Iliyasu Gadu
Ilgad2009@gmail.com
08035355706 (Texts only)
It took over two decades for the National Assembly to finally pass the Petroleum Industry Bill in July 2021 and for President Muhammadu Buhari to sign it into law the following month in August 2021 as the Petroleum Industry Act, (PIA)
The PIA 2021, replaced the Petroleum Act of 1969 which was the first comprehensive legislation which sought to harmonize the workings of the Nigerian Oil and Gas Industry since the discovery of crude oil in commercial quantities in the late 50s in Oloibiri in present Bayelsa state (indeed the Nigeria National Petroleum Company Towers should be named Oloibiri House in commemoration).
Over the years with passing of the Petroleum Act of 1969, and with the rapid expansion in the activities of the Nigerian oil and gas industry, the Petroleum Act did not cover enough grounds to give effect to necessary legislation required to keep up with the pace of operations in the industry.
So, set the stage for the enactment of laws rather sporadically as new challenges and opportunities came about in the industry over the years. But the lacunae was such that as soon a law came to being, it was found out that yet another law was needed to either cover identified flaws in the legislation.
That is how Nigeria ended up with 16 laws on the industry some of which were overlapping and contradictory. Although the Nigerian oil and gas industry was potentially attractive, investors in the industry however found the laws too labyrinthine inhibiting their optimal participation and operations. For instance, investments into the potentially lucrative natural gas sector were held up for decades because there were no clear laws to guide investors or that the existing laws were contradictory. Another example was that the Nigeria National Petroleum Corporation NNPC established as a government owned entity in 1977 under yet another law operated both as a participant in oil contracts and as a regulator. The International Oil Companies (IOCs) and other investors with whom NNPC signed Joint Venture operations found this intriguing as they would have to compete with the NNPC as well as submit to it for regulation. As the lines of operation and regulation of the industry by NNPC was blurred, this gave rise to opaqueness and inefficiency which became the signature identity of the corporation.
When the PIA was finally signed into law in 2021, it was the result of a rigorous and comprehensive review of the operations of the industry by key players and stakeholders over the years. The IOCs were happy that they now had the weight of NNPC as both competitor and regulator off their backs. There were provisions in the act for independent entities like NUPRC and NMDRA to regulate operations of upstream operations like mining licenses for exploration and extraction of oil fields as well as operations of refineries and Liquefied natural gas projects respectively. The PIA 2021 also covered the interests of oil producing host communities and new frontier oil exploration activities across the country. Indeed, the PIA catered for the interests and concerns of government, the IOCs and other investors, host communities, future exploration and above all set the stage for streamlining and deregulation of the entire sector and its associated operations. In this regard, the provisions of the PIA which unbundled the NNPC, freeing it from being a regulator and enabling it to operate as a limited liability company is key. With the PIA Nigerians looked forward to a new oil industry regime in which transparency and accountability will govern operations thereby attracting much needed investment.
However, the proposed amendment of the PIA 2021 by the Tinubu administration these expectations are likely to be put on hold and possibly reversed eventually. Essentially the amendment targets an increased revenue take from the upstream and midstream operations of the oil industry which the administration believes is full of leakages and thus does not allow for maximum revenue take. Similarly, the amendment also hopes to take the powers of the board of NNPCL to determine its budget and strategic decision making and transferring such powers to the Ministry of Finance.
In effect, the amendment hopes to add to the regulatory functions of the NUPRC and RMDRA, the powers of participating in the upstream operations of the oil industry. The removal of the powers of budgeting from the NNPCL also effectively renders the entity ineffective subsuming the entity, its operations and finances to the Ministry of Finance and not its board or the Ministry of Petroleum.
In the pursuit of more revenues, the Tinubu administration seems not to mind the collateral damage it does to the PIA 2021 rendering all the painstaking efforts to clean up the Nigerian oil and gas industry virtually useless. The opaqueness and lack of accountability that used to characterize the Nigerian oil sector will return with the PIA amendment. The proposed PIA amendment will give legal backing to the hijacking of the oil industry by a cabal who will not bring the necessary technical and capital investment but to strip and sell the industry’s assets for which massive public investments have been expended in the past. In corporate practice, this amounts to a hostile takeover with the intention of raiding and appropriating assets and selling them preferred partners.
As one who was intimately involved in the evolution of the present PIA under the Oil and Gas Implementation subcommittee (OGIC) I can confirm that it is the most comprehensive legislation on the oil and gas industry in the country. Our efforts in the OGIC resulted in the establishment of the NUPRC and the NMRDA replacing NNPC’s former Directorate of Petroleum Resources (DPR) as regulators of the Upstream and Midstream sectors of the industry. When the PIA was eventually signed into law we were satisfied that at last the industry was appropriately segmented and regulated per their operations in line with best practices in global oil operations.
If the PIA amendment is allowed by the National Assembly it will not only turn the hands of the clock backwards as far as the regulation of the industry is concerned, it will reinforce the impression of inconsistency often labeled against the Nigerian oil and Gas industry thereby leading to investors scaling down or totally withdrawing their investment in the industry.
The proposed PIA amendment is about quick fixes of acquiring and transferring assets incestuously to cronies, thereby raising revenues in line with the fiscal policies of the Tinubu administration since coming to office. But the PIA 2021 on the other hand is all about long-term strategic plans and projections for comprehensively growing the industry for the ultimate benefit of generation of Nigerians to come. It is therefore incumbent on the National Assembly to which the proposed amendment will be presented for deliberation, stakeholders in the industry and Nigerians in general not to allow its passage in the overriding interest of the country.
