Guardian PIB: Ailing oil industry, failing political class MONDAY, 01 JULY 2013 00:00 EDITOR OPINION - EDITORIAL WHEN Nigeria was compared to a “sinking ship” the other day, many in government dismissed this characterization as the ostentatious language of opposition politics. This, after all, is the giant of Africa! No doubt, with a leadership committed to the national good, it should not be difficult to put Nigeria in the ‘A’ Class of nations, which is where, with its abundant human and material resources, it should be. The actual problem therefore is that Nigeria is like a ship that is left to the mercies of the winds and waves. Nigeria’s failure to pass the Petroleum Industry Bill (PIB), the initial policy deliberations on which started nearly a decade ago and was first presented to the National Assembly in 2008, is painful evidence of the nation’s crisis of leadership. The oil and gas sector overwhelmingly dominates government revenue. It thus determines the pace of growth of the national economy and capacity to invest in infrastructure and social sectors like education and health. The persistent failure of Nigerian politicians to pass this legislation that will determine the rate of investment and growth in such a critical sector is therefore tantamount to allowing the fuel on which the national economic ship is running to drain away. Sooner or later, such a ship will sink unless people wake up to their responsibilities. Calculations of lost investment due to the uncertainty surrounding the tax regime of Nigeria’s petroleum industry run between $50 to $100 billion. It has for long been clear to domestic and international oil industry watchers that Nigeria’s state-dominated oil sector is a cesspit of corruption and inefficiency, a fact which seriously limits its contribution to national economic and social development. It is highly centralized, with a Nigerian National Petroleum Corporation (NNPC) that combines the roles of investor, regulator, marketer and explorer amongst others. It has become widely believed that top bureaucrats and politicians abuse the weak governance framework of the industry to award oil blocs and other highly lucrative contracts to friends and business fronts. Nigeria’s capacity to invest in developing new oil and gas fields is also known to be constricted due to NNPC’s status as a state corporation. The Petroleum Industry Bill was conceived to create a regulatory framework that makes the governance of Nigeria’s oil sector more transparent, reduce the scope for the corrupt exercise of discretionary powers and bring more investment into the sector, both from international oil companies and a new commercially-driven national oil company. Petronas, the Malaysian national oil company, which is ranked as the 12th most profitable company in the world, is often cited as a model of what the Nigerian reform should bring about. Sadly, all this remains an aspiration, five years after the first draft of the Petroleum Industry Bill was sent to the National Assembly. After the fuel subsidy protests of January 2012 and the revelation of gargantuan corruption in the oil sector, the Federal Government raised a task force to write a new draft legislation that is supposed to fast-track its passage. This was a concession to public outcry and demands to clean up the murky industry. But it seems that with the task force, really no more than a sop intended to divert public attention; there was actually no commitment to enthroning transparency in the sector. The new draft PIB that was sent to the National Assembly did not free Nigeria’s oil industry from the clutches of politicians. Rather than promote an independent regulator, it retained the much-abused powers of the Minister of Petroleum to grant and renew licences for oil blocs. To erase all doubts about the lack of urgency of passing the PIB, President Jonathan once said: “The PIB has moved into the Parliament. I have no controlling say on the Parliament… We have done our own part. I would be misleading you if I said in a month, three months, six months the PIB will get through”. Interestingly, the National Assembly that has the responsibility of passing the bill into law is dominated by lawmakers from the party President Jonathan heads, the Peoples Democratic Party. Not only the Presidency, the Petroleum Minister and the Peoples Democratic Party, but the whole of ruling political class stand accused of failing Nigerians over the PIB with the attendant threat to economic growth and the welfare of Nigerians. The current National Assembly has reached its half time and the polity will become increasingly dominated by electioneering as 2015 approaches, further reducing the chances that the PIB will be passed during its lifetime. Sadly too, no major opposition political party has made its views on the PIB known, not to talk of mobilizing Nigerians behind the urgent need to pass the legislation. What then is the worth of their promises to perform better than the PDP if Nigerians don’t see them fighting to pass a piece of legislation that is so critical to reducing corruption and boosting the nation’s revenue? This disservice to the nation by the politicians is made more painful by the prospects of bankruptcy the nation faces, especially at a time when new technologies are increasingly making it commercially viable to bring huge volumes of the so-called shale oil and gas into the market in the United States and other countries, which currently import large quantities of Nigerian oil. The National Assembly should urgently pass into law a bill seeking to eliminate the discretionary powers of the Minister of Petroleum, which ensures that there is a clearly distinct industry regulator which has clear-cut powers that can be exercised independently of the Minister of Petroleum and the President. A future in which mineral resources are controlled by communities and in which states compete to develop industries is better for Nigeria than one in which states and elite politicians concentrate on fighting for resources commandeered by an over-centralized Federal Government. For this, a sensible and principled compromise ought to be found on the Host Community Fund (HCF) component of the Petroleum Industry Bill instead of narrow regional attachments to existing arrangements, which have become a constant source of tension and are clearly unsustainable. Nigerian politicians should suspend self-centered politicking and pass the Petroleum Industry Bill into law this year.
Posted on: Mon, 01 Jul 2013 07:33:32 +0000
Trending Topics
Recently Viewed Topics
© 2015