regulatory framework for the benefit of, not only the Nigerians, but also for local and international investors.’ The government, according to her, ‘will continue to engage the National Assembly to ensure passage of the bill as soon as possible.’ Nigerians need to know what these modifications are.
One reason why the international oil companies, and possibly even the NNPC, are resisting the passage of the PIB into law is probably the implication of what implementing strict metering of petroleum extraction would mean to them. The bill requires that royalties be paid on production and not merely on what is exported. Oil companies argue against this because a fraction of their production gets lost during transmission to the export terminals. They claim that such losses are owing to oil theft and that paying royalty on production would place the burden of securing the transmission lines on them, whereas it should be the duty of government.
The issue of metering and the insistence on payment of royalties on production volumes are essential to bringing sanity to the sector. The government should not back down on this. Nigerians deserve to have factual data on how much oil is being extracted daily from our nation and not just how much gets to the official end of the pipelines. The fact that oil is lost/stolen during transmission is well known. We deserve to know how much is being lost. This can only happen if production is strictly metered. If production data were available, simple accounting would reveal how much gets missing. The next questions would be concerning the points of leakage and who benefits from such leakages. The refusal of industry players to allow this simple step in transparency shows the rogue nature of the game and underscores why the people and the environment continue to suffer at their hands.
With all the politicking over the PIB and all the surgery going on outside public purview, who knows what creature will eventually emerge from the theatre?
- Originally entitled 'Wither the Petroleum Industry Bill'. No longer available online ↵
- Elisha Bala-Gbogbo. February 22, 2011. Nigeria Says Proposed Law Will Boost Crude Oil Reserves. http://www.bloomberg.com/news/articles/2011-02-22/nigeria-says-proposed-oil-industry-law-will-boost-hydrocarbons-reserves (accessed 7 June 2016) ↵