The Petroleum Industry Bill (PIB) has been in the news for a few weeks, as the nation awaits the consent of President Muhammadu Buhari to turn the controversial bill into law.
But before the President signs the bill, some experts in separate interviews have tasked the Federal Government to make some amendments to prevent further controversies.
READ: Southern Governors reject proposed 30% profit share for oil exploration in the North
What the experts are saying about PIB
Prof. Wunmi Iledare, a professor of Petroleum Engineering, explained that the Federal Ministry of Petroleum Resources needed to be reconfigured to fit into the recommendations of the PIB currently passed by the National Assembly.
He said, “The institution of the Minister is of great concern. I hasten to say that the capacity in the Ministry of Petroleum 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 demands for policy sustainability beyond a one-term minister in the office.
READ: PIB Passage: Have the demons really been defeated?
“The bill seemed to have settled for two regulatory institutions, and some coordinations among the instructions should be envisaged. The selection of members of the Board of the authority, the regulatory body by political appointment instead of qualifications, makes it seem like jobs for the “boys.”
Iledare, who is also a former President of the Nigerian Association of Energy Economics (NAEE) said that government should have used the reform to get out of the direct EP funding through JV or PSC altogether.
He added that an asset management company outside NNPC would enhance Nigerian National Oil Corporation’s (NNOC) effectiveness and efficiency.
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“That was what the 8th NASS did. Too much government involvement, more than sixty years after the first oil, beyond governance, regulatory, and administration. It is no longer good for Nigeria Oil and Gas.
“Of course, a National Petroleum Company for commercial national energy security might be tolerable. 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 equitable, efficient, effective and ethical implementation strategy,’’ he added.
Another industry expert, Olaoluwa Omole, who is also a Petroleum Engineer, is rather concerned about the ownership agitation on the Bill.
According to him, the agreement on the percentage of the preceding year’s Operation Expenses (OPEX) did not matter, as such would not resolve the controversies.
He said, “Even if NASS settles at last for 5% of the preceding year’s Operation Expenses (OPEX), it will not resolve the ownership agitation.
“I just cannot comprehend why it is constitutional to surrender 30% of Production Sharing Contract (PSC) of Petroleum Operations (PO) for frontier explorations, but NASS cannot surrender 10% of royalty for Human Capital Development (HCD) instead of 5% of OPEX. It seems like selective interpretation of the constitution to me.
“It is not 30% NNPC profit that is earmarked. It is also not a coup against any section of the country, as suggested by some analysts trying to sow seeds of discord.”
He added that the optics looked unbelievable to sound minds including PWI and that 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, 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 added.
The thumb ups
Iledare commended the effort of the 9th Assembly in succeeding where the 8th failed, noting that the flaws in the bill could have been avoided if the latter had allowed its technical advisory team to continue the journey with them to the end.
He added that the fiscal framework looked generously competitive, attractive and progressive, but did not see fiscal neutrality and optimisation of mutuality of interest.
“It is too skewed to the investors at the expense of the government.
“No Hot Temperature (HT) for a relative de-risked deep water all because there is now a progressive deep water royalty scheme with a cap of 7.5%, irrespective of fiscal arrangements.
“Of course I understand it was zero before this reform, but it should have been progressively set at 10% for investors in a concessionary arrangement framework,’’ Iledare said.
In case you missed it
Nairametrics had reported that both chambers of the National Assembly on July 1, passed the PIB currently awaiting harmonisation before being assented to by the President.